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Important Differences Between Commercial and Residential Leases

December 29, 2017

In New York, there are a number of differences between commercial and residential leases that are worth noting.  As a landlord, your duties and obligations to the tenant may be substantially affected by the nature of the lease (commercial/residential).

Have questions or concerns about your lease agreement with a tenant?  Call (212) 374-9790 today to connect to one of the experienced New York real estate attorneys here at Griffin Alexander, P.C.

Fundamentally, commercial leases tend to be saddled with fewer implied or built-in rights.  The tenants (in the commercial context) are assumed to be more sophisticated and to have more resources at their disposal such that they can guard their own interests more carefully by simply negotiating their contract accordingly.  By contrast, residential leases are linked to tenant protections that are not otherwise available to the commercial tenant.

Let’s take a look at some of the major differences.

Landlord Duty to Mitigate

When a tenant breaks their lease and prematurely vacates the premises, you are entitled to sue and recover damages for the unpaid rent remaining on the lease.  The duty to mitigate your losses may vary, however.  In New York, as in many other states, residential landlords have a duty to mitigate the damages they sustained as a result of the tenant vacating — by finding a replacement tenant.  Commercial landlords, by contrast, do not have a duty to mitigate.  A commercial landlord need not find a replacement tenant, and may sue and recover for the full amount of the unpaid rent.

Implied Warranty of Habitability

The implied warranty of habitability applies to all residential tenants in the state of New York, regardless of whether the lease agreement includes any reference to such a warranty.  The warranty of habitability guarantees a residential tenant to reasonably safe, clean, and comfortable living conditions.  This may impose various duties on a landlord to regularly maintain common areas and correct property damage that affects their tenants.

The implied warranty of habitability does not apply to commercial tenants, however.  If the commercial tenant would like to impose positive duties on the landlord to maintain the premises in a particular condition, then such duties must be explicitly provided for in the lease agreement.

Rent Control Laws

In New York, only residential properties have the potential to be rent-controlled.  Commercial properties are not eligible for rent control.  After the expiration of a lease, a New York landlord may choose to raise the rent on the property by any amount they wish, with no limitations (except what is provided for in the lease agreement).

In New York, as in other states, there are a number of different factors that can affect your duties and obligations with regard to a tenant and their lease.  Whether you are a residential landlord or a commercial landlord, it’s important that you work with an attorney who has experience handling New York landlord tenant law.  Let the skilled attorneys at Griffin Alexander, P.C. assist you!

Call (212) 374-9790 to speak with one of our attorneys today.

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