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 Pennsylvania, commercial tenants are indeed considered more sophisticated than residential tenants and are thus afforded fewer legal protections under the law. The expectation is that a commercial tenant will thoroughly review and negotiate the terms of a commercial lease agreement to secure their own protections before signing. The lease agreement itself typically dictates the rights and remedies available to both parties, including the circumstances under which a commercial landlord may shut off utilities. While Pennsylvania contract law does recognize an implied duty of good faith and fair dealing in contractual relationships, this does not necessarily prevent a landlord from taking actions outlined in the lease agreement, such as shutting off utilities for non-payment of rent. However, if such an action is deemed to be in bad faith or unreasonable under the circumstances, the landlord could potentially be found in breach of this implied duty. Commercial tenants should ensure they understand their lease terms and seek legal advice if necessary to navigate these issues.