Structure

Hello landlords and tenants, I’m going to discuss the meaning of “structure” in a commercial real estate lease. My name is Jenna Zebrowski and I’m the attorney behind LawByJZ.com. A structure is generally going to be something like the roof, the foundation and load-bearing walls of the premises. Tenant wants to limit its responsibility for any structural items to those within the space it controls, the leased premises. 

Landlord owns the building and should be responsible for it. The landlord should protect its investment and make sure to take care of the property, and the things that tenants share, like common areas or the roof.  The tenant should get permission before changing structural elements, in case a warranty is accidentally voided, and so other tenants aren’t unreasonably inconvenienced.  

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Commercial Real Estate Case Study

Structure: Holding It All Together

Patricia had a furniture sales and interior design business that catered to a high-end clientele, so appearances mattered very much in her location. It was absolutely crucial for her to have an immaculate showroom and office, not just in the appearance of the work stations and the arrangement of the displays, but also the floors, ceilings, walls and windows. It had to be attractive and reflective of her brand. Her items were very expensive, so it was important that the building was in good condition, she couldn’t have roof leaks or broken windows let in rain or snow that would damage her furniture or other work equipment!

Patricia was in a triple net lease, so she paid base rent and additional monthly payments for her share of insurance, taxes and operating expenses for the building containing her location. One winter weekend, the heating and air conditioning system, which was on top of the building, froze. This meant burst hoses and busted pipes. The roof flooded and the water broke through the roof, the ceiling of Patricia’s space, and completely ruined her entire show room and work space.

Patricia had insurance, which paid for the damage to her inventory and office equipment. It also paid for the cost of the extra fancy finishes, such as the trendy wallpaper and upgraded light fixtures.  The landlord told her it had also better cover the cost of the damage to the building, since it was her responsibility.

Patricia knew that couldn’t be right, and she turned to her attorney to confirm it. The lease stated that Patricia was responsible for all of the non-structural elements inside of the space, so she would pick up that cost, but it specifically carved out structural items. Those were the landlord’s responsibility!

Structural items are things like the roof, foundation, load-bearing walls and building systems, like plumbing and air conditioning.  Even though Patricia’s space used these structural parts of the building, she paid triple nets, which meant she was financially contributing to their upkeep, but not taking on any of the actual upkeep responsibility herself. She hadn’t caused the air conditioning to break, or any of the other conditions that caused the damage, so she wasn’t on the hook for the costs.