I rented my commercial property to a tenant and would like to know who is responsible for renovating the interior of the building? Is it the landlord or the tenant? My property at one time was a law office, but now I have a tenant who wants to convert it into a hair salon. What are my obligations as the landlord and the owner of the building?
Thanks for visiting our site and great question. Who’s responsible for renovating the interior of the commercial property really depends on what you and your tenant agree upon and what’s written in your lease. Generally, there are a few ways to handle the leasehold improvements, which are the improvements needed for the new tenant to use the property for their business. You could offer discounted rent for the number of months it takes the tenant to complete these improvements or you could require a security deposit and waive the rent for the first couple of months while the improvements are being done. You could also complete the improvements yourself with your own contractors but will allow input from the tenant and you could agree to split the costs. Another common practice is giving the tenant a tenant improvement allowance which gives them a certain amount of money, usually per square feet to do the renovations. I recommend consulting with a local real estate attorney to put in the right verbiage in the lease and make sure you and the tenant feel comfortable with the outcome.
All the best,