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Avoiding a lawsuit when a commercial lease expires

| Feb 4, 2021 | Commercial Real Estate |

New York commercial real estate tenants may need to take precautions to avoid a lawsuit when their lease agreement ends. A property owner may file a legal action to recover damages if a tenant fails to remove fixtures, furniture or other improvements made to the rental unit. 

Lease terms may specifically outline that a tenant must return the property to its original condition. As reported by the American Bar Association, a lease may include language, such as turnkey condition or vanilla box space, to describe how a tenant must return the unit at the end of a lease. 

Pop-up and shared workspaces may require negotiation

Real estate trends reveal a higher number of tenants searching for shorter-term lease agreements. Whether they wish to rent a unit for a holiday season or special event, some property owners may require tenants to maintain the unit exactly as they found it. 

A lease with turnkey conditions may offer minimal fixtures and enough room to set up displays to sell merchandise. To save on costs, tenants may find others to share the space with them, which typically requires permission from a landlord to allow the arrangement under a lease agreement. 

A landlord may seek damages from a former tenant

A commercial tenant faced a lawsuit for close to $50 million worth of damages to cover demolition and unpaid back rent. According to Billboard magazine, after moving out and then subleasing its unused space to a fast-food restaurant, the tenant did not restore the property to its original condition when the lease expired. The restaurant reportedly left behind a refrigerator and freezer that it installed on the premises. It also neglected to readjust the ceiling and floor heights that it altered to meet its needs.