The tenant (the business occupying the space) who signs a commercial lease agreement is generally expected to be a more savvy, sophisticated, and informed tenant (also known as a lessee) than a tenant in a residential lease, and the law usually does not provide a commercial tenant with the same protections as residential tenant receives.

Because the law does not provide a commercial tenant with many protections, it is up to the commercial tenant to read, understand, and negotiate protections in a proposed lease agreement before signing it, as most every paragraph in a commercial lease agreement can have a significant impact on a business’s operations and financial stability.

Laws vary from state to state, but a commercial landlord’s ability to shut off a tenant’s utilities is usually determined by the terms of the lease agreement and the state’s contract law—to determine, for example, if any breach of the lease agreement by the tenant was a material breach that might justify an extreme measure such as shutting off the utilities.

Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a commercial landlord who shuts off a tenant’s utilities because the tenant is a few days late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing.

In Michigan, commercial tenants are indeed considered more sophisticated than residential tenants and are thus afforded fewer legal protections under the law. Commercial lease agreements are primarily governed by the terms negotiated between the landlord and the tenant, and it is crucial for the tenant to thoroughly review and negotiate the lease terms. Michigan law does not provide statutory protections for commercial tenants similar to those for residential tenants, so the lease itself is the key document outlining rights and responsibilities. Regarding utility shutoffs, such actions by a commercial landlord would typically be governed by the lease agreement and Michigan's contract law. While there is an implied duty of good faith and fair dealing in contractual relationships, a landlord's decision to shut off utilities for a minor lease breach may be seen as a violation of this duty. However, the specific circumstances and the lease terms would be critical in determining the legality of such an action. Commercial tenants should seek the advice of an attorney to understand their rights and obligations under a commercial lease agreement in Michigan.