Oregon 30-Hour Real Estate Law Practice Test

How are security deposits for commercial tenancy governed?

1. By state law

2. By the lease agreement

3. By industry standards

4. By the local municipality

The correct answer is: By the lease agreement

The governance of security deposits for commercial tenancy is primarily determined by the lease agreement between the landlord and the tenant. This contract outlines the specific terms and conditions related to the security deposit, including the amount required, the circumstances under which it can be withheld, and the process for its return at the end of the lease term. While state laws provide a framework for security deposits, these laws often defer to the terms set out in the lease agreement for commercial properties. This allows parties involved in commercial leasing to negotiate and establish their own rules and standards based on their specific arrangements, unlike residential leases where state law tends to provide more uniform regulations to protect tenants. Thus, the lease agreement plays a critical role in governing the handling of security deposits within commercial tenancy.