Even though a lease is between a land­lord and ten­ant, there are oth­ers who are not part of the lease but have a con­nec­tion with the land­lord and ten­ant. They might have oblig­a­tions such as main­te­nance or improve­ments. Let’s take a look at them.

The Landlord’s Owners

These are the own­ers of the land­lord if its an entity such as an LLC. They more than likely formed an LLC to pro­tect their per­sonal assets. This means that the LLC is often highly lever­aged and doesn’t have many assets. If the land­lord is an LLC or cor­po­ra­tion and is fund­ing your ten­ant improve­ments, you may want to get a guar­an­tee from their owners.

These are the own­ers of the ten­ant if it’s an entity such as an LLC. The land­lord wants to make sure that it will get its money. Often the ten­ant is either heav­ily lever­aged or thin on assets. The land­lord often requires the tenant’s own­ers to sign per­sonal guar­an­tees. This exposes their homes, sav­ings, cars, and other per­sonal assets to lia­bil­ity for every­thing that’s in the lease. The ten­ant should try to make sure that the guar­an­tee ter­mi­nates if the ten­ant trans­fers the lease to another party, or the ten­ant should try to get more time to make pay­ments and limit the affects of rent accel­er­a­tion on the per­sonal guarantee.


The land­lord often finances the space you’re leas­ing with a loan from the bank. The bank secures the loan with the prop­erty. The bank might want you to con­firm that your lease is enforce­able and that there are no uncured defaults. The bank will want you to sub­or­di­nate your inter­est in your lease to the bank’s inter­est. They’ll want you to acknowl­edge any new land­lord that takes over the prop­erty after a loan default or fore­clo­sure. You’ll want to make sure that none of your lease rights are affected by the landlord’s rela­tion­ship with the bank.


Besides rent, your biggest lia­bil­ity expo­sure is for prop­erty dam­age and any injuries that hap­pen on your leased space, the com­mon areas, park­ing, etc. There is also expo­sure for envi­ron­men­tal issues such as haz­ardous waste. If some­one is injured, prop­erty is dam­aged, or envi­ron­men­tal lia­bil­ity is incurred, your insur­ance and the landlord’s insur­ance should kick into gear.

Most leases include clauses that try to push the landlord’s lia­bil­ity to your insurer. There are waivers of sub­ro­ga­tion, addi­tional insured pro­vi­sions, and pri­mary insured require­ments. You’ll want to make sure that lia­bil­ity is divided appro­pri­ately between you and the land­lord. This includes mutual waivers of sub­ro­ga­tion, mutual addi­tional insured pro­vi­sions, and no pri­mary insured provisions.

Prop­erty Managers

The prop­erty man­ager takes care of the oper­a­tions and main­te­nance of the leased space. You can set their duties and stan­dards in the lease. Bro­kers

The ten­ant or land­lord or both may have bro­kers or nego­ti­ate on their own. These bro­kers can receive hefty fees. Make sure you know who will pay their fees and how much they will be involved in the man­age­ment of the lease.


Some con­trac­tors are bet­ter than oth­ers. Some do bet­ter work then oth­ers. The work often takes longer than antic­i­pated and they will need to be paid. You’ll need to deter­mine how much con­trol you want over the con­trac­tors and their progress. When the lease is done the ques­tion of who owns the improve­ments comes into play.


What hap­pens if your land­lord leases a nearby space to one of your com­peti­tors? It could dam­age your busi­ness. This is some­thing to con­sider if you know your land­lord has other prop­erty to lease. You might want to get exclu­sive rights to oper­ate your busi­ness in an indus­try or location.

Sub­lessors and Assigns

You might out­grow your space or need to move to a smaller space. No mat­ter what you do, you’re on the hook for the total term of the lease. So you might want to sub­lease your space or even assign it. These are two very dif­fer­ent things and you’ll want to make sure you have cer­tain rights with each. For exam­ple, you may want to ask the land­lord for a total release from your oblig­a­tions if you trans­fer the lease to some­one else.

Clients and Customers

You may have hun­dreds, even thou­sands of cus­tomers come and go from your space dur­ing the life of your lease. Hope­fully they will come and go with­out mishap. But slips and falls hap­pen. What if it hap­pens in your space? What if it hap­pens in a com­mon area? What if the landlord’s faulty maintenance causes it? The insur­ance and lia­bil­ity pro­vi­sions need to divide lia­bil­ity for these acci­dents between you and the landlord.


Some­times the gov­ern­ment will take an inter­est in your space. Whether its through inspec­tions, emi­nent domain, or other laws, you’ll want to cover what hap­pens when the gov­ern­ment gets involved in your lease.

Land­lord and Tenant

This is the main rela­tion­ship of the whole lease. The key item is rent, but also includes secu­rity deposits, defaults and accel­er­a­tions. The lease pro­vides a valu­able oppor­tu­nity to set expec­ta­tions between the par­ties and to dis­cuss up front what hap­pens if the lease doesn’t work out.


How will co-tenants use their space? You don’t want a bar next to a child­care cen­ter. You may rely on an anchor ten­ant. What hap­pens if the anchor ten­ant moves or closes its doors? You should mon­i­tor co-tenants to pro­tect co-tenancy rights and require cotenants to be opened for busi­ness when you open for business.