What is the difference between a commercial lease and a residential lease?

A commercial lease and a residential lease are both rental contracts, but they are not subject to exactly the same rules.

A commercial lease generally concerns premises rented for the operation of a business, trade, office or other professional or commercial activity.

A residential lease, for its part, concerns a place intended for habitation. The Civil Code of Québec sets out several specific rules for this type of lease, some of which are mandatory and from which the parties cannot deviate.

In a commercial lease, the landlord and tenant generally have greater freedom to determine their rights and obligations. In particular, they can negotiate:

• the duration of the lease and its renewal conditions;
• the rent and the terms of its increase;
• the allocation of taxes, insurance and other charges;
• the tenant's proportional share in the building's operating costs;
• responsibilities related to maintenance and repairs;
• the work and improvements to be carried out on the premises;
• the guarantees or securities requested;
• the conditions concerning the assignment of the lease or subletting;
• various other conditions relating to the use of the premises.

This contractual freedom is not absolute, however. The parties must respect the mandatory provisions of the law and the public policy rules that apply to them.

It is therefore important not to automatically apply the specific rules governing residential leases to a commercial lease. The rights and obligations of the landlord and tenant must be determined according to the rules applicable to commercial leases and the provisions of their contract.