Tenant removing upgrades They did

[EJ K.]

Hi, have my own rental properties but my mother in law is the tennant in this case. She decided to shut up shop on her preschool and move into her home to downsize. She rented for many years and was responsible for turning the place into a daycare. Being polish she had all her contractors do work and have the place running. Owner didn’t pay for any of it but allowed it. She stayed 13 years. She even converted uninhabitable rooms into rooms and even added children’s toilets and a whole new bathroom at that. Changed the kitchen to commercial grade. Installed cubbies. 

At the time of leaving, the owners daughter, as the owner died, marketed it as a preschool. On the way out we removed most of the commercial stuff, including sink, all the wall cubbies, painted over the murals that were in there and are planning on removing the children’s toilets too. Essentially making it uninhabitable. 

Can the owner do anything about this as the place is still significantly upgraded from when they had it? 

Also if her business is closing and turning into a home day care and it was always in an llc where she was an employee and paid by the business could she even be liable if that was a possibility.

When we left the floors were damaged too. Whoops... there was children carpet to play on and a leak in the window there. So months of the carpet getting a little moist with sunlight on it drying it up it was stuck to ground. Hence when pulling carpet up, tile came up to.

Throughout the time there she saved numerous receipts and had to fix problems on her own as well.
i think overall she was taken advantage of being a foreigner in this country but she made a great living for 13 years and funded 3 big ten universities with it. 

Any thoughts appreciated 

[Justin Tahilramani]

Nobody on here can answer your question. What does the lease say that she can/can't do upon move out? Sounds like you and her have already made up your minds on the route you are going to go. The landlords recourse is to accept it, or sue your mother in law for breach of contract. 

[Kyle J.]

Depends on how the lease reads. For example, my lease has a clause that states (in part) that the “Tenant shall not make any repairs, alterations or improvements in or about the Premises without the Landlord’s prior written consent.” 

Then, there’s another clause that states “All alterations/improvements made by or caused to be made by Tenant, with or without Landlord’s consent, become the property of Landlord upon termination (of the lease). Landlord may charge Tenant for restoration of the Premises to the condition it was in prior to any alterations/improvements.”

So if your mom’s lease had similar clauses, and she didn’t have the necessary written permissions from her landlord agreeing to the alterations over the years, then she could be charged. 

You’ll just have to look and see what her lease says to know for sure since none of us have read it. 

[EJ K.]

@Justin Tahilramani

I’m not really involved and don’t know. I think a lot of the remodeling that she did was just approved by him without a lease. Before and after the landlord is coming out ahead. So not sure how it’d turn out. 
there was no way we were gonna let her rent it as  a preschool 

[Theresa Harris]

If she was there for 13 years there will be normal wear and tear, especially for a day care.  One question out of curiosity is why did she remove the upgrades-did she plan on using them elsewhere?  My mom had a store and installed a floating floor-she paid.  When she moved, she took it up as she wanted to use it.

The landlord can advertize the space as suitable for a daycare, but they didn't own the business, so they can only market the building-not the business. The business is owned by the tenant.

[EJ K.]

She has people buying some of the items she’s removing. The rest is an FU to landlord. She was there 13 years and once covid hit was harassed about payment.

She probably added 6 figures of upgrades through the years without rent break. 

I would have advocated for her more but just got into the family 3 years ago.

she advertised it as ready for a daycare. She removed all her touches that made it ready. Ie commercial sink, appliances, cubby’s, cabinets, security cameras, park outside, and is contemplating taking the toilets from the two new bathrooms she had installed and the water fountains. They painted over very nice murals as well.

[Anthony Wick]

@EJ Kanive

Depending on the lease, I would sue her. You purposely destroyed the place and don’t care. As a landlord, I’m coming after her with everything I have.

[Ted L.]

I don’t think there would ever be a case when you could remove toilets. Generally, anything attached to the building stays with the building. It’s an improvement, it’s not equipment. You obviously made a decision to limit competition by ruining the place. If it were me I would keep the security deposit and depending on the cost of the vandalism, I would sue for damages. I would probably see if the district attorney’s office would be willing to file any criminal charges as well. You are awful people to destroy the place on your way out. You didn’t just do it for your gain, you did it intentionally to make the place less desirable.

[Karen F.]

If the lease had the clauses that mine does, (no alterations, and if you do, you have to leave them in place), I'd sue you for every cent needed to restore the property to its prior condition.

