The Tenant is required to take good care of the rented space, repair any damage they directly or indirectly cause, and comply with all applicable rules and laws. The terms of the lease should demand that Tenants use all plumbing fixtures, elevators, and other facilities in a reasonable manner. Tenants should be prohibited from willfully destroying or damaging the premises, or allowing other to do so, and from disturbing the quiet enjoyment of other Tenants.
Tenant Improvements
Tenants should not be allowed to make alterations without advance written consent from the Owner, who must be informed of such alterations and protected from all liabilities arising from them. Tenants are required by law to comply with local building and housing code provisions regarding health and safety. In general, most Tenant improvements to property are classified as fixtures and become part of the Real Estate.
Commercial Tenant Improvements – Trade Fixtures
However, a commercial or industrial Tenant may be given the right to install trade or chattel fixtures for business use. These are the personal property of the Tenant and may be removed before or upon expiration of the lease agreement, provided that the building is restored to the condition it was in when the Tenant took possession. The wording of the clause that allows the Tenant to remove trade fixtures is crucial. Some lease forms stipulate that the property must be restored to the condition it was in as of “the Tenant’s taking of possession” whereas others require restoration only to the condition that prevailed “as of the beginning of the lease.”
The minor difference in phraseology can have a major impact on the Owner. As an example, one long-term Tenant installed fixtures during the first lease and later removed them under the terms of the third lease, which required restoration only to the beginning of the lease. The Tenant was obligated to restore only those alterations made under the third lease. Alterations made under the first lease were not covered by the terms of the last lease, so the Owner had to bear the expenses for restoration.
Security Deposit
State laws vary regarding security deposits, particularly how they can be retained, what documentation is required, and the return within a certain period of time. While security deposits are not required by law, some states have imposed a maximum amount allowed for residential security deposits.
Prompted by the Uniform Residential Landlord and Tenant Act, Illinois has passed security deposit statutes. In Illinois, Landlords are required to keep security deposits in a federally insured financial institution. In buildings less than 25 units, the Landlord is not required to pay interest on the Security Deposit. The state does not regulate the amount of the security deposit, but some municipalities, such as Chicago, designate, on a year-to-year basis, what the minimum interest rate a Landlord has to pay.
The lease should also list the amount and kind of security deposit due from the Tenant, as well as the conditions under which it will be refunded. In Illinois, if the Owner or Manger retains any or all of the security deposit to cover damages, the Owner or Property Manager must provide a list of the damages and cost to repair to the Tenant within 30 days of the end of the lease. If the Landlord or Property Manager does not provide this list within 45 days, the full security deposit must be returned to the Tenant immediately.
Personal Property
A clause should be included that obligates the Tenant to remove personal property from the premises and to clean the rented area at the termination of the lease (broom clean). Any property left behind is considered abandoned and may be removed from the premises at the Tenant’s expense.
