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How are commercial and residential leases different?

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Both commercial and real estate leases involve obtaining temporary use of a property, but that is where the similarities end. If this is your first time involved in commercial leasing, it is vital that you understand how commercial leasing is different.

Understanding the rights and responsibilities involved with commercial leasing will help you negotiate more effectively with the landlord. According to FindLaw, the reason why commercial leases are so much more complicated is because the terms vary more between commercial properties as compared to residential ones.

What are the main differences between commercial and residential leases? 

A huge difference between commercial and residential leases is that commercial leases offer far few legal protections for the lessee. This is generally because lawmakers and states assume that persons involved with commercial leasing are more knowledgeable and thus require less protection than consumers involved with residential leasing.

However, it is not just the assumptions of lawmakers that make commercial leasing different. Because commercial usage is far more varied than residential usage, the terms, by definition, must be more flexible. For instance, it is likely that you will end up negotiating a longer lease than one year. The lessee often negotiates additional rights to a commercial property that residential lessees do not have; for instance, the right to renovate.

Can I bargain with a commercial landlord? 

Yes. This flexibility of terms in commercial leasing opens up the possibility of bargaining. In fact, it is likely that a commercial landlord will expect you to bargain on the terms.

Depending on your potential needs, you may be able to bargain about the lease length, when rent increases will happen and what the cap on those increases can be and what the security deposit is.