The distinction between a “commercial” and a “residential” lease

 

 

1. What is the distinction between a “commercial” and a “residential” lease? How do the differences in use of the leased property impact the terms of the lease? In a commercial lease agreement, should the law seek to protect the interests of the commercial tenant more than the interests of the commercial landlord? Why or why not?
2. Sections 5 and 6, respectively, impose on the commercial tenant the obligation of making repairs to the leased property, and of making alterations and improvements to the leased property. Should the lease impose these obligations on the tenant, or should such obligations be legally imposed on the commercial landlord? Explain your answer.
3. In the default provisions of Section 15, what is the landlord’s duty to “mitigate” damages? Should the landlord be required by law to mitigate? Explain.
4. Sections 2 and 19 discuss the creation of, and the parties’ rights in, the security deposit. Do these rights favor the landlord or the tenant? Is that appropriate? Why or why not?
5. Section 29 requires mediation, followed by arbitration, in lieu of litigation, to resolve disputes. What are the advantages and disadvantages of such a provision? How should mediators and arbitrators be selected?
6. As a businessperson guided by a Biblical worldview, what changes would you make in this lease to make the terms comport more closely to Script?

Sample Solution

  1. The main distinction between a commercial and a residential lease is the use of the leased property. Commercial leases are for businesses, while residential leases are for individuals or families. This difference in use affects the terms of the lease in a number of ways. For example, commercial leases typically have longer terms than residential leases, and they often require the tenant to make more repairs and improvements to the property. Commercial leases also typically have more restrictive provisions, such as those governing the use of the property and the tenant’s right to sublease.

The law does not seek to protect the interests of either the commercial tenant or the commercial landlord more than the other. Instead, the law seeks to balance the interests of both parties. However, there are some cases where the law may give more weight to the interests of one party over the other. For example, the law may be more likely to protect the interests of a commercial tenant if the tenant is a small business or if the lease is for a long term.

  1. Sections 5 and 6 of a commercial lease typically impose on the tenant the obligation of making repairs to the leased property and of making alterations and improvements to the leased property. These obligations are typically imposed on the tenant because the tenant is the one who will be using the property and who will benefit from the repairs and improvements. However, there are some cases where the landlord may be responsible for making repairs or improvements, such as if the repairs are necessary to maintain the property in a habitable condition.

The law does not specifically address whether the lease should impose these obligations on the tenant or on the landlord. However, the law does require that both parties act in good faith and that they comply with the terms of the lease. If the lease does not specify who is responsible for making repairs or improvements, then the parties may need to negotiate an agreement.

  1. In the default provisions of Section 15, the landlord’s duty to “mitigate” damages means that the landlord must take reasonable steps to reduce the amount of damages that the tenant is likely to suffer if the landlord breaches the lease. For example, if the landlord fails to deliver possession of the leased property to the tenant, the landlord must take steps to find another property for the tenant to lease.

The landlord is required by law to mitigate damages because it is unfair to allow the landlord to profit from its own breach of the lease. If the landlord does not take steps to mitigate damages, the tenant may be able to recover more damages from the landlord.

Here are some additional thoughts on these questions:

  • The distinction between commercial and residential leases is important because it affects the rights and responsibilities of the parties to the lease. Commercial tenants typically have more bargaining power than residential tenants, so they are often able to negotiate more favorable terms in the lease.
  • The law does not always protect the interests of either the commercial tenant or the commercial landlord more than the other. However, there are some cases where the law may give more weight to the interests of one party over the other, such as when the tenant is a small business or when the lease is for a long term.
  • The law does not specifically address whether the lease should impose the obligations of making repairs and improvements on the tenant or on the landlord. However, the law does require that both parties act in good faith and that they comply with the terms of the lease.
  • The landlord’s duty to mitigate damages is an important principle of contract law. It ensures that the landlord cannot profit from its own breach of the lease.

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