Your Actual Exposure: $290,000

A $6,000/mo general lease doesn't create $6,000/mo in liability. It creates $290,000 in total exposure across rent, personal guaranty, restoration, and every other clause your landlord drafted to protect themselves — not you.

Where $290,000 Comes From

Remaining Rent$108,000
Personal Guaranty$108,000
CAM Charges$18,000
Restoration$25,000
Legal Fees$30,000
Holdover$36,000
Late Fees$15,000
Total Exposure$290,000

What Most People Miss

Rent acceleration. Many commercial leases allow the landlord to demand all remaining rent immediately upon default — not just the missed months. A default on month 25 of a 36-month lease means $66,000 immediately due.

Key Risks in This Scenario

  • Landlord can accelerate all remaining rent — entire balance due immediately
  • Rent acceleration triggers personal guaranty enforcement immediately
  • Landlord's duty to mitigate may be limited — they don't have to re-lease at your rate

How to Reduce Your Exposure

  • Negotiate in advance with the landlord before missing a payment — proactive workout is always better than default
  • Explore sublease options before the lease enters default status

Frequently Asked Questions

What happens when a commercial lease enters default?
The landlord issues a notice of default, typically requiring cure within 3-10 days for non-payment. If not cured, they can declare the tenant in breach, pursue eviction, and accelerate all remaining rent obligations.
Can a landlord accelerate all remaining rent upon default?
If the lease includes an acceleration clause, yes. The entire remaining balance becomes immediately due. This converts a $6,000/month cash flow problem into a $108,000 lump-sum liability.
Does the landlord have to find a new tenant to replace me?
Most states require landlords to make 'reasonable efforts' to mitigate damages by re-leasing. But they can re-lease at any rate, and you're responsible for the difference plus their re-leasing costs.
What is a workout agreement with a landlord?
A workout is a negotiated modification — temporary rent reduction, deferred payments, or lease restructure — that avoids formal default. Landlords often prefer workout to eviction because eviction takes 3-6 months and costs $10,000-$25,000 in legal fees.
Can I file for bankruptcy to stop a lease default?
Chapter 11 or Chapter 7 can create an automatic stay, temporarily stopping eviction proceedings. But the lease is an executory contract — the bankruptcy trustee must decide to assume or reject it. See bankruptcy-lease-proceedings scenario for more detail.