Lease holder improvement question - commercial real estate - Colorado

[lrich66]

What is the name of your state (only U.S. law)? Colorado

Hi,

My situation is as follows:

I am the owner of a small shop/boutique.

I signed a sublet agreement with a person that I share the space with. She has 3/4's of the space
and I have 1/4. She and her husband hold the main lease with the owner of the building.

I am moving out of the space in about a week. I had one wall covered with barn wood before I moved in.

The owner of the building has said that I cannot remove the barn wood, that it is considered a "lease holder improvement".

My question is this:

In my lease with the other shop owners, there is no verbiage regarding lease holder improvements. Do my legal rights
fall under jurisdiction of the main lease? I don't understand, since I did not sign that lease, nor ever seen it.

Please advise! If you need more info, I can provide. Thank you in advance ))

 

[Gail in Georgia]

When a tenant attaches what is considered a "permanent" item to a property (unlike an appliance that is simply plugged in, for example), it becomes the property of the owner. An example would be if a tenant replaced kitchen cabinets without obtaining approval to do so first.

How was this barn wood attached to the wall?

Gail

 

[justalayman]

I'm going to disagree with Gail on this one. The rule she provided applies to residential matters but commercial issues are not bound by the same rules. Given it is common for a commercial space to be altered for or by a tenant for their specific use, what is used for the build out may be owned by the tenant or it may be owned by. The landlord. A smart tenant or landlord will make sure this is clear when entering a lease.

Unless your contract includes you are bound by the terms in the main lease, you are not bound by the terms of the main lease.


Your contract is with your landlord and your obligations are determined by that contract.

So, does the main lease obligate changes such as the wall finish to remain?

What has your landlord said to the matter? Did you received permission from
Anybody to install the wall covering when moving in? If so, was there any discussion about the wall covering staying or you taking it when leaving?

 

[lrich66]

Hi! Thank you for your quick replies!

To answer your questions:

1. I did ask the landlord for permission to install the barn wood and he approved, with no mention that
it would need to be left behind.

2. I have not seen the main lease (why would I, as I'm not on it?) So, I'm not sure what the language is with that,
but I could try and find out.

3. I guess my main question is: am I held to the main lease, or the one I actually signed, the sublet lease? In the sublet lease,
as I mentioned, there is no language about improvements being left behind. Isn't that my legal, binding contract? Not the main one
which I never signed?

4. The only mention is to leave the premises in the condition in which I found them.

Thank you! I need to reply to the landlord soon - he is bullying me with lots of legal language and I want to have an accurate
rebuttal/response.

Thanks so much!!

 

[justalayman]

Just a technicality but I would not see your changes as an improvement but an alteration. Improvement suggests a betterment of the premises (upgraded electrical system, new plumbing system) would be an improvement. A wall finish is rarely considered an improvement as each tenant will have their own needs and desires so one person's alteration can be another persons need to change it back to what it was. That has no true legal basis but to me it helps determine what might be considered an actual part of
The structure and what is simply dressing.


You say you received permission from THE landlord to add the boards. Is THE landlord a reference to your landlord (the primary tenants) or their landlord, who realistically isn't anything to you other than a owner of the building.

 

[lrich66]

So, the owner of the building- I should have clarified, is whom gave me verbal permission to install
the barn wood.

The person whom I share the space with - she has a main lease with the owner., and I sublet from her.,
if that makes sense.

It sounds to me like I am not beholden to the main lease?

Thanks!

 

[justalayman]

Why were you asking THE landlord for permission to install the boards?

 

[lrich66]

The people that I sublet from told me I should ask...
His office is right next door. In retrospect, maybe I shouldn't have. Ugh.

 

[lrich66]

Hi: Justalayman,

Thank you for helping me with this situation - one more question:

So, you think I have rights to retain the barn wood wall as long as I return to original condition?

This is my thinking.

Laura

 

[LdiJ]

The people that I sublet from told me I should ask...
His office is right next door. In retrospect, maybe I shouldn't have. Ugh.

Legality check...

In most commercial rental situations its one of two things. Either you have to leave improvements there when you leave, or you can take the improvements with you but you must return the space to what it was before you made your improvements.

Frequently leaving the improvements is a good idea because it mitigates your damages. Other times its better to return it to a plain vanilla box.

 

[justalayman]

The people that I sublet from told me I should ask...
His office is right next door. In retrospect, maybe I shouldn't have. Ugh.

You're in a tough spot. You can try to argue the wood is not a leasehold
Improvement but a trade fixture (ornamental alterations, even if attached such that one may consider the possibility it is a fixture (as opposed to chattels) can be considered trade fixtures in some
If instances) You might consider weighing the cost of the boards to
The cost of returning the wall to its original condition (as you would likely be required to do)


You may also consider the cost of litigation should the prime landlord sue you for either the boards or the cost to repair the wall. In doing so you should check to see if you can self represent your business or you are required to use a lawyer to represent your company.

 

[lrich66]

Legality check...

In most commercial rental situations its one of two things. Either you have to leave improvements there when you leave, or you can take the improvements with you but you must return the space to what it was before you made your improvements.

Frequently leaving the improvements is a good idea because it mitigates your damages. Other times its better to return it to a plain vanilla box.

Is it implicit that I leave the improvements or alterations behind? Even if not written in my sublease?

 

[lrich66]

Also: justalayman,

the barn wood is part of my "brand" - I have barn wood on my sign (for shop) and on my business cards,
FB page, etc. Since I'm just moving down the street, a few doors down, I'd like to keep that "look and feel" consistent
and not have it used by another business.

I will check on cost of getting space back to original condition - that's a good point. But, I guess - at this point - the
principle of the matter is bothering me. That there was no agreement to leave it behind, and that it would detract from
my own brand.

 

[LdiJ]

Also: justalayman,

the barn wood is part of my "brand" - I have barn wood on my sign (for shop) and on my business cards,
FB page, etc. Since I'm just moving down the street, a few doors down, I'd like to keep that "look and feel" consistent
and not have it used by another business.

I will check on cost of getting space back to original condition - that's a good point. But, I guess - at this point - the
principle of the matter is bothering me. That there was no agreement to leave it behind, and that it would detract from
my own brand.

You are going to have to at least put it back the way that it was.

In the end, it may be less costly to simply get more barn wood for your new location.

 

[justalayman]

Also: justalayman,

the barn wood is part of my "brand" - I have barn wood on my sign (for shop) and on my business cards,
FB page, etc. Since I'm just moving down the street, a few doors down, I'd like to keep that "look and feel" consistent
and not have it used by another business.

I will check on cost of getting space back to original condition - that's a good point. But, I guess - at this point - the
principle of the matter is bothering me. That there was no agreement to leave it behind, and that it would detract from
my own brand.

There may not have been an agreement to leave the wood but there also was no agreement to take it with you either. That is a problem, especially since it appear the prime landlord's interpretation is that it would be required to be left based on his inderstanding of the installation and his lease with his tenants. If he is well off financially it makes it possible, or even likely he may take legal action to fight this.