If you have found a commercial space that you have decided to lease, your landlord will probably ask you for a security deposit. Here is some information about security deposits that might be useful to you during this stage of the renting process, as explained in the article “Significant Drafting Issues Specific to Commercial Leases”:
What is the purpose of a security deposit?
Security deposits are the landlord’s way of protecting themselves from tenants who default. If the landlord is at all concerned about a tenant’s ability to pay rent, he or she will ask for a security deposit that will be refunded only at the end of the lease term when the client has met all of the lease requirements.
What is the amount of a security deposit?
The amount a landlord asks for varies based on both the size of the space being rented and the credit history of the potential tenant.
What are some issues surrounding security deposits?
During negotiations you will want to clear up several questions about the security deposit: Will there be interest on the deposit? Will it be credited to rental payments over the course of the term, or will it be refunded all at once at the end of the term? Will it be kept in a separate account if interest will accrue? Address all of these things before you sign the lease.
If your landlord does require you to make a security deposit, make sure that you clarify in negotiations all possible issues that may prevent you from eventually receiving this money back.
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