I bet it was more work for you guys to destroy the place, than the pennies you're selling the fixtures for. Did the landlord's heir do something horrible to you, that you would want to do this? And don't think you're gonna hide behind her being an LLC. The LLC didn't vandalize the property - YOU and SHE did. Frankly, if it were me, I'd call the police and get you arrested for vandalism and theft. You better hope she doesn't have pictures of what it was before you made it "uninhabitable".

You must have realized this, or you wouldn't be posting this question halfway through your destruction of the property.  I recommend that you STOP immediately, and have an attorney contact the owner, explain what happened, that you're very sorry, that the mother in law is old country and didn't know the laws, and come to a settlement with the owner of the property for the destruction you've wrought, before the owner tries to have you arrested.

[Theresa Harris]

removing toilets and sinks is too much.  Taking down cabinets she installed and painting the walls to repair any damage is acceptable.  The place needs to be in good shape when she leaves.

[EJ K.]

we have lots of receipts for upgraded as well as fixes that were neglected by the prior owner. We left toilets. Ultimately removed every other upgrade but the fact still stands the additional room that was added, new bathrooms (plural), flooring, all made the place worth what it is now. As much as was taken out, landlord still coming out way ahead. 
I don’t think they’d have a great case with the lack of upkeep that was done in any counter. I don’t see the vandalism claim when it was just simply taking back built in cabinets, security, covering up expensive hand painted murals, reclaiming all the kitchen equipment, playground in back, all which was done by us without rent breaks or assistance from land lord. Also in time of covid I don’t think much would favor the landlord side. 
I am a landlord too, difference is I would have never done things the way this lady did. 

[EJ K.]

I don’t see how we’d have to repaint walls that weren’t painted in the first place. She essentially rented a fixer upper. The walls that had any damage after removal were added in the first place by the tennant 

[EJ K.]

The concept of returning anything to prior is so out of this world because where the place is now is exponentially more valuable than when it started being rented 13 years prior. 

[Greg M.]

This is well beyond free internet advice. This is well into she needs to retain a lawyer ASAP territory. She will likely be sued. She could potentially be charged criminally. The same for you since you helped her. 

State law varies on the requirements for an installed feature to become permanent. Outside of a written agreement of what happens to these fixtures when she leaves, common law will apply. If it is a permanent fixture, the landlord owns it. If not a permanent fixture, your MIL has a requirement to return the place back to its original condition. When you took out the sink, did you put the original one back? Did you put the old stove back? 

A new bathroom, a sink, cubbies secured to walls, a playground, etc are most assuredly going to be the property of the landlord. That mural she painted over had more value than a white wall. She can be sued for that value. She can also be sued for the lost rent while the place is being remodeled.

All those repair receipts you have, those will be good for tax deductions. They are meaningless in this case - unless you want to help out the landlord and use them to show the court how much money you put into the place and then destroyed.

Your MIL is not going to come off looking like a victim here, she's going to come off looking like a vindictive ***** that stole from and trashed the place of her dead landlord so there wouldn't be any competition. Stop pretending that since this place is better than what was originally rented it is all OK. It is significantly worse than the day she decided to leave. That is all that will matter. The courts will judge the current condition against its high point, not a low point 13 years ago.

And yes, the LLC will provide some protection. That protection will be fully pierced in about 3 seconds by some fresh out of law school lawyer in this particular case.

As someone else mentioned, I'd never set foot in there again and I'd get a lawyer ASAP.

[Ryan Heywood]

@EJ Kanive here are a few articles that may be helpful.

This is not legal advice, but after doing some quick research I found the following. What you need to do is differentiate between “fixtures” which stay with the building, and “trade fixtures” which go with the business. I would think that she would have to leave any improvements that replaced pre-existing parts of the property. If the property has a toilet, and you replaced it you would need to either leave it or reinstall the previous one. As for item that specifically related to the business of running a daycare that she installed, I would imagine those are hers to take. I would consult an attorney to make sure that everything that must remain is there before handing over the keys. The lease will also be important to reference. Hope that helps.

https://www.iowacourts.gov/static/media/documents/21195_353E2E499ED15.pdf

https://www.google.com/amp/s/www.natlawreview.com/article/who-gets-what-when-real-property-lease-terminates%3famp

[EJ K.]

