Signing a commercial lease in Los Angeles is one of the most significant legal commitments a business owner can make. Unlike residential leases, commercial leases are largely unregulated in California — meaning almost everything is negotiable, and the standard landlord form is designed to favor the landlord.

1. Unlimited Personal Guarantee

Landlords routinely require the individual owner to personally guarantee the lease. Without limits, if the business closes, you're personally responsible for the remaining rent for the full term. Negotiate a capped guarantee or a burn-down provision that reduces liability over time.

2. Open-Ended CAM Charges

Common Area Maintenance charges pay for your share of building operating costs. Without a cap, they can increase dramatically year over year. Negotiate an annual CAM increase cap, exclude certain cost categories, and require annual reconciliations with audit rights.

Watch for "gross-up" provisions — these allow landlords to calculate CAM as if the building were fully occupied even when it isn't, artificially inflating your costs.

3. Restricted Assignment Rights

If your business changes ownership or you need to exit early, you'll need assignment rights. Many standard leases give landlords nearly unlimited discretion to deny — negotiate for clear, objective approval standards and allow transfers to affiliates without consent.

4. Narrow Permitted Use Clauses

An overly narrow use clause can restrict your business if it evolves. Read the entire lease — including exclusivity provisions granted to other tenants — before signing.

5. Punishing Holdover Provisions

Many commercial leases charge 150–200% of rent during any holdover period and make the tenant liable for all resulting landlord damages. Negotiate a reasonable holdover rate and a defined escalation timeline.

6. No Exit Options

A lease without a termination right locks you in for the full term regardless of circumstances. Negotiate a termination right with defined notice and fee, or at minimum clear language on business sale and force majeure events.

Frequently Asked Questions

Are commercial leases negotiable in California?
Yes — commercial leases are largely unregulated and almost everything is negotiable. Tenants with experienced legal representation routinely improve terms on rent, CAM charges, renewal options, and more.
What are CAM charges in a commercial lease?
Common Area Maintenance charges are the tenant's share of building operating costs. They can add substantially to effective rent and should be capped and carefully defined in the lease.
Is it worth hiring an attorney to review a commercial lease?
Absolutely — the cost of a few hours of attorney time reviewing a 5–10 year lease is trivial compared to the potential savings from one negotiated clause.
⚖️
Devon Warner III
Managing Attorney — Warner Legal Group
Devon Warner III is a third-generation Los Angeles real estate attorney with 25+ years of experience and a USC Gould School of Law degree. Contact Warner Legal Group at (213) 400-7800 or schedule a consultation online.