New tenant wants carpet replaced

[Pudding]

Hi everyone,

I have finally been able to get my office leased (tenant took keys 8/10). Today I have received an email from the PM advising that the tenant would like the carpets replaced.

A few weeks before the tenant moved in the PM recommended that I have the carpets professionally cleaned, which I did. There are a few dark stains scattered on the carpet(the carpet itself is dk blue w/multi coloured specks throughout) but other than that the carpet is still in good nick ( no thinning, scuffs, only the dark stains)

The tenant has offered to split the cost, my question is, if the tenant wants new carpet, should they pay the whole cost? Or am I lucky that they are willing to split the cost?

Sorry for my ignorance, this is my first ip! Also I have emailed the PM, but do not expect a response until Monday.

Thank you!

 

[Scott No Mates]

You will need to weigh up several things:

• Has the tenant accepted the premises in 'as is' condition?
• How old is the carpet?
• How long has the tenant been in the premises?
• How long is the lease?
• How much time is left to run on the lease?
• Do they have an option to extend the lease beyond the current term? If so, can they exercise the option now in return for carpet replacement?
• What does the lease say with regards to responsibility for maintenance?
• Are they a good tenant?
• Is it a deal breaker (if they haven't signed the lease yet)?
• How much is it going to cost?
• Who is responsible for the moving of furniture?
• Does all of the carpet need replacing (or only high traffic areas)?
• Who is getting the tax deduction/depreciation?
• Will they buck up about it if you don't do it?

 

[Pudding]

Hi Scott,

Thanks for your quick reply, I know I will need to weigh this up on my own but the more input the better

The lease commenced at the start of this month, they moved in 2 days ago. Lease is 2/1/1/1.

Lease mentions any maintenance/ improvements are at the lessee's cost.

I think the carpet is 11 yrs(!) old, however the property had been vacant for 6 years before I took it on.

Thanks

 

[Rolf Latham]

what does your lease say

ta
rolf

 

[Pudding]

Haha yes... But I can be a total pushover at times...

Thanks everyone!

 

[Colin Rice]

The tenant has offered to split the cost, my question is, if the tenant wants new carpet, should they pay the whole cost? Or am I lucky that they are willing to split the cost?

Your tenant is your business partner and clever business partners make agreements in writing. Show em the lease!

 

[geoffw]

With such a short term (for a commercial lease) following a long vacancy I'd be trying to ensure a renewal.

I like Scott's questions. It would be good to try to secure the exercise of an option or two in return for half the cost of the carpet- but that does depend on the cost.

 

[DEC]

Lease mentions any maintenance/ improvements are at the lessee's cost.

Problem sorted

 

[skater]

Lease mentions any maintenance/ improvements are at the lessee's cost.

There's your answer.

DEC beat me to it.

 

[Macca]

To me it depends on the cost of the carpet and the amount of rent they are paying.

If the rent is a good return and it is only an offcut size piece of carpet which would be cheap to buy then I would be going halves but only if they exercise a one year option.

This gives you a tenant for 3 years (assuming they stay in business)

 

[DaveM]

If they didnt negotiate new carpet as part of the lease then boohoo to them.

Tenants in my CIP tried that.. new lease was signed they move in, then its oh we want this and that repaired and this replaced and this fitout changed please. Advised them its not a resi lease where the landlord comes running every second they need something done. But they are welcome to make changes at their own cost. Havent heard a peep since.

 

[chilliblue]

Agree with the others. Take note that often when you start changing the terms of the lease a tenant will often keep on asking for more.

 

[Deltaberry]

The only time a landlord makes contributions is initially when he is trying to entice the tenant.

 

[geoffw]

In this case the place has been vacant for 6 years. The current lease option expires in 2 years. The place sounds as if it may be hard to lease, and if the current tenant left after the initial two years, the owner could have an empty premises for a considerable time.

