Repair of rented office space

Most companies work in rented premises because it is expensive to buy your real estate, while a leased office is a mobile and affordable option even for start-up entrepreneurs. At the same time, the premises need to be adapted to the firm’s activities – to make repairs when they move in and subsequently, if necessary, to carry out manipulations. Who should pay for this work – the owner or the tenant?

When is it necessary to repair the office rented from the owner?

The renovation of commercial real estate is required in several everyday situations:

• When an entrepreneur moves in when you need to create a comfortable working environment;

• When renting an object without renovations;

• To create a brand atmosphere;

• For promotional purposes to attract customers;

• In the case of failure of plumbing equipment and communications;

• In the possibility of defects and damages on the floor and walls of the building;

• In the case of the need for redevelopment, such as expanding staff.

The office may require both cosmetic repairs and significant renovation, the implementation of which is associated with substantial expenditure and improvement of the leased premises. For this, you need a tenant build-out contractor. 

Who pays for office renovations – the owner or the tenant?

The debate over who should pay for repairs to the premises is the subject of much litigation and conflict between the parties. However, there is a well-established position in which the tenant makes cosmetic repairs at his own expense, and the owner makes major repairs. Thus, the owner of the office must pay for the following:

• Demolition work to remove old coatings and utilities;

• Redevelopment of the building, including the demolition and construction of partitions;

• Laying of new electrical cables and modernization of the lighting system;

• Installation of water pipes and plumbing fixtures;

• Replacement of the floor, windows, and doors;

• Ceiling installation;

• Roughing the walls;

• Installation of electrical fittings – lamps, safety devices, switchboards;

• Installation of air conditioning and ventilation systems.

The tenant must eliminate minor defects, clean the premises, and decorate the workspace for his needs. He also installs flooring, glues wallpaper, or other wall materials.

Office renovation in the lease – legal subtleties

To avoid disagreements between the owner and the office’s landlord, it is recommended to settle this issue at the stage of the contract, stating who performs and pays for the work. If the documents have already been signed, and the need for repairs has only now arisen, the area of responsibility is divided by law:

• Current repairs, aimed at ensuring the proper condition of the office, are performed by the tenant, and the costs are accounted for in the tax returns;

• Significant repairs are paid by the owner of the premises or the tenant, who subsequently applies to the owner for a refund;

• When improving the leased facility (the work falls under the concept of neither major nor cosmetic repairs), the tenant pays the costs, but the owner can reimburse the costs.

In addition, it is necessary to coordinate the repairs with the owner of the premises since the entrepreneur cannot fully dispose of the leased real estate – the circle of his rights is limited. If disputes arise between the parties afterward, they can be resolved by filing a lawsuit in Arbitration Court. Still, it is better not to bring proceedings to try and resolve all issues amicably.