10 Common Mistakes Landlords Make in Commercial Leases — And How Tenants Can Leverage Them

The most common landlord mistake—and the most expensive for tenants—is a CAM provision that defines "common area costs" so broadly that virtually any expense can be passed through to tenants. Without explicit exclusions for capital improvements, above-market management fees, leasing commissions, debt service, and non-recurring items, tenants can face CAM bills that are 40 to 80 percent higher than expected.

Common overbroad CAM language: "Tenant shall pay its pro rata share of all costs and expenses incurred by Landlord in operating, maintaining, and managing the Property and its common areas." The word "all" is the problem. Without a list of specific exclusions, that one word can include elevator cab replacements, roof tear-offs, and landlord legal fees for tenant disputes.

Landlords sometimes draft use clauses either too broadly ("any lawful purpose") or too narrowly ("retail sale of women's apparel only"). Both cause problems. An overly broad use clause can allow a tenant to operate in ways that violate co-tenancy agreements, exclusivity protections, or zoning. An overly narrow clause can expose the landlord to claims of constructive eviction if the tenant's business naturally evolves.

From the tenant's perspective, a vague or broad use clause is actually an opportunity. If the landlord's form says "any lawful retail use," that language gives you significant operational flexibility — but you should get it in writing before signing, not fight about it during operations.

Landlords who use lease forms drafted in the 1990s or early 2000s often have insurance minimums that were reasonable then but are dangerously low now. A requirement for $1M per occurrence in commercial general liability coverage may have been market standard in 2000; in 2026, that limit covers barely half of a slip-and-fall verdict in a major market. Similarly, many small-tenant leases specify coverage limits but fail to require that the landlord be named as an additional insured.

For tenants, inadequate landlord-specified minimums actually create opportunity: you can propose moderate increases to coverage (e.g., $2M per occurrence) in exchange for tenant-favorable concessions elsewhere, or you can point out the discrepancy as evidence that the landlord's lease form needs updating across the board.

Estoppel certificates are critical instruments that allow landlords to represent the status of their leases to lenders, buyers, and investors. A properly drafted estoppel provision specifies: (a) the tenant's obligation to deliver a completed estoppel within a defined period (10 to 15 business days is market), (b) the form of the estoppel, and (c) the consequence of failing to deliver (typically, the landlord's version is deemed accurate). Leases that simply say "tenant shall provide estoppel certificates as required" without specifics create real problems when a landlord needs to close a refinancing in 30 days.

For tenants, a vague estoppel provision is leverage. You can negotiate the response window up (15 business days instead of 5), limit the frequency (no more than twice per year), and specify that estoppels only certify facts, not legal conclusions.

In a multi-tenant building, some operating expenses are variable (cleaning, utilities) and scale with occupancy. If the building is only 60% occupied, actual variable operating expenses may be significantly lower than at full occupancy. Without a gross-up provision, tenants pay their pro rata share of lower actual costs—which sounds beneficial—but the problem arises when occupancy rises and the per-tenant cost spikes, or when the landlord under-maintains the building during vacancy to suppress costs artificially.

The market standard is to gross up variable expenses to a hypothetical 95% occupancy level. This creates predictability for both parties. Leases that lack a gross-up provision—or that cap gross-up at actual occupancy—create exposure for tenants in buildings with volatile occupancy histories.

Many landlord lease forms include personal guarantee riders that guarantee the full lease obligation for the entire term. A 10-year lease for a new business signing at $30/SF means the guarantor has a personal liability of over a million dollars at signing. The landlord's mistake is often failing to include any burn-down language—automatic reductions in the guarantee amount as the tenant establishes a payment track record.

In competitive markets, experienced landlords offer burning guarantees that reduce by one year's rent for each year of on-time payment. Less sophisticated landlord forms leave the guarantee static, which is a clear drafting oversight and a strong negotiating opportunity.

HVAC disputes are among the most common landlord-tenant conflicts in commercial leases, and most originate in vague lease language. "Tenant shall maintain the HVAC in good order and repair" — but what does that mean when the unit is 12 years old, has exceeded its service life, and needs a $15,000 compressor replacement? Many leases fail to distinguish between maintenance (tenant) and capital replacement (landlord) or fail to specify what happens when an aging system requires capital work.

Standard commercial leases spend pages detailing what happens when tenants default. They spend very little time on what happens when landlords default. A lease that fails to define "landlord default," specify a cure period, and grant tenants a self-help remedy (right to perform the landlord's obligation and deduct costs from rent) leaves tenants with only one option: sue. In practice, suing your landlord mid-lease is expensive, slow, and usually not a realistic option for small tenants.

Most commercial leases include a subordination clause that makes the tenant's lease junior to any mortgage on the property. This is standard — lenders require it. The problem is when the lease includes subordination but not non-disturbance. Without a non-disturbance agreement (NDA), a foreclosing lender can terminate the tenant's lease even if the tenant is in full compliance with all obligations. For tenants who have invested in tenant improvements, this is catastrophic.

Some landlord lease forms — particularly in multi-tenant office buildings — include relocation clauses that give the landlord broad rights to move tenants to different suites within the building with minimal notice. Without limitations, a landlord could relocate a successful retail tenant from a prime corner space to a less visible interior unit, effectively destroying the tenant's foot traffic-driven business model.