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 Vermont, commercial tenants are indeed considered more sophisticated than residential tenants and are thus afforded fewer legal protections under the law. It is the responsibility of the commercial tenant to thoroughly review and negotiate the terms of a commercial lease agreement. The lease itself typically dictates the rights and obligations of both parties, including the circumstances under which a landlord may shut off utilities. While Vermont law does not specifically legislate the rights of commercial tenants regarding utility shutoffs, general contract law principles, including the implied covenant of good faith and fair dealing, apply to commercial leases. This means that a landlord's actions, such as shutting off utilities, must be evaluated in the context of whether they are acting in good faith and dealing fairly with the tenant. A landlord who shuts off utilities for a minor lease violation may be seen as acting in bad faith, potentially giving the tenant grounds for legal recourse.