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Key differences between a residential and a commercial tenant

On Behalf of | Jan 2, 2019 | Landlord / Tenant |

Like many other states, California views matters differently when it comes to renting property to an individual as opposed to a business. Individuals are given certain protections that a commercial tenant would not receive. Before renting a commercial property, it would be a good idea to understand some of the differences, especially if a new venture is just entering into this rental market.

Rent control does not exist in the commercial rental market. Having rent capped at a certain amount could give a business an unfair advantage over other, similar businesses. Even so, a property owner may agree to keep the rent at or below a certain amount when the tenant is a public agency. California also specifically prohibits property owners from extorting under-the-table payments or bribes in exchange for a rental property.

Unless a property owner has a good reason, commercial tenants are free to sublet the property. If the landlord objects, the reasons must be in writing and stand up to the scrutiny of the court. Tenants must still receive the property owner’s approval, but that approval cannot be withheld without reasonable objections. If a tenant receives no written response from the landlord regarding the request, that is considered a passive approval.

Another reason that the state does not provide the same protections for a commercial tenant as it does for a residential one is negotiating power. Most commercial leases are heavily negotiated before they are signed, so it is thought that a potential renter has more of a level playing field as opposed to residential lessees. Residential renters often have little to no say in this process, which gives commercial renters a benefit of which they should take full advantage.