A business that leases real estate and improvements (buildings, etc.) in the form of space for offices, a warehouse, a restaurant, a nail or hair salon, a clothing store, a coffee shop, or other commercial (nonresidential) space will usually be required to sign a written contract known as a commercial lease agreement.
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 as 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.
The law governing commercial leases varies from state to state but generally consists of a state's contract law (as applied to the lease agreement)—and in some states, includes the statutes enacted by the state's legislature that specifically apply to commercial tenancies, or that generally apply to both residential and commercial tenancies.
In Rhode Island, a business that intends to lease commercial space—such as offices, warehouses, or retail locations—will typically enter into a commercial lease agreement. Unlike residential tenants, commercial tenants are presumed to have greater expertise and bargaining power, and therefore, they receive fewer legal protections under the law. Rhode Island's commercial lease transactions are primarily governed by general contract law principles, which require the lease agreement to be in writing and enforceable as per the terms agreed upon by the parties. There may also be specific state statutes that apply to commercial tenancies, but these are less protective than those for residential tenancies. It is crucial for a commercial tenant to thoroughly review, understand, and negotiate the terms of the lease agreement, as the provisions can significantly affect the tenant's business operations and financial health. An attorney can provide valuable assistance in reviewing and negotiating a commercial lease to ensure that the tenant's interests are adequately protected.