The tenant (the business occupying the space) who signs a commercial lease agreement is generally expected to be a more savvy, sophisticated, and informed tenant (also known as a lessee) than a tenant in a residential lease, and the law usually does not provide a commercial tenant with the same protections as residential tenant receives.

Because the law does not provide a commercial tenant with many protections, it is up to the commercial tenant to read, understand, and negotiate protections in a proposed lease agreement before signing it, as most every paragraph in a commercial lease agreement can have a significant impact on a business’s operations and financial stability.

Laws vary from state to state, but a commercial landlord’s ability to shut off a tenant’s utilities is usually determined by the terms of the lease agreement and the state’s contract law—to determine, for example, if any breach of the lease agreement by the tenant was a material breach that might justify an extreme measure such as shutting off the utilities.

Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a commercial landlord who shuts off a tenant’s utilities because the tenant is a few days late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing.

In Arizona, commercial tenants are indeed considered more sophisticated than residential tenants and are thus afforded fewer legal protections under the law. Commercial lease agreements are primarily governed by the terms negotiated and agreed upon by the landlord and tenant. It is crucial for the commercial tenant to thoroughly review and negotiate the lease terms to ensure their business interests are protected. Unlike residential leases, which are subject to specific statutory protections, commercial leases are largely dictated by contract law. In Arizona, as in many states, there is an implied covenant of good faith and fair dealing in contractual relationships, which requires parties to act honestly and not deprive each other of the benefits of the contract. If a commercial landlord were to shut off utilities for a minor lease violation, such as being a few days late on rent, this could potentially be seen as a breach of the implied duty of good faith and fair dealing. However, the specific rights and remedies would depend on the exact language of the lease agreement and the circumstances of the breach.