While they are both legally binding contracts that grant the right to occupy a space, the agreements governing a residential apartment and a commercial office or retail space are vastly different documents with distinct legal principles and priorities. A residential tenancy agreement is primarily designed to protect the rights of an individual in their home, a place of shelter. A commercial tenancy agreement, on the other hand, is a B2B (business-to-business) contract negotiated between two sophisticated parties with the primary goal of facilitating commerce.
The most fundamental difference lies in the level of consumer protection. Residential tenancy law is heavily regulated to protect tenants, who are generally considered the more vulnerable party. These laws often imply non-waivable rights, such as the warranty of habitability, and impose strict rules on landlords regarding security deposits, evictions, and privacy. Commercial leases, by contrast, operate on the principle of “freedom of contract.” The law assumes that both the landlord and the business tenant are knowledgeable parties who can negotiate the terms of the lease on a more equal footing. As a result, almost every detail of a commercial lease is negotiable, and there are far fewer built-in legal protections for the tenant.
The structure of the rent is another major point of divergence. Residential rent is almost always a simple, fixed monthly amount (a “gross lease”). Commercial leases, particularly in retail, often have much more complex rent structures. A “triple net lease” (NNN) is very common. In this arrangement, the tenant pays a base rent plus their proportional share of the three “nets”: property taxes, property insurance, and common area maintenance (CAM) fees. This makes the total monthly cost for the tenant variable and requires careful scrutiny of the building’s operating expenses.