Security Deposits in Commercial Real Estate: An Investor’s Guide

Much like with residential leases, investors in commercial properties may require tenants to pay a security deposit before entering into the lease agreement. Security deposits, whether in commercial or residential settings, are used to protect the landlord from incurring a loss in the event the tenant does not pay the rent, breaches the lease agreement, or damages the property.

In short, the purpose of the security deposit is to secure the lease obligation. While security deposits can be requested in both the residential and commercial worlds, when it comes to commercial-lease landlords, there are no uniform provisions. State law does not place a restriction or cap on how much the landlord can charge for the security deposit.

In general, the law recognizes those who interact in the commercial real estate world to be sophisticated actors and, thereby, able to negotiate the terms of the security deposit, absent an existing statute. This gives the landlord free range when setting the security deposit.

Include A Clause In The Lease Agreement

While there is no standing state law, landlords should include the negotiated terms of the security deposit in the lease agreement. The type of language included in a commercial lease agreement is important. When drafting the lease provision, the landlord should include language dictating when and how the security deposit will be used, refunded, and retained.

When drafting the lease, landlords may also want to consult an attorney to ensure it’s airtight. The landlord may also want to consult with an attorney concerning how the funds should be handled. In some circumstances, the landlord is required to hold funds in interest-bearing accounts.

For this reason, the landlord should not only include within the lease the account in which the security deposit will be held but also consult with an attorney when drafting this provision.

Read More…


7¢ Skip Tracing – Guaranteed lowest price on the market for the best quality data.

Don’t just take our word for it. Try us out by running a small list first to see the tier 1 data for yourself. We are offering non-members access to member pricing, so you can experience the Skip Force Difference and improve the quality of your lists.

🔥Pay wholesale price for quality data
🔥Receive the TOP 3 Phone Numbers
🔥Discover which phone numbers are best
🔥Learn the BEST Time to reach a contact
🔥We can take your old list, grade it and come up with the
BEST NUMBERS to contact
🔥Increase ROI and TEAM MORALE

We have extended this special but cannot afford to keep this offer running for long.

Have Questions? Reach out to us, we’re here to help.
Call us at: 866-962-8190

Get Started Now

About Skip Force LLC.: Skip Force is a SaaS company based in Austin, TX. Founded in August of 2019, Skip Force has developed solutions, for real estate investors and resellers, to streamline the skip tracing process to effectively close leads.

Related News

cold calling
10 Real Estate Cold Calling Scripts To Increase Lead Generation

In the fast-paced world of real estate, staying ahead of the competition requires effective lead generation strategies. Cold calling is a tried-and-true method for reaching potential clients, but it’s not enough to simply pick up the phone and start dialing numbers. To maximize your success, you need well-crafted cold calling scripts that engage prospects and […]

Sustainable Living: The Rise of Eco-Friendly Homes and Their Benefits

In an era where climate change is a pressing global concern, the concept of sustainable living has gained immense traction. People are increasingly looking for ways to reduce their carbon footprint and adopt eco-friendly practices in their everyday lives. One significant way individuals are contributing to this movement is by embracing eco-friendly homes. These sustainable […]

Navigating the Luxury Real Estate Market: Insider Insights and Trends

The world of luxury real estate is a world unto itself, where opulence meets exclusivity, and where properties are not just homes but statements of prestige and wealth. In the United States, the luxury real estate market has always been a bellwether for economic prosperity and a playground for the rich and famous. From sprawling […]