Difference Between Commercial And Residential Lease?

Although both commercial and residential leases are written agreements for the use of the property and have some similarities, there are also a number of the important difference between commercial and residential lease. If you are going to make a rental agreement any time soon, you should be aware of the main distinctions between a residential rental agreement and a commercial lease if you work in either or both sectors of the real estate industry.

Commercial lease vs residential lease

ALLOWED AND REQUIRED USES OF PROPERTY

One obvious distinction between the two types of leases is indicated by the terms themselves: one type of lease is for business property, while the other is for residential property.

• Commercial leases apply to locations where goods or services are produced or sold, such as a restaurant, retail shop, warehouse, or workplace. The types of company operations allowed on the premises are typically outlined in the leases. Some industrial leases stipulate specific business days and hours.

• Residential contracts cover areas where people reside, like apartments or homes.

LENGTH OF LEASE

For both types, the lease's duration may vary, but usually speaking:

• Commercial leases typically last for lengthier terms—at least three to five years. When that time frame ends, the lessee frequently has the choice to extend.

• Residential leases usually last one year before transitioning to a month-to-month arrangement.

LEGAL PROTECTIONS

Due in part to the fact that commercial tenants are assumed to be more resourceful and knowledgeable in negotiations and in part because housing is a fundamental need deserving of protection, tenants under a residential lease have several legal protections that do not extend to commercial tenants. States and, occasionally, cities have different laws governing these safeguards. In general, residential tenants are better protected than business lessees from eviction and price increases.

RESPONSIBILITY FOR MAINTENANCE AND REPAIRS

Although the property must be kept in a reasonable state by both kinds of tenants, their responsibilities for major maintenance and repairs vary for commercial and residential leasing.

• In business leases, the bulk of maintenance and repairs are typically covered by the tenant. The lease will specify how the responsibilities will be divided in detail. Typically, the landlord is only accountable for the upkeep of the actual structure and common areas.

• Tenants typically have little accountability for repairs under residential leases. When something in the rental unit breaks, the tenant must inform the landlord or the landlord's property manager. Then, the landlord is in charge of making any necessary adjustments in a timely manner and must guarantee the safety of the rental property.

I hope this outlines the difference between commercial and residential lease for you.