So you’re now in your space. You’re excited to build it out maybe or you’ve been in your space for a while and you’re excited to do a remodel or a renovation and you have plans drawn up and you’re ready to go. Before you commence any work with some exception you do need to get your landlord’s approval.
And there’s a process built into most typical leases as to how that’s done. What plans need to be drawn up? What notice needs to be provided to a landlord? How much time the landlord has to approve the request? And what happens if they say no? And if they say yes, what terms are still attached? What do you need to deliver to them as far as plans or final plans? What permits do you need to obtain? And what types of contractors could you use?
When we are looking at the renovations clause or a tenant improvement clause or landlords work or tenants work, the things that we look for is the restrictions the landlord tries to put on a tenant when they’re looking to undertake some work. So there could be a lease clause that says landlord has to approve any and all contractors.
We typically like to see some more flexibility where as long as a contractor has insurance, has experience, has a license that the tenant gets to select them, that it doesn’t have to first go through the landlord to obtain approval.
We also try to differentiate in a lease, the work that a tenant wants to do, what needs to be approved by landlord and what may be landlord doesn’t need to approve. So, for instance, we try to work in what’s called a decorative alteration. So you may want to paint, you may want to re-carpet, you may want to hang certain things on the wall and you don’t want to have to go to the landlord to obtain approval because they’re more cosmetic things in nature.
They’re not going to effect the structure. And we differentiate that from a structural alteration. So if you were going to break through a ceiling, add a staircase, do something major interior, knocking down walls, putting up walls where you may need to pull a permit where the landlord may want to approve the plans, exactly what you’re going to do in their space.
And we sometimes try to set a threshold for that as well. So maybe it’s not a decorative alteration, maybe it’s not a structural alteration, but it’s going to be $50,000 worth of renovations where the landlord doesn’t really care that strongly about approving the plans because they understand there’s only a limited amount of things you could do for $50,000 or 25,000 and anything above that, that’s where you need need to obtain their approval.
But in any event, we try to structure it in a way where it gives the tenant the maximum flexibility to operate their business, to make modifications to the space while also recognizing the landlords need to protect their asset and protect the interest in this space.
