As new businesses and new business models emerge after forced shutdowns, we have observed a noticeable uptick in requests for lease reviews for tenants seeking to lease office space, restaurants, and retail centers. These new business owners, faced with market competition and other business constraints, often concede important legal issues and, many times, do not even know to address them at all. Below is a list of critical lease considerations and provisions that are often overlooked and could have a large impact on the viability of your business.

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Assignability of your lease. As a tenant, your ability to assign a lease to a third party has a direct impact on the ability to sell your business down the road. For landlords, assignment provisions provide control over the transfer of leases to ensure that any new occupant is qualified and worthwhile. Tenants, on the other hand, need the ability to freely assign the lease so they can exit the lease, and perhaps their business. If possible, a tenant should negotiate the ability to assign the lease without the landlord’s consent so long as, for example, the new tenant purchases all, or substantially all, of the tenant’s assets.

Patrick R. MacQueen is a founder of MacQueen & Gottlieb, PLC.

On particular note, you will need to address whether any existing guarantor will have continued liability for a tenant’s obligations arising after the assignment. Landlords will always seek to collect from as many potential “pockets” as possible and typically require that, even if they consent to an assignment of the lease, the tenant and guarantor will remain liable under the lease after its assignment. It is imperative for a tenant and guarantor to attempt to preemptively limit this type of exposure. Otherwise, a tenant may end up successfully assigning the lease but the original lease guarantor may remain obligated.

Exclusive use provision. For a new business, an exclusive use clause may provide you with an edge against competitors. Through such a provision, a landlord is restricted in its ability to lease space in their development to a competing business. Through such a provision, you will want the broadest language possible to ensure you will not face competition. You will also want language requiring a landlord to actually enforce the exclusive use provision and language addressing what remedies are available if the exclusive use provision is violated. Without a remedy or an enforcement mechanism, an exclusive use provision is largely useless.

Termination/reclamation upon assignment. Many landlords include language providing the landlord the ability to terminate your lease and “recapture” (i.e., retake) the premises if the tenant seeks the landlord’s consent to assign the lease. Recapture language can make a tenant’s assignment a risky proposition. It is usually best to seek to delete recapture language. 2

Guaranty. In most cases, a tenant is a newly formed limited liability company or other business entity with little (or no) credit and little in terms of assets. Thus, if you default under the terms of your lease, your landlord will want someone else, i.e., a person, to collect rent from. This is why most landlords require a personal guaranty. If you are required to execute a guaranty, it is critical to ensure that the guaranty is limited in some fashion. For example, consider requesting a stated cap on your maximum financial exposure, a complete burn-off of the guaranty after a period of time so long as no defaults exists, and/or a complete release if the original tenant is no longer the tenant.

In short, you should not sign a lease (or a guaranty) without a full understanding of your obligations. Leases are complicated and often lengthy legal documents and landlords are looking out for their best interests, which means that you should do the same.

If you are a tenant or a landlord and have additional questions about the lease you are about to sign or have other business law related questions, you can contact me at or call 602-533-2840.


Patrick R. MacQueen is a founder of MacQueen & Gottlieb, PLC.