You have been a great Tenant, we are sorry to see you go…here’s your bill
THE RESTORATION CLAUSE
Most commercial leases contain a Restoration Clause whereby a Tenant could be obligated to return their premises to the Landlord in “base building” condition. This means that the Tenant would be required, at their expense, to remove not only their furniture and trade fixtures, but all leasehold improvements including walls, carpet, etc. and repair any damage from doing so.
A typical Restoration Clause reads as follows:
“The Tenant shall at the end of the Term remove such of its Leasehold Improvements, trade fixtures and telecommunication and computer cabling as the Landlord shall require to be removed, (and if the Tenant fails to remove the same within a reasonable period of time, the Landlord may remove the same and charge the cost of such removal to the Tenant).”
If the Landlord exercises this clause to its full extent this can be a very expensive surprise. It can also have the effect of tipping renewal negotiations in the Landlord’s favour because it is yet another moving cost a Tenant will incur…advantage Landlord!
We meet too many Tenants who sign their lease without understanding some of the onerous clauses the lease contains. The Landlord writes the lease and they are generally weighted in favour of the Landlord.
We have been very successful negotiating with Landlords to change many clauses in the lease, such as the Restoration Clause, to make it much more Tenant friendly and minimize the financial impact on Tenants.