Missouri rules that shape every commercial lease

Missouri law (RSMo 432.010) says a lease for more than one year must be in a writing signed by the person you want to hold to it. The same law says a personal guaranty, which is your own promise to pay if your company cannot, must also be in a signed writing.

Two other laws matter at the end of a lease. The first covers a tenant who stays past the end on purpose, after the landlord demands the space and gives written notice. That tenant owes double the yearly value of the space for the time it stays. The second covers unpaid rent. When rent is due, the landlord has asked for it, and it is still unpaid, the landlord can sue for rent and possession before an associate circuit judge. A lease can add to these rules, but it cannot make them go away.

The terms that decide what the lease really costs

• Rent type. Gross, modified gross, or net. In a triple-net lease, you pay a share of property taxes, insurance and upkeep of shared areas on top of base rent.
• Shared building costs. Which costs you share. Whether big capital repairs are left out. Whether yearly increases are capped. Whether you can audit the landlord’s year-end math.
• Rent increases. Fixed steps, a percentage, or tied to an index.
• Build-out. Who designs and pays for changes to the space, how much the landlord puts toward them, and what happens if construction runs late.
• Repairs and replacement. Roof, structure, parking lot, heating and cooling. In a small retail lease, a duty to replace the HVAC system can cost more than a year’s rent.

The terms that decide your flexibility

• Use and exclusives. A narrow use clause can block you from changing your business later. A retail tenant may want an “exclusive” that stops the landlord from renting to a competitor in the same center.
• Assignment and subletting. Whether the landlord can refuse a transfer for any reason, or only for a good one. Whether selling your company counts as a transfer of the lease. This matters if you may one day sell the business.
• Renewal options. Notice deadlines are strict, and the rent for the renewal term should be clearly defined.
• Relocation and redevelopment. Some landlords keep the right to move you or end the lease early.
• Early exit. A right to leave early, often for a fee, is worth more than a promise to be reasonable later.

The personal guaranty

Most landlords ask the owner of a small tenant company to sign a personal guaranty. Your LLC’s limited liability protects you from company debts you did not promise to pay yourself. A signed guaranty is exactly that kind of promise.

You can often limit a guaranty. Common ways include:

• A cap equal to a set number of months of rent.
• A guaranty that ends after a period of on-time payments.
• A “good guy” guaranty. It ends once you move out and hand back the keys with proper notice.

Each one takes negotiation, and each is easier before you sign the lease than after.

Default, cure and the end of the lease

Read the default section as the page most likely to matter. It sets how much notice you get and how long you have to fix a problem, called the cure period. It says whether the landlord can demand all future rent at once. It says whether the landlord must try to rent the space to someone else, and who pays legal fees. The surrender terms say what shape the space must be in when you leave, and whether you must remove your changes.

Harjot Singh Padda, JD, reviews leases for tenants and writes them for landlords. Mr. Padda gives you a marked-up lease and a short list of issues. He can also negotiate the changes with the landlord’s lawyer. If a lease is already in default or in court, see landlord-tenant disputes.

Common questions

Related reading

• Landlord-tenant disputes
• Commercial real estate transactions
• Buying or selling a business
• Business law practice