Residential & Commercial Lease

It is important to know the differences between a residential and commercial lease because both are treated differently under the law. The distinctions will set out certain rights and obligations for both parties involved in the contract.

A residential lease is most often between a landlord and an individual tenant or family. The agreement is to provide a living arrangement. It is usually set up to include a monthly payment, but not always. The term varies from month-to-month, to a term of several years, although one-year leases are perhaps the most common.

These types of leases usually apply to houses, apartments, townhouses, or condos. The location is generally not used for profit. However, some areas do permit residences to run a business out of their home.

Commercial leases involve a contract between a landlord and a business. The business can be a sole proprietorship or a corporation. The purpose of the arrangement is to provide space so that the business can sell goods and/or provide services. The goal for the company is to use the area to generate a profit. It is not designed for sleeping or to meet the residential needs of a business owner or it’s employees.

Commercial spaces are usually locations such as:

• Warehouse
• Office space
• Strip Malls
• Stand-alone structures.

The rent that the tenant pays is usually based on the square footage of the property. Some agreements also contemplate that they will charge a portion of the business’ gross sales over a specific period as well. Commercial leases are also often much longer in duration.

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