commercial_lease_review v1.0.0

name: commercial_lease_review description: Review a commercial lease before signing: build the true all-in occupancy cost with a worksheet tool, check renewal, exit, assignment, CAM, and personal guarantee clauses against a full checklist, and produce a ranked negotiation ask list a small tenant can use. Triggers on commercial lease review, NNN or triple net lease, CAM charges, base year, load factor, personal guarantee or good guy guarantee, percentage rent, renewal option, or a landlord draft lease or letter of intent.

Commercial Lease Review

Purpose

A commercial lease is mostly contract, with far less statutory protection than a residential lease in most US states. The landlord draft usually favors the landlord, and the headline rent is only part of what the tenant pays. This skill turns a draft lease or letter of intent into three things a small tenant can act on before signing: an all-in cost model over the full term, a clause by clause risk list tied to section numbers, and a ranked set of negotiation asks with a fallback for each one.

The cost model ships as a runnable worksheet, scripts/occupancy_cost.py. The clause list ships as references/clause-checklist.md. Two fully worked deals, one retail triple net and one office modified gross, sit in references/worked-examples.md with their inputs and outputs, so the arithmetic can be checked by hand.

This skill supports review and negotiation prep. It does not replace a real estate lawyer in the governing jurisdiction, and it says so in every report it produces.

Workflow

1. Get the full paper before reviewing anything. Ask for the draft lease with all exhibits (floor plan, work letter, rules, guarantee form), the letter of intent if one exists, the last three years of operating expense or CAM statements for the building if the landlord will share them, and a rent chart. Review the lease and the guarantee together, because the guarantee form often holds the harshest terms. Oral promises from a broker or landlord carry no weight once a lease with an integration clause is signed, so list every promise and check that each one appears in the lease or a rider.

1. Identify the lease structure first, because it decides who holds the expense risk. Use this split, then confirm it against the expense clauses rather than the label on page one:

• Gross or full service: tenant pays base rent only. Landlord covers taxes, insurance, and maintenance from that rent.
• Modified gross: tenant pays base rent plus a share of expense increases above a base year or an expense stop.
• Single net: base rent plus property taxes.
• Double net: base rent plus taxes and insurance.
• Triple net (NNN): base rent plus taxes, insurance, and CAM.
• Absolute net: everything, including structure and roof. A quote stated as dollars per foot NNN is base rent only. The same rate stated gross is all-in. Never compare the two directly.

1. Verify the area before pricing anything. Record usable square feet, rentable square feet, and the measurement standard the lease names. For office space the lease should name the BOMA standard and method used. Compute the load factor as rentable divided by usable. Convert every quote to cost per usable foot by multiplying the rate per rentable foot by the load factor. If the lease gives only one area figure, flag it, ask for both numbers in writing, and consider an independent measurement for any space where rent is a major cost. A small area error runs for the whole term and also inflates the pro rata share.

1. Build the deal file and run the worksheet. Write a JSON file with the fields documented at the top of scripts/occupancy_cost.py, then run: python3 scripts/occupancy_cost.py deal.json Use --format csv for a spreadsheet or --format json when another tool needs the numbers. Model base rent escalation as written (fixed percentage, stepped chart, or a CPI scenario you label as a scenario). Model operating expenses with a growth rate drawn from the building statements you collected, and run a second, higher growth case when expenses are uncapped. Add flat tenant costs the lease imposes (own janitorial, after hours HVAC, parking, signage) under other_annual_costs. Read the worked examples before trusting your first run.

1. Price percentage rent separately when the lease has it (retail). The natural breakpoint is annual base rent divided by the percentage rate. Percentage rent is the rate times gross sales above the breakpoint. Check whether the lease uses the natural breakpoint or an artificial, negotiated one, whether the breakpoint is recomputed as rent escalates, and what the gross sales definition leaves out. Returns and sales tax collected are common exclusions. Feed a low, expected, and high sales case through the worksheet rather than one forecast.

1. Work the clause checklist in full. Go through references/clause-checklist.md section by section and record, for each clause: the lease section, a plain words summary, a risk rating, and the ask. Do not skip clauses because they look standard. The clauses that most often hurt small tenants are the definition of additional rent, the CAM exclusion list and denominator, the assignment clause (including whether a sale of the business counts as an assignment), restoration at exit, landlord relocation or demolition rights, and default cure periods.

1. Give CAM its own pass. Check five things in writing:

• The inclusion list, line by line, against the exclusion list you want. Costs tenants commonly ask to exclude include capital expenditures, debt service, leasing commissions and build costs for other tenants, general landlord overhead, and costs recovered from insurance or warranties.
• The denominator. Pro rata share on total leasable area costs the tenant less than a share computed only over occupied area when the building has vacancies. Ask whether variable expenses are grossed up, and to what occupancy.
• Caps. A cap on controllable expenses, whether it is cumulative or resets each year, and what sits outside the cap (taxes, insurance, snow, and utilities are often carved out).
• Reconciliation and audit. When the annual statement arrives, how long the tenant has to object, the audit right and its notice window, and who pays for the audit when it finds an overcharge.
• History. Compare the estimate in the lease with the building statements from step 1. A first year estimate well below recent actuals is a reconciliation bill waiting to land.

