Oct
26
Who pays for major building improvements under commercial lease?
By
We operate in NJ where we are currently leasing a space for a store. We are in need of more power at the location which requires a major investment to be made into upgrading electrical infrastructure in the building. Our lease expires in less than a year and I think it’s the landord’s responsibility to cover the cost of such improvement since it’s his property and it would be a permament improvement to his property from which next tenant would benefit if he or us don’t renew the lease. Am I right in my thinking? Is there a law which I can use to pursuade him that it is his responsibility to pay for it?
Thank you.
Quick Property Sale
Related articles:
- Who pays for a fire alarm subscription in a commercial lease? I am leasing my commercial property to a tenant and wondered who usually pays for the fire alarm subscription for it? the tenant or the property owners?Sell and Rent...
- what steps are involved in building a commercial building for lease? I have someone who wants me to build a commercial building for lease on my property. What steps are involved in getting plans, costs and permitting to begin the...
- Who pays for external property damage (i.e., a broken window) in a commercial lease when the lease is silent? In the state of Maryland, if a window is broken on a commercial building, who pays to repair the damage (lessor or tenant) when the lease itself does not...
- I own a business and rent the building with a 10yr lease. The landlord is selling the building ? The building I believe will be bought by the fire dept. and demolished. I have only been there for 3 years of the lease. What are my legal options?...
- I sign a commercial lease which has 9 years to run at £11,000 PA I assigned it to others who have since gone ? bankrupt the landlord is asking me to pay the rent I dont have it. What I want to do is borrow one sum to pay him off what would...
4 Comments
April 9th, 2009 at 8:46 am
That should be spelled out in your lease.
However, the landlord is under no legal obligation to provide upgrades because you need it. At most, he’s responsible for regular upkeep of a standard building set-up – and many leases stipulate that the landlord isn’t even responsible for any repairs or maintenance.
It may seem inherently wrong because a permanent improvement would stay with the landlord’s building, but if you need something above standard electrical, he doesn’t have to provide it or pay for it. Your best bet is to approach the landlord and work out some sort of deal, letting him know that you’ll have to move if the electrical doesn’t get upgraded.
April 10th, 2009 at 8:46 pm
Read the lease. The rights and responsibilities of both parties are spelled out in the lease. If the topic is not covered, then it is subject to negotiations. If you want to persuade the landlord that he is absolutely required to pay for improvements that he would ultimately get, but that he may not want, good luck with that. If it is not in the lease he is not required to make any improvements at all, and certainly not significant ones. If the law was otherwise, you could tear down the building, put up a new building that the landlord didn’t want, and make the landlord pay for it. There is no such law that imposes such an obligation on the unwilling landlord.
April 13th, 2009 at 10:40 pm
This is likely covered in your lease. A major building improvement is something that would impact all tenets in a building. The improvement you are talking about only impacts you. I can’t see this being a landlord responsibility.
As your lease expires in less that a year, you can begin discussing this as part of a new lease. If he wants to keep you bad enough, you might be able to reach some kind of agreement.
April 14th, 2009 at 2:06 am
Im not aware of any laws in NJ – as Im in CA.
I can tell you that this sounds like it is a tenant improvement – something that you need done to improve your work space. However, the tenant improvement will benefit the Owner as well. Often times, as this will benefit both parties, it would be best to share costs with the Owner. Afterall, if he puts forward the money and you do not sign for an extended lease, he is assout, so to speak…. Sure, he can get another tenant, but he could get another tenant WITHOUT these improvements.
Fact is, you leased the area as it was a year ago or longer. Therefore, it is not the Owners responsibility. (I know this isnt what you wanted to hear.) However, maybe try this- agree to resign/extend the lease for two years IF the Owner pays all costs, or, agree to pay a portion of the costs and stay an extra year. Or, go find a new location!
Good luck!