If Pudding were to offer new carpet (or half share) in return for extending the initial lease term to four years, then both the tenant and landlord are better off. I believe contracts can be varied with the mutual consent of all signatories.

 

[chilliblue]

In this case the place has been vacant for 6 years. The current lease option expires in 2 years. The place sounds as if it may be hard to lease, and if the current tenant left after the initial two years, the owner could have an empty premises for a considerable time.

If Pudding were to offer new carpet (or half share) in return for extending the initial lease term to four years, then both the tenant and landlord are better off. I believe contracts can be varied with the mutual consent of all signatories.

All leases may be varied by Variation to Lease document

 

[skater]

In this case the place has been vacant for 6 years. The current lease option expires in 2 years. The place sounds as if it may be hard to lease, and if the current tenant left after the initial two years, the owner could have an empty premises for a considerable time.

If Pudding were to offer new carpet (or half share) in return for extending the initial lease term to four years, then both the tenant and landlord are better off. I believe contracts can be varied with the mutual consent of all signatories.

Yes, however if it is leased to a start-up, the odds of them surviving for more than 2 years are limited (95% of new business fail - or something like that). So....getting them to agree to a longer term might not be worth the paper it's written on.

OR.....maybe it was vacant because the previous owner wanted too much rent & the OP is more realistic and has set the rent at an affordable level that can attract new Business.

Either way, I would not spend money on something that had not already been agreed to. It is a Business Premises, so a Commercial Lease should be in place & they should have discussed the carpet prior to the signing of the Lease. Sounds to me of a Tenant that wants to get more out of the deal than the contract he signed. What's next? I want a new Air-Con, Paint, etc......

I say NO! Nip it in the bud now.

 

[Pudding]

Hi everyone,

Thanks for all the replies, it has given me a lot to think about.
And skater, thanks for pointing out that getting the tenant to agree to a longer term might not be worth the paper it is written on... would never have thought of that. The abn was only est. in early 2011, so still relatively new.

Apparently the place was never made available for lease, just one of those units that sits vacant for a long time...

Thanks once again for everyone's advice, very much appreciated!

 

[willister]

Hi everyone,

Thanks for all the replies, it has given me a lot to think about.
And skater, thanks for pointing out that getting the tenant to agree to a longer term might not be worth the paper it is written on... would never have thought of that. The abn was only est. in early 2011, so still relatively new.

Apparently the place was never made available for lease, just one of those units that sits vacant for a long time...

Thanks once again for everyone's advice, very much appreciated!

Once bitten, twice shy, we had a shocking experiment with two start ups even though they renovated the place on their own costs.

It cost us over $5K twice to clean up the place as both were failed businesses with 3 years...not to mention the legal costs associated - we're going through one right now as I type.

One promised the world and he said bla bla I'll be in here for 13 yrs - we offered him a 3x3 year lease and he couldn't even last the first tenure let alone 13 years!!

A lot of start-ups that I see fail often because they overspend within the first few years expecting a goldmine return only to find realities really harsh.

 

[Peterw]

With, companies, we try to get directors guarantees for leases, to try to assist in the case of collapses.

 

[Pudding]

Reply from RE agent today:

*
Hello Pudding,
*
Under the Terms and Conditions of the Lease, the Lessee is to repair, maintain and keep the premises in a good and tenantable state of repair and condition, however with the age and marks of the carpet, the Lessee has come to us requesting it be changed.
*
Understanding we don`t want to have large costs associated with us just leasing the property we have gone back to the Lessee asking that they get some quotes for the new carpet and would they be willing to split the cost 50 / 50 of having it replaced.* They have agreed to obtain the quotes and split the cost with you, the Lessor.
*
The floor coverings of the premises are an integral part of the building which will stay with the building should the Lessee vacate the premises in the future, and will be maintained by them until that time.

--end--

I think it would just be easier to agree to what the re agent is proposing, I was going to get new carpet put in once the place became vacant again anyway.

Thanks once again for the advice everyone!