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Guide

A commercial lease negotiation: trade the paperwork without losing track of it.

Signing or renewing a commercial lease for an office, a store, a restaurant or a warehouse is one of the largest commitments a small business makes. Before a landlord will issue a lease, it usually wants to know you can pay: financial statements, tax returns and often a personal guaranty from the owners. Before you sign, you want to understand the building, the costs you will share and the rules you will live under.

This guide covers the documents that typically move between tenant, landlord and brokers, and how to keep the tenant's side of that exchange under control. It is general information, not legal or real estate advice. Your attorney and tenant broker should review any lease before you sign.

How a lease deal usually unfolds

  1. A tenant broker shortlists spaces and requests proposals from landlords.
  2. Tenant and landlord exchange a letter of intent covering rent, term, the tenant improvement allowance and key terms. It is usually non-binding.
  3. The landlord reviews the tenant's financial information and decides whether to require a guaranty or a larger security deposit.
  4. Attorneys negotiate the lease itself, along with exhibits such as the work letter, the floor plan and the rules and regulations.
  5. If the property has a mortgage, the lender may ask for a subordination, non-disturbance and attornment agreement, and later the tenant may be asked to sign an estoppel certificate confirming the lease terms.

The structure of the rent matters as much as the headline figure. Under a gross lease the landlord covers most operating costs. Under a net or triple net lease the tenant pays a share of taxes, insurance and common area maintenance. Ask for the history of those charges before you commit.

What each side usually asks for

From the tenant

  • Two or three years of business financial statements and tax returns.
  • A current balance sheet and evidence of available cash or credit.
  • Personal financial statements from guarantors, if the landlord asks.
  • A description of the business, its use of the space and any planned build-out.

From the landlord

  • The proposed lease form and all exhibits.
  • A breakdown of common area maintenance, taxes and insurance for recent years, and the budget for the coming year.
  • Floor plans, measurement standards used for the rentable area, and building rules.
  • Information on zoning and permitted use, and the condition of building systems.

Running the tenant's side in one room

  1. 1

    Make a folder per space

    If you are comparing several locations, give each its own folder for proposals, floor plans and cost histories.

  2. 2

    Share your financials once

    Put your financials in a folder each landlord's group can see, view-only and watermarked with the reader's name, email and the date.

  3. 3

    Keep drafts versioned

    Each round of lease markup is uploaded as a new version, so the history shows how the terms moved.

  4. 4

    Close the losing bids

    When you choose a space, revoke the other landlords' access in one step.

Why the tenant's financials deserve protection

A landlord reviewing your application, and its leasing agent, its asset manager and possibly its lender, will all see your numbers. If you approach several landlords, that is a lot of copies of your business and personal finances. A room lets each landlord read what it needs without receiving a file it can pass along.

Each landlord gets its own group, which sees only the folders you allow and never another landlord's proposal. ShareAndGo's insights show who opened the room and what they read, which tells you whether a landlord is actually considering your application.

Once you sign, keep the executed lease, the exhibits and every later amendment in the same room. Years later, when a renewal option comes up or a dispute about operating charges arises, the whole history is in one place, with an audit log of who saw what.

Questions

Can my tenant broker manage the room?
Yes. Add the broker to your team and they sign in through MyAndGo.
Can landlords upload their documents to us?
Yes. A public request-a-file link lets a landlord or its agent upload documents straight into the room.
Is the letter of intent binding?
Usually it says it is not, apart from certain clauses. Your attorney should confirm what yours says before you sign it.

Related guides

A commercial property transaction

When you buy the building instead.

Preparing an asset sale

Selling a business with a lease to assign.

A business loan application

Financials lenders and landlords both ask for.

All guides

Every business process we cover.