How are real estate leases regulated?

Residential real estate and rental agreements are generally governed under a separate body of statutory law to commercial leases.  Landlord-tenant residential statutes attempt to protect the rights of tenants and set forth obligations of landlords, while commercial statutory law tends to presume that parties in commercial transactions are sophisticated enough to look out for their own best interests.

Residential leases are typically highly-regulated, provide tenants cost protection and generally cannot be amended by agreement between the landlord and tenant.  In a residential lease, the landlord is also often held responsible for maintaining the property and for injury that occurs to tenants and their guests in common areas – halls, walkways or recreational areas.

It may be possible for a tenant to negotiate a commercial lease with rental caps, which limit the amount the tenant must pay.  In a commercial lease, the tenant is usually responsible for maintaining the property and injury that occurs on the property, unless the lease explicitly covers maintenance and insurance, as in a gross lease.

Also, cost protection may be negotiated in commercial leases to limit increases in insurance premiums and maintenance expenses as well as any new taxes or an increase in taxes beyond a certain point.  The tenant’s right to sublease property must also be agreed.