Security Deposit For Commercial Property

A commercial property owner has more freedom when it comes to negotiating security deposits than residential landlords have.

Security deposit for commercial property.

The security deposit law applies to the rental of all premises used for dwelling purposes pursuant to a lease contract or license except owner occupied premises with not more than two rental units. Commercial landlords routinely use security deposits as a reserve account available to help them offset the cost of repairing damages caused by a tenant to satisfy unpaid rent or to allow them to. Using a letter of credit not a security deposit for commercial property. There aren t any restrictions on how much a landlord can charge for a commercial security deposit.

We find that security deposits can take many first time tenants by surprise and present a cost that they did not expect. If you re in the process of a commercial lease negotiation you might find that the the landlord asks for a security deposit. Code 1950 7 governs security deposits for commercial leases and the handling of the deposit after the termination of tenancy. Get the basics on the purpose of the security deposit in a commercial lease.

Understanding security deposits in commercial real estate leases. The damages for bad faith retention of a commercial property tenant s security deposit is subject to statutory damages of up to 200 plus the tenant s actual damages which are recoverable in a civil action brought by the tenant. Additionally the landlord could be subject to a civil suit for an unfair business practice. Unlike commercial leases the security deposit in a residential lease is governed by the security deposit law njsa 46 8 19 et seq.

The amount is decided only by how much the market allows. Letter of credit or uniform commercial code lien. In some cases a bank will guarantee payment to the landlord in lieu of a cash deposit from you. Unlike residential laws there aren t any laws that govern how much a commercial landlord can ask.

How landlords use security deposits in commercial real estate. How landlords use security deposits in commercial real estate by janet portman attorney your landlord may ask for a security deposit to assure that cash will be available if you fail to pay the rent or don t make other payments required under the lease.