LANDLORDING:  TENANT   INSTALLATIONS?

Tenant-Installed Fixtures

by Robert L. Cain  September 1, 2007

Q. I have a new tenant that asked if they could put a California closets style closet system in the master walk in. Can you give me advice on a tenant doing changes to the property on their own dime?

I’m okay with the closet system as long as they do not then remove it when they leave (holes in the wall, damages, etc.)   Thanks, Steve, Dayton, Ohio

A. The short answer is any improvements done to the property by a tenant may stay with the property.  That means that if the tenant installs a California closet system it becomes a fixture and is part of the property as Steve has indicated he is are aware of.

There is a longer answer, though. A number of years ago I was friends with Jack, an apartment manager, who managed a small apartment building that attracted high-end, long-term tenants. It was an older building, built in the early 1900s, complete with hardwood floors, concrete walls between units and huge rooms. Plus, it was in a desirable part of town that attracted yuppie-type residents.

Jack marveled that when many tenants moved in they wanted to carpet their apartment with top-of-the-line, wall-to-wall carpeting, texture walls and even hire professional decorators to trick out their new digs. He couldn’t imagine spending that kind of money as a renter. But he welcomed anyone who wanted to make improvements such as those. What that meant to him was that these tenants were planning on being there long-term—none of this moving after a year or so.

The California Closets case is similar. I checked some websites that sold California Closet systems and found a couple that would allow you to “build your own” and calculate the cost. Even a small closet organizer is going to cost around $300. That’s a lot of money to spend for a fixture in a rental house.

So the longer answer is that we probably should welcome tenant improvements such as those.

The fly in the ointment is when tenants move out and think that the fixtures they installed belong to them. If a tenant installs a fixture, we need to be sure he or she understands the ramifications of installing that fixture.

We can handle it a couple of ways.

One is, as this landlord suggests, that the closet system remains in the property and that they assure you that no damage will result from their installing the system. Creating an addendum to their rental agreement that explains that any item installed as a fixture remains with the property is an excellent step. On that addendum be sure to provide examples of what would be considered a fixture. The tenant needs to sign the addendum and get a copy.

The other way to handle it would be to tell them that they can install the closet system and take it with them when they leave, but that there must be no nail or screw holes left in the property that could be attributed to the closet system and that the closet must be restored to its original condition.

Take pictures of the closet as it was at move-in so there can be no question. With items such as wall-to-wall carpet it is less likely that the tenant will expect to take it with him, but you never know.

Regardless, this procedure would apply to all kinds of improvements tenants want to make on a property, whether it’s wall-to-wall carpeting, garage cabinets, or custom lighting.

In either case what we must be concerned with is that the installation of any fixture to the property could be either sloppy and damage the property, or could create a safety issue.

Always supervise and/or inspect any such installation to ensure it is done both properly and safely. Remember, as property owners we are responsible for any work done on our property, regardless of who does the work.

Reprinted by Permission. Copyright 2008 Cain Publications, Inc. Robert Cain is a nationally-recognized speaker and writer on property management and real estate issues. For a free of the Rental Property Reporter call 800-654-5456 or visit www.rentalprop.com.