AI Contract Review - Lease Easy AI

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Risk Score

Moderate Risk Detected

This lease contains some unfavorable terms that may warrant negotiation before signing.

2 Critical 4 Warnings 3 Notes

📋 Key Terms Extracted

AI Verified

Lease Type Commercial Office

Term 5 Years

Commencement March 1, 2025

Expiration February 28, 2030

Base Rent $12,500/month

Escalation 3% annually

Security Deposit $25,000 (2 months)

Square Footage 5,200 SF

Renewal Option One 3-year term

Termination Option None

⚠️ Risk Analysis

🚨

CRITICAL

Personal Guarantee Required

Section 14.2 requires a personal guarantee from company principals for the full lease term. This creates significant personal liability exposure.

📍 Found in: Section 14.2, Page 12

💡 Recommendation: Negotiate to remove personal guarantee or limit to first 12-24 months. Consider offering additional security deposit instead.

🚨

CRITICAL

No Early Termination Clause

This lease contains no early termination option. You would be liable for all remaining rent if you need to exit early.

📍 Not found in document

💡 Recommendation: Request early termination option after Year 2 or 3 with 6-month notice and termination fee (typically 3-6 months rent).

⚠️

WARNING

Unlimited CAM Pass-Through

Section 5.3 allows landlord to pass through all operating expenses with no cap. CAM charges could increase significantly year-over-year.

📍 Found in: Section 5.3, Page 6

💡 Recommendation: Negotiate a CAM cap of 3-5% annual increase, or request a gross lease structure.

⚠️

WARNING

Broad Assignment Restriction

Section 11.1 prohibits assignment or subletting without landlord consent, which can be "withheld in landlord's sole discretion."

📍 Found in: Section 11.1, Page 10

💡 Recommendation: Modify to "consent shall not be unreasonably withheld" and add explicit right to assign to affiliates or in connection with merger/acquisition.

⚠️

WARNING

Above-Market Rent

Base rent of $28.85/SF is approximately 12% above current market rates for Class A office in this submarket ($25.70/SF average).

📍 Calculated from: Section 3.1

💡 Recommendation: Negotiate rent reduction to market rate, or request additional concessions like free rent (2-4 months) or TI allowance ($15-20/SF).

⚠️

WARNING

Relocation Clause

Section 18.4 allows landlord to relocate tenant to "comparable space" with only 60 days notice.

📍 Found in: Section 18.4, Page 15

💡 Recommendation: Remove clause entirely, or add protections: comparable size AND quality, no relocation in first 2 years, landlord pays all moving costs.

ℹ️

INFO

Renewal Rent Not Specified

Renewal option exists but renewal rent is "to be negotiated at fair market value" which creates uncertainty.

📍 Found in: Section 2.4, Page 3

💡 Recommendation: Add cap on renewal rent increase (e.g., max 10% over final year rent) or define fair market rent determination process.

ℹ️

INFO

Insurance Requirements High

Required liability coverage of $5M may exceed typical requirements for this space type.

📍 Found in: Section 9.1, Page 8

💡 Recommendation: Verify with your insurance broker. Standard requirement is typically $1-2M for office space of this size.

ℹ️

INFO

No Audit Rights for CAM

Lease does not include tenant's right to audit landlord's CAM calculations.

📍 Not found in document

💡 Recommendation: Add right to audit CAM charges annually. If discrepancy exceeds 3%, landlord should pay audit costs.

📊 ASC 842 Classification Analysis

Operating Lease

Based on the extracted terms, this lease would be classified as an Operating Lease under ASC 842.

Classification Test Results:

Criterion	Test	Result
Transfer of Ownership	Does lease transfer ownership at end?	✗ No
Bargain Purchase Option	Is there a bargain purchase option?	✗ No
Lease Term	Is term ≥ 75% of economic life?	✗ No (13%)
Present Value	Is PV ≥ 90% of fair value?	✗ No (45%)
Specialized Asset	Is asset specialized with no alternative use?	✗ No

No criteria met → Operating Lease

📝 Missing Standard Clauses

❌

Force Majeure / Pandemic Clause

No provision for rent abatement or termination rights in case of pandemic, natural disaster, or government-mandated closure.

❌

Co-Tenancy Clause

No protection if anchor tenants leave or building occupancy falls below threshold.

❌

Exclusivity Clause

No restriction on landlord leasing to competing businesses in the building.

❌

SNDA (Subordination, Non-Disturbance, Attornment)

No protection if landlord's lender forecloses on the property.

🤖 AI Contract Review

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AI Analyzing Contract...

Moderate Risk Detected

📋 Key Terms Extracted

⚠️ Risk Analysis

Personal Guarantee Required

No Early Termination Clause

Unlimited CAM Pass-Through

Broad Assignment Restriction

Above-Market Rent

Relocation Clause

Renewal Rent Not Specified

Insurance Requirements High

No Audit Rights for CAM

📊 ASC 842 Classification Analysis

Classification Test Results:

📝 Missing Standard Clauses

✅ Negotiation Checklist