Last Updated May 14, 2019

Law and Practice

Contributed By McGuireWoods LLP

Authors



McGuireWoods LLP has a diverse real estate practice of more than 80 lawyers and land use planners in its offices in Tysons, Charlottesville, Richmond and Norfolk, with skills in a wide range of traditional and non-traditional real estate transactions. The firm’s transactional representation spans all aspects of real estate acquisition, development, financing and disposition, including acquisition, sale, leasing and financing transactions, as well as project finance, construction, public-private partnerships, negotiation of local and state incentives and privatization transactions. The team respresents clients around the world on various sides of such transactions, including Fortune 500 companies. The transactional practice is complemented by the firm’s land use expertise, as it frequently handles zoning and land use matters for development projects.

The extent of a tenant’s right to alter or improve its premises depends on the identity of the tenant and the nature of its lease. In a long-term ground lease where the tenant owns the improvements, there are typically few limitations (if any) on the tenant’s right to make alterations, provided they do not adversely affect the fair market value of the landlord’s property. Similarly, a credit tenant under a relatively long-term lease, or a tenant in a single-tenant facility, will have wider flexibility than a tenant under a short-term lease in a multi-tenant facility.

Where restrictions exist, there are some common features. Most landlords prohibit exterior or structural alterations, or any alterations that impact the HVAC, electrical or other building systems, without their consent. Even interior, non-structural alterations may be prohibited without consent if they are substantial in nature (eg, if they require a building permit, or if they exceed a certain dollar threshold). For permitted alterations, landlords typically require the right to approve the plans and specifications for the work, and also the identity of the contractor(s) performing the work. In the case of substantial additions, landlords may also require final plans or as-built surveys upon completion. In many cases, landlords also reserve the right to require tenants to post bonds or other security in advance of performing the work, and also that lien releases and other similar documentation be provided upon completion.

Finally, most commercial leases provide that the landlord may elect to require the tenant to remove the alterations at the end of the term, at the tenant’s expense, although the tenant may request that the landlord makes this election earlier in the term (eg, at the time the landlord consents to the alteration).

McGuireWoods LLP

1750 Tysons Boulevard
Suite 1800
Tysons, VA 22102-4215

+1 703 712 5000

+1 703 712 5050

info@mcguirewoods.com www.mcguirewoods.com
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Authors



McGuireWoods LLP has a diverse real estate practice of more than 80 lawyers and land use planners in its offices in Tysons, Charlottesville, Richmond and Norfolk, with skills in a wide range of traditional and non-traditional real estate transactions. The firm’s transactional representation spans all aspects of real estate acquisition, development, financing and disposition, including acquisition, sale, leasing and financing transactions, as well as project finance, construction, public-private partnerships, negotiation of local and state incentives and privatization transactions. The team respresents clients around the world on various sides of such transactions, including Fortune 500 companies. The transactional practice is complemented by the firm’s land use expertise, as it frequently handles zoning and land use matters for development projects.

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