putting coin in blue piggy bank

We recently went in-depth on residential leases and the security deposits renters have to pay, but what about commercial security deposits? Are they treated the same? Are there limitations? Our Long Island, NY commercial landlord-tenant dispute lawyers can tell you all about what to expect when you negotiate and sign a new lease agreement.

Are the Rules About Residential and Commercial Security Deposits the Same?

The rules about commercial security deposits are a little different. The biggest difference between these deposits and the ones asked for by residential landlords is that there is no real limitation on a commercial deposit. Most residential landlords are confined to asking for a month’s rent as security. A commercial landlord can ask for more than that, and considering the costs of rent for commercial property you could end up having to put aside a significant amount of money for your deposit.

Can I Negotiate a Commercial Security Deposit?

There is often more room for negotiation when it comes to a commercial security deposit though. In most cases, such negotiations are even expected. Compare this to renting a residential property, where trying to bargain over a security deposit is likely to just confuse and surprise your landlord.

Just about everything in a commercial lease, from who pays taxes to how long the lease lasts for, is negotiable much of the time. This means that commercial security deposits can be discussed and that you may be able to come to an agreement that renter and landlord can live with.

What Are Deposits Used For?

Commercial security deposits have limited uses. They are meant to:

  • Cover any rent not paid if the tenant defaults
  • Clean the property after a tenant’s lease ends
  • Fix any damage to the property

If you paid your rent and damage to the property does not go beyond normal wear and tear, you should get much of that deposit back when your lease ends.

How Should Commercial Security Deposits Be Invested?

Commercial security deposits are not just supposed to go into a landlord’s bank account. They should be in a separate, interest-bearing account that a tenant is made aware of. The interest gained, minus a one-percent fee, can be given to the tenant or used to pay rent. This is another matter that you can negotiate when you work on your lease.

When Do I Get My Deposit Back?

Another difference between residential and commercial security deposits is that there is no set timeline for landlords to return a deposit to a commercial tenant. Negotiating a reasonable timeline when you sign your lease can offer you some protection and peace of mind.

Talk to an Experienced Real Estate Lawyer

If you need help negotiating your lease or getting back a security deposit, we may be able to help. Contact David A. Gallo & Associates LLP and ask to schedule a consultation with our team.