Written for owners of independent stores and small chains in the US: convenience and grocery, liquor and smoke shops, fashion, gifts, hardware, and garden and farm stores.
The short version
- Compare offers on total occupancy cost.Base rent plus your share of taxes, insurance and CAM, per square foot a year. The rent on page one is only part of it.
- Negotiate CAM, gross sales and the guaranty.Cap controllable CAM with an audit right, exclude sales tax and returns from gross sales, and cap the guaranty with a burn-off.
- Calendar every deadline the day it arrives.CAM audit windows are often short, and default notices run in days. If a notice arrives, call a state-licensed landlord-tenant attorney before its deadline runs.
The base rent on the first page of a store lease is only part of what you pay. Under an NNN lease you pay base rent plus your share of the property's taxes, insurance and common area maintenance (CAM). Compare offers, whether NNN, modified gross or gross, on total occupancy cost per square foot a year.
CAM: an estimate now, a bill later
CAM is paid monthly as an estimate and reconciled after the year. Negotiate:
- A cap on controllable CAM, with taxes, insurance and utilities outside it.
- Exclusions for capital repairs, leasing costs and vacant space.
- A fixed administrative fee.
- An audit right with a deadline, often 90 to 180 days after the statement, and landlord-paid audit costs if the overcharge passes a set percentage.
| Controllable CAM, capped at 5% over last year's $9,000 | $9,450 |
| Taxes and insurance, outside the cap | $3,800 |
| CAM actually owed for the year | $13,250 |
| Balance to pay now | $3,650 |
$13,250 minus $9,600 of estimates paid. Dispute the other $950 ($10,400 of controllables billed minus the $9,450 cap) and request the backup inside the audit windowThe landlord billed $14,200 in total.
Percentage rent and the breakpoint
Percentage rent is base rent plus a percentage of gross sales above a breakpoint. The natural breakpoint is base rent divided by the percentage. For example, $60,000 of base rent at 6% gives a natural breakpoint of $1,000,000 of sales; at $1,150,000 of sales, percentage rent is 6% of $150,000, or $9,000.
Every sale wrongly counted above the breakpoint costs you the percentage rate on it.
Protections to ask for
- Co-tenancy: reduced rent or a right to leave if anchors or occupancy fall.
- An exclusive use clause, limits on relocation and a sales kick-out.
- A go-dark right instead of a continuous-operation covenant.
- An SNDA, so a lender's foreclosure does not end your lease. Your estoppel answers bind you, so check them.
- A capped guaranty with a burn-off, never an unlimited one. New York leases often use a 'good guy' guaranty that ends when the tenant leaves on proper notice.
- No radius restriction you cannot live with.
If a notice arrives
Default notices are short
California: a 3-day notice to pay or quit, excluding weekends and holidays. Texas: at least 3 days' written notice to vacate before filing, unless the lease sets another period; for suits filed from January 1, 2026, a landlord ending possession only for nonpayment, against a tenant who was not late before, must give a notice to pay rent or vacate. A Texas landlord may change the locks on a commercial tenant in arrears but must post where the new key is available during business hours. New York: a 14-day rent demand, and a tenant served a notice to cure seeks a Yellowstone injunction before the cure period ends. Florida: a 3-day demand. As of Oct 2026.
Cal. CCP 1161; Tex. Prop. Code 24.005 and 93.002; N.Y. RPAPL 711; Fla. Stat. 83.20; Fla. Stat. 83.232
- Calendar the deadline.The same day the notice arrives.
- Call a state-licensed landlord-tenant attorney.Before the deadline runs. In New York, that means inside the cure period.
- Keep paying undisputed rent.Pay what is not in dispute while the rest is resolved.
- In Florida, pay into the court registry.Once sued, a tenant who does not pay the rent into the court registry waives its defenses, unless it pleads payment.
The other long contract: the card terminal lease
A card terminal equipment lease is often 48 to 60 months, non-cancelable, with a third-party lessor, and it survives a processor switch. For example, a gift shop on a 60-month lease at $89 a month that switches processors after 12 months still owes 48 x $89 = $4,272. Ask for month-to-month processing terms and the full fee schedule.
The CAM audit window is often only 90 to 180 days after the statement. Put it on the calendar the day the reconciliation arrives.
Asked in Greymill
Natural breakpoint (where percentage rent starts): $60,000 / 6% = $1,000,000
As drafted: 6% x ($1,150,000 minus $1,000,000) = $9,000
Without sales tax: 6% x ($1,070,000 minus $1,000,000) = $4,200
Every dollar wrongly counted above the breakpoint costs you 6 cents in rent.
Ask for gross sales to exclude sales tax, returns, employee sales, gift card sales until redeemed, and online orders returned in store.
Then decide on purpose whether online orders picked up in store count.
Also check before you sign: a cap on controllable CAM (common area maintenance) with an audit right, and a capped guaranty with a burn-off, so it shrinks or ends over time. Never an unlimited one.
I can redraft the definition now and list the other clauses worth pushing back on.
Ask it about your own business
Paste this into Greymill with your own figures, and Contracts & Disputes works it through for your business.
I run a shop in [state], in the US. Here is the lease, or letter of intent, for [location]: [paste]. Abstract it: term and options, base rent and escalations, CAM estimate, cap and audit window, percentage rent and breakpoint, co-tenancy and go-dark, exclusive and radius, assignment, guaranty and burn-off, SNDA status and every notice date. Then flag the clauses I should push back on.
More for shops and physical retail in the US
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Open the interactive lesson · Every shops and physical retail lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- CRT overview; Form CR-Q1 instructions 2026-27 (The store lease)
- Civ. Code 1950.9, 827 (The store lease)
- CCP 1161, 1161.1; Civ. Code 1951.2, 1951.4 (Default and commercial eviction by state)
- Prop. Code 24.005 as amended by SB 38; 93.002 (Default and commercial eviction by state)
- RPAPL 711; Holy Properties v. Kenneth Cole, 87 N.Y.2d 130 (1995); First National Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630 (1968) (Default and commercial eviction by state)
- Fla. Stat. 83.20, 83.05, 83.232 (Default and commercial eviction by state)
- FOMC statement; H.15 (Show the MATH, source the MARKET)
- 16 CFR 436.5(t), (u) (Contract red flags)
- 21 CFR 1140.14(a)(2) (Deliverables in house style)