Commercial Lease Checklist for Michigan

A commercial lease is usually the largest contract a small business signs, and for a landlord it sets the income and the risk on a building for years. This guide walks through the parts of a Michigan commercial lease that deserve a careful look before anyone signs, whether you are the tenant or the owner.

Start With the Basics: Parties, Premises and Term

Check that the tenant is named exactly as it appears in state records. If the business is an LLC or corporation, the entity should sign, not the owner personally, unless a personal guaranty is intended.

The premises description should match reality. Look at how square footage is measured, because rent and shared costs are often calculated from it. Confirm which parking, signage, storage and common areas come with the space.

Then look at the term. Many leases distinguish between the date the lease is signed, the date the space is delivered and the date rent begins. If build-out or permits are needed first, those dates matter a great deal. Michigan’s statute of frauds also matters here: a lease for longer than one year must be in writing and signed by the party making the lease, or it may be void.

Rent Is More Than the Base Number

Base Rent and Increases

Confirm the starting rent, when it is due, any grace period and how it increases over time. Increases tied to an index or to “market rent” need a clear formula and a clear process for resolving disagreements.

Operating Expenses, Taxes and Insurance

Many commercial leases are “net” leases, meaning the tenant pays a share of property taxes, insurance and common area maintenance in addition to base rent. Ask for an estimate of these charges and a history from prior years. Look for what is excluded, such as major roof or structural replacement, the landlord’s financing costs and costs caused by other tenants. Tenants often ask for a cap on increases in controllable expenses and a right to review the landlord’s records. Landlords want the definitions broad enough to recover the real cost of running the building.

Security Deposit and Personal Guaranty

Michigan’s Truth in Renting Act and residential security deposit rules apply to residential tenancies, not commercial ones. In a commercial lease, the deposit, how it is held and when it comes back are set mostly by the contract, so spell them out. If the landlord asks for a personal guaranty, read it as carefully as the lease itself. Look at whether it covers the full term, whether it ends or reduces after a period of on-time payments and whether it survives an assignment.

Use, Zoning and City Approvals

The use clause says what the tenant may do in the space. Too narrow, and the tenant cannot adjust its business. Too broad, and the landlord may face conflicts with other tenants or with zoning. Before signing, confirm that the intended use is allowed at that address under local zoning.

In Detroit, the Buildings, Safety Engineering and Environmental Department notes that changing a building’s use usually requires a permit, and that some uses need a Special Land Use Grant approved after a public hearing. If the tenant’s plans depend on a permit, a license or a zoning approval, the lease should say who is responsible for getting it, what happens if it is denied and whether the tenant can terminate.

Repairs, Maintenance and Build-Out

The lease should be clear about who maintains and replaces the roof, structure, parking lot, HVAC, plumbing and electrical systems. “Tenant maintains the premises” can mean a tenant pays to replace a rooftop unit near the end of its life. If the tenant is responsible for systems, ask for their age and condition.

For build-out, look at who designs and performs the work, who pays, whether there is a tenant improvement allowance and when it is paid. Confirm who owns the improvements at the end of the term and whether the tenant must remove them and restore the space.

Assignment, Subleasing and Getting Out

Under Michigan law, a tenant is generally presumed to have the right to assign or sublet unless a statute or the lease restricts it. That is why most commercial leases include a consent clause. Tenants usually ask that consent not be unreasonably withheld and that transfers to an affiliate or a buyer of the business be allowed.

Look at renewal options too. Note the deadline and method for exercising them, and how rent will be set for the renewal term. An option that leaves rent “to be agreed” invites a dispute.

Default and Remedies

Every lease defines what counts as a default and how much notice and time to cure each side gets. Read these provisions from both directions: what happens if the tenant pays late, and what the tenant can do if the landlord fails to make repairs.

If rent goes unpaid, Michigan law provides a court process called summary proceedings. A landlord may serve a written demand for possession for nonpayment, and if the tenant has not paid or moved out within 7 days, the landlord may file in district court. Accelerated rent that becomes due only because of a breach is not counted as rent due for this purpose. Michigan law expects landlords to recover possession through the court process rather than through lockouts or other self-help, so lease language that suggests otherwise deserves a second look.

Insurance, Indemnity and Casualty

Check what insurance each side must carry, the required limits and whether each must name the other as an additional insured. Indemnity clauses decide who pays when someone is injured or property is damaged, so make sure they are balanced. Finally, read the fire and casualty clause: who rebuilds, whether rent stops during repairs and when either side may terminate.

A Pre-Signing Checklist

Correct legal names for both parties
Accurate premises description and measurement method
Clear delivery and rent start dates
Base rent, increases and an estimate of operating expenses
A use clause that matches zoning and your plans, with approval contingencies
Repair and replacement duties for every major system
Assignment, subleasing and renewal terms
Default, insurance and casualty provisions, plus any personal guaranty

A lease review before signing costs far less than a dispute after. If you would like Kyle to read your lease line by line, you can request a consultation or learn more about our commercial leasing work.

Frequently Asked Questions

Does a Michigan commercial lease have to be in writing?

A lease for longer than one year must be in writing and signed by the party making the lease under Michigan’s statute of frauds. Shorter leases can be oral, but a written lease is far easier to enforce and avoids disputes about what was agreed.

Can a commercial landlord change the locks if rent is late?

Michigan law expects landlords to recover possession through the district court summary proceedings process rather than self-help such as lockouts. Landlords should follow the notice and court steps, and tenants facing a lockout should get legal advice quickly.

Can I sublease my commercial space?

Michigan law generally presumes a tenant can assign or sublet unless the lease or a statute restricts it. Most commercial leases do restrict it, usually by requiring the landlord’s consent, so the answer depends on your lease language.

Sources

This article is general information about Michigan law, not legal advice. Every lease and every situation is different.

This article is general information about Michigan law, not legal advice for your situation. Reading it does not create an attorney-client relationship.

What to Check Before You Sign a Commercial Lease in Michigan