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Residential & Commercial Tenants: Do Not Treat Them the Same

All leases are not created equal. Commercial leases are generally governed by the specific terms of the lease agreement between landlord and tenant. Residential leases, on the other hand, are governed by the specific terms of the lease agreement and by certain statutory terms that are automatically merged into every residential lease/occupancy. Generally speaking, residential tenants have considerably more rights than commercial tenants.  Some of the important distinctions that landlords should be aware of are identified below:

Evictions 

Commercial landlords have rights of self-help; they can, under proper circumstances, simply lockout non-paying tenants. Residential landlords, however, have no such remedy. The Virginia Code provides that landlords may not recover or take possession of residential dwelling units unless by judicial process.  In addition, while a commercial landlord can immediately file for eviction if a tenant does not pay rent (subject to the terms of the lease), a residential tenant must first be served with a 5 day “pay or quit” notice.  We generally recommend that commercial landlords provide a similar notice, even if not required by the lease.

Duty to Maintain

A commercial landlord has no duty to maintain the premises during the lease term.  Of course, both commercial landlords and tenants can, and often do, specifically contract to impose a duty to on the landlord to make certain repairs, but no such duty is implied in law. Conversely, every residential landlord has an affirmative to maintain and repair the premises throughout the term of the lease to keep it in a “fit and habitable” condition. A residential landlord must keep all common areas in a clean and safe condition, must maintain in safe working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances, and must supply running water and reasonable amounts of hot water at all times.  In some cases these duties can be transferred to the tenant by written agreement, but only if done for a “good faith” purpose (something other than just an attempt by the landlord to evade his obligations).

Security Deposits

In commercial settings, the amount and disposition of security deposits are generally governed by provisions of the lease. The lease will spell out for what purposes it can be used by the landlord, and when and how the security deposit is to be returned to the tenant. Residential landlords, on the other hand, must comply with the Virginia Code, which provides detailed procedures and rules governing the use of residential security deposits. The Virginia Residential Landlord and Tenant Act (which does not apply to all residential landlords) mandates that a residential security deposit cannot exceed more than two month’s rent; and the landlord must provide interest on the security deposit payable to the tenant upon termination of the lease (if the deposit is kept for over thirteen months).

The residential landlord may apply the security deposit only to the payment of accrued rent (with attendant late charges), and to offset damage to the premises caused by the tenant. The landlord must inspect the premises for damage within 72 hours from the time the tenant vacates, and the tenant has a right to be present during the inspection. After making deductions for damage, the landlord must return the remaining portion of the security deposit within thirty days after the termination of the tenancy, along with a written itemization of the damages to which the deposit was applied. If the landlord fails to comply with any of these provisions, the tenant may recover from the landlord the security deposit plus any actual damages and reasonable attorney’s fees.