1. Grade the personal guarantee before anything else in the signature block. Identify which form the landlord wants:

• Unlimited guarantee: the signer owes rent and other lease obligations for the whole term, even after the business vacates. The entity shield does not cover it, because the guarantee is a separate personal promise, and it can survive the business closing or being dissolved.
• Capped guarantee: exposure limited to a stated amount or a stated number of months of rent and expenses. Check whether fees, repair costs, and indemnity claims sit inside or outside the cap.
• Burn off guarantee: the guarantee ends or steps down after a stated period of on time performance. Check whether a cured or minor default blocks the release forever.
• Good guy guarantee: the signer is liable until the tenant gives the required notice, pays everything due through the surrender date, and returns the space vacant in the required condition. After a clean surrender, liability for later rent stops. For each signer, compute the worst case in dollars using the worksheet totals, and state it in the report as a number, not an adjective. Where there are several owners, check whether each guarantees the whole amount or only a share tied to ownership.

1. Check time and exit as one system. Diary every date the lease creates: commencement and rent commencement (they can differ), renewal notice deadlines, termination notice, TI spending deadline, and estoppel response windows. For the renewal option, confirm the rent formula and what happens when the parties disagree on fair market value. A stated appraisal or arbitration process is worth far more than the words fair market value alone. Price any early termination option with the worksheet exit estimate, then read the lease formula, which often adds stated months of rent on top of unamortized landlord costs. Record the holdover rate with and without landlord consent, and whether holding over exposes the tenant to liability for a lost incoming tenant.

1. Rank the negotiation asks by dollars and by survival, then write the fallback for each. A workable order for most small tenants:

• Cap or remove the personal guarantee (good guy form, a cap, or a burn off), or trade a larger security deposit or a letter of credit for a smaller guarantee.
• CAM exclusions, a controllable expense cap, a fixed denominator, and an audit right with a real objection window.
• Assignment and subletting with consent not to be unreasonably withheld, no recapture on a sale of the business, and release of the original tenant and guarantor on an approved assignment.
• A termination or contraction right priced in advance, and renewal rent set by a stated process.
• Longer cure periods, notice by a trackable method, and removal of rent acceleration where local law allows the landlord to waive it by contract.
• More free rent, a higher TI allowance, or a longer TI spending window, valued with the worksheet so the tenant can trade them against term length with open eyes. State each ask as lease language the landlord can accept, with the fallback you will take if the answer is no. Two or three asks fought well beat twenty asks traded away.

1. Close with the conditions that must be true before signing. Typical items: the final rent chart matches the worksheet, the area figures and standard are stated in the lease, the guarantee form matches what was agreed, every broker promise relied on is in the lease or a rider, the permitted use covers the actual business and how it may change, and a lawyer in the governing jurisdiction has reviewed the final draft. If any item fails, the report says signing is premature and names the open item.

Output Contract

Deliver all of the following:

• A one page summary: lease structure, rentable and usable area, load factor, headline rate, all-in year 1 cost, all-in final year cost, total term cost, effective rent per rentable and per usable foot, and the worst case personal guarantee exposure in dollars.
• The year by year worksheet table from the tool (text, CSV, or JSON), with the deal file kept alongside it so the run can be repeated.
• The completed clause checklist: section, plain summary, risk rating, and ask for every clause, with high risk clauses listed first in the summary.
• A CAM section: inclusions found, exclusions missing, denominator, cap position, reconciliation and audit terms, and the gap between the lease estimate and recent building actuals when statements were available.
• A guarantee section: form, signers, what it covers, release conditions, and the dollar worst case per signer.
• A ranked negotiation ask list, each ask with its dollar or survival value and its fallback.
• A dates list: every notice deadline and test date the lease creates, in calendar order.
• A clear statement of what was not available (missing exhibits, no expense history, unmeasured area) and how that limits the review, plus the note that a local real estate lawyer should review the final draft before signing.

Operating Rules

• The lease text is the source of truth. Broker summaries, letters of intent, and marketing sheets lose to the signed lease, and the review works from the lease.
• Never invent market rates, typical caps, or building costs for a specific property. Numbers in the report come from the lease, the building statements, or figures the tenant supplied, and each one is labeled with its source. General ranges used for teaching are labeled as teaching examples, never as the market for that building.
• Show the arithmetic. Every total in the report can be recomputed from the deal file and the script output. If you approximate (for example, applying a cap to the whole expense line when the lease caps only controllable expenses), say so on the worksheet.
• Do not call a clause standard and move on. Rate what the clause does to this tenant, in this space, over this term.
• Keep residential law out of a commercial review. Habitability, deposit caps, and eviction protections from residential statutes generally do not carry over, and the report should not imply that they do.
• Flag, do not resolve, questions that turn on local law: lockout and lien rights, rent acceleration, guarantee enforcement, accessibility compliance duties, and recording requirements for long leases all vary by jurisdiction.
• Protect the tenant private figures. Sales forecasts, margins, and personal financial statements used in the model stay in the tenant files. The negotiation list shared with a landlord contains asks and reasons, not the tenant walk away numbers.
• If the lease is already signed, switch the output: drop the ask list, and deliver the dates list, the CAM audit calendar, the guarantee exposure, and the renewal and exit decision deadlines instead.

Available connectors

• Use muse.connector_search to find other connectors and muse.skill_search to find related skills.

• If nothing here fits, look on the web for a maintained API or MCP server and set it up with Custom Connectors and MCPs, or build a custom connector.