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Commercial lease disputes often stem from property alterations

On Behalf of | Jun 18, 2020 | Commercial Real Estate |

One of the most common disputes involving commercial real estate has to do with the modifications made to the premises and the scope of use of the premises.

While some commercial leases prevent business owners from altering the property in any way without consent from the landlord, many leases give business owners some freedom to make modifications to the property on their own. The alterations clause in your lease agreement will likely specify which modifications are significant enough to require landlord approval and which ones are considered minor and therefore do not require approval.

Minor alterations may include cosmetic changes that are easy to undo if necessary, including changes to the paint color or window coverings. Generally, minor alterations do not negatively impact the value of the property, require additional permits, harm the structure of the building itself, or negatively impact other tenants.

In some cases, landlords may offer tenants a ‘tenant improvement allowance’ where the landlord essentially funds agreed-upon improvements to the property, or a ‘build-out allowance’ where the landlord offers certain standard fixtures for the building, and gives the tenant the opportunity to upgrade at their own expense.

Disputes between landlords and tenants often arise when a tenant modifies the property in a way he or she thinks is ‘minor’ under the terms of the lease agreement. However, the landlord may disagree, contending that the change made to the property was a violation of the lease. Any ambiguity in a commercial real estate lease agreement can cause a dispute. A commercial real estate attorney can review your agreement help resolve any disputes you may have with your landlord regarding property modifications.