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The Basics of Commercial Leasing with AMMLAW

Commercial property, also called commercial real estate, investment property or income property, is real estate intended to generate income, either from capital gains or rental income.

Commercial leases are primarily used for commercial business property. These leases include a variety of unique terms, including responsibilities related to the upkeep of the property, payment of service charge and responsibilities of the landlord (often referred to as Lessor) and the tenant (referred to as Lessee). Commercial leases are used for a range of properties, including retail and office spaces. A tenant may be obligated to maintain or schedule period repairs of the interior of the property while the Landlord maintains the structure of the building. In either case, insurance may be required of either party. Typically, commercial leases will last between five and twenty years. In Kenya, commercial leases must be above 5 years so as not to be caught by the protection of tenancies as per legislation, failure to which the property is converted to a Controlled Tenancy.

What’s The Difference Between a Commercial and Residential Lease? 

Commercial leases and residential leases have some specific major differences, especially in legal terms. First, broadly speaking commercial leases are not subject to as many consumer protection laws as residential leases. For example, the privacy of a tenant is not guaranteed with a commercial lease, and there is also no limit to the amount that can be charged for a security deposit. Indeed, eviction of a commercial tenant for breach of the lease tends to be marginally easier than when dealing with a residential tenant as the law seeks to protect the latter.

Second, there is no standard form that can be used for a commercial lease. While this does make writing these leases a little more time consuming, it also means that the commercial lease can be customized so that the needs of the landlord will be fully met. If you are a tenant, however, this lack of standardization means you should closely review a commercial lease before signing the Lease. Exit clauses are also not allowed in commercial leases as such exit clauses then convert the lease to a protected lease, which no landlord wants.

Thirdly, commercial leases are considerably harder to break than residential leases. This is on account of all the terms and conditions contained in such leases. Indeed, when these leases are broken, a great deal of money stands to be lost.

Lastly, commercial leases usually involve a longer negotiation period than residential leases. This is because commercial leases often need to include language that covers the individual needs of a business owner, and landlords will mostly be willing to meet these needs, as long as their compliance results in a signed lease. From our experience, landlords will want to ensure that the business tenant is licensed to conduct their intended business lest they take up the space and cannot open for business on account of this lack of license. This is important because unlike residential properties (where uptake of neighbouring houses is not crucial) commercial property owners rely heavily on the footfall created by occupied premises.

On the next blog, we’ll be talking about how to do your due diligence when leasing a commercial property in Kenya. We are available for consultation on legal advice and representation once you contact us on or 0702045995.