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How Commercial Property Law Is Different Than Residential Property Law

Posted by John D'Intino Jr. | Mar 24, 2020 | 1 Comment

Philadelphia property law
The rate of homeownership in Philadelphia has been steadily decreasing in recent years. However, property law is relevant for more than just buying a home.

Whether you are looking for a penthouse apartment or a new business office, you are going to need the help of a good property law practitioner. However, not all property lawyers are the same. Different lawyers specialize in different kinds of transactions.

Read on as we explore the differences between commercial property law and residential property law.

Commercial & Residential Property Law: The Basic Differences

The primary difference between residential and commercial property is that the former is for living in, while the latter is for doing business.

However, it is not quite as straightforward as that. Many differences are caused by this in terms of the legal requirements of transactions.


Naturally, one of the foremost considerations in terms of any transaction is its financial implications.

Generally speaking, costs will be lower for residential property transactions than for commercial ones. This fact tends to be true whether you are renting or buying.

Mortgage applications for business properties will present far greater costs than those for residential properties. This fact is especially true if your building will have owner-occupier status, i.e. if you can prove you will be living there yourself.

Your lawyer will be able to walk you through the best cost-reduction approaches in respect of every type of property transaction.

Legal Protection

There are significant differences in the law's treatment of commercial and residential tenants.

Generally speaking, the law offers far greater protection to residential tenants than commercial ones. This protection is because where the basis for a lease relates to business, the courts presume that both parties to it have entered into it intending to make a profit and that the tenant is therefore reasonably competent.

Courts also appreciate that residential tenants may be families. This fact means that the repercussions of a failure in a lease can be far more difficult, especially where younger children are affected.

For commercial properties, there are fewer restrictions on rent increases and maximum lease terms. There are also usually stricter rules on security deposit repayments for commercial leases.


If you fall behind on mortgage repayments on a property you have purchased, the lending bank may be entitled to foreclose on the property.

This option means that they will claim the property and use it to regain the money they are owed on it. This process may be done by a simple sale, or by other means.

For business property, courts will often appoint a figure known as a receiver. This receiver is someone who will take over the running of your business for a time to secure as much repayment as possible for the lending bank.

Receivership is only possible in respect of commercial properties.

Families facing financial difficulty may experience emotional trauma with it as well. It is important to remember that anything you share with your lawyer is held in the strictest confidence and that they will be able to offer support and guidance, as well as practical tips, to help you through the challenges you face.

Property Requirements

There are different requirements in terms of the contents and facilities a property must-have, depending on whether it is a commercial or residential building.

Generally, these are more demanding when dealing with residential property. It is required that all residential properties have a kitchen and at least one bathroom, for instance.

There are fewer requirements in terms of what a commercial property must contain. However, these rules have gotten somewhat stricter in more recent times.

Many commercial leases will contain provisions forbidding tenants to live in the property. Similarly, many residential leases do not allow for the carrying on of business in the property.

Disclosure Requirements

Because of the assumptions made about the competence of parties to a commercial arrangement, disclosure requirements are less severe in commercial property law.

Generally, those buying or leasing residential property have the right to be informed of defects in the property.

Those acquiring commercial property are not so well protected. A greater duty falls on them to assess any shortcomings in the property. However, buyers and renters should always have the opportunity to thoroughly inspect the property.

The Differences Between Mortgages & Leases

Whether you are dealing with residential or commercial property, you will need to know about the features of mortgages and leases.

A mortgage is the loan instrument given to someone by a bank to be used for the purchase of a property. A lease is an agreement between a landlord and a tenant when the property is to be rented rather than purchased outright.

As noted above, mortgages carry the possibility of foreclosure. In the case of commercial mortgages, this process may also imply receivership.

As leases do not involve debts, their termination is more straightforward. A landlord can just end the renting relationship and re-purpose the property if he or she chooses.

However, there are legal rules against terminating a tenancy arrangement unfairly or without good reason. Again, the standards here are higher in respect of residential tenancies.

Finding the Philadelphia Property Lawyer that Best Suits Your Needs

By now, you should have an appreciation of the factors to consider when hiring a Philadelphia property law professional.

The differences in practice between residential property law and commercial property law can be significant. Not only that, but there can be variations within each type, depending on the nature of the transaction you're entering.

Therefore, it is important to have the right lawyer alongside you every step of the way. If you are ready to take the first steps towards owning the new property of your dreams, contact us today to arrange a free consultation.

About the Author

John D'Intino Jr.

Since founding the law firm, John has worked tirelessly to build his firm from the ground up, developing a reputation as a tough attorney and a willingness to fight for the needs of those he represents.


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Posted Sep 21, 2022 at 13:05:53

Excellent and A wonderful read! Your article is the best one I have learned, and it has helped me. Keep doing that.

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