@Ryan Heywood

Gotcha. Thank you. That was my interpretation. There was no infrastructure for a day care. One bathroom. She added multiple bathrooms fit for little people. There was no kitchen so she took back all that was hers. The painting was probably the only overboard part. The jungle gym was hers and looks like it did prior to her renting now. Security wasn’t there before and isn’t now. Cabinets and wall mounts/shelves aren’t there as they were before. Water fountain isn’t there as it was before. It was a dump, we left it better than it was. 
this was probably the wrong forum to post on but I wanted opposition views and I sure got them. I don’t think a lot of the situation is easily translatable. The floor damage was due to her not fixing leaks and it caused the carpet to pull up the floor when I pulled it up. By carpet I mean child rug with car lanes on it. The only permanent things we took, which weren’t there before anyway was water fountains, industrial sink ( was no kitchen before), and painting over a mural which I doubt she knows was there as she’s managing from afar.

The appliances are ours and not permanent. We left the toilets. Figured it’s doubtful another daycare goes in there now anyway.

The jungle gym wasn’t cemented in. Figured that was fair pickings too. 

She needed to paint the place anyway. It was run down and never maintained except by renter.... 

they had to paint immediately upon leasing so it wouldn’t make sense to return something prestine that was garbage before.

[EJ K.]

id Also make the argument even water fountains are trade fixtures... 

[EJ K.]

When they are 2 feet tall...

[Isaac S.]

Originally posted by @EJ K.:

She has people buying some of the items she’s removing. The rest is an FU to landlord. She was there 13 years and once covid hit was harassed about payment.

She probably added 6 figures of upgrades through the years without rent break. 

Hey EJ,

Sorry for the hassle you are going through....honestly, this all kind of comes down to the above quote.

I understand what you are saying about the "sweat equity" that was a labor of love, that your MIL put into the place...but, at the end of the day, it is a business and businesses have very specialized highly detailed leases that spell out every little thing the tenant pays for and the landlord pays for.

The stuff you are talking about is exactly what is covered in a commercial business lease, and the reason they cover that stuff is specifically to protect the amount of time and money you invest into developing a business and cultivating that business and it's associated location. Unfortunately, when you don't go over those details and protect yourself, on the front end, in a lease contract, you run the risk of adding value to an asset that is not yours, and the landlord eventually realizing they can now get much more rental income from your sweat equity.

Sorry for the harsh lesson, but, you should not do anymore "...FU to the landlord..." type of stuff....and try to end this amicably as possible, or risk being even more expensive after adding your legal fees and the landlords legal fees and damages.

Don't let pride or self-righteousness add more fuel to the fire, it only makes it sting and cost more.

Best of luck! Stay healthy.

[Ryan Heywood]

@EJ Kanive

If you wanted to cover your bases, I’d send an itemized list of the removed items and some photos to a commercial re lawyer. I can’t imagine it would be more than a couple hundred bucks if that. Great peace of mind. Good luck!

[EJ K.]

@Ryan Heywood

If it came down to it I plan on it. We have a lawyer as a family friend but would prefer to not call in a favor for this if it doesn’t need to be. The keys are handed over soon and we will see how it goes.
i don’t think it’d be worth it given the primary nature of most of damages was lack of upkeep and water damage. It needed to be painted anyway.

I really appreciated your articles.

I’m a landlord myself and I’d never be like she had been. Maybe because it’s a hobby, maybe it’s just my nature, idk. When it’s all said and done I’m just a W2 worker that is trying to get 5-6 properties to supplement my 401k in retirement. Figured id ask the cut throats and smart people what their perspective was

[Jackie Cramer]

I think many bvb replies are confusing a commercial rental with a residential one

The details of the lease control. 

Very often in a commercial rental one rents 4 walls and a roof. Referred to as a triple net less. Again refer to the lease.

[Michael King]

You're doing it as an "FU to the landlord". Because there was no rent break over the years. Owning property for someone else to live in or make their own money from, is a business and costs money. As a landlord, I don't get a break on taxes, water, utilities, nothing. In fact, something called inflation causes my costs to go up year after year. Is it bad for a landlord to increase prices to cover this?

[Natalie Schanne]

@EJ Kanive - I’m assuming the owner of the house didn’t raise rent on your mom significantly as she owned her business. Some landlords would increase the price the more upgrades you put in the property because the upgrades usually belong to them as fixtures (unless they’re trade fixtures which are personal property).

Flip it on its head and ask yourself if you were selling the property as a daycare and it looked like it originally did and when the buyer went for his final walk through you had taken out all the cabinets and sinks and painted over all the murals/decorations, would he still want to buy it and give you the same amount of money? The answer is no.

I think you set you and your mom up to be sued and/or receive a judgement in court for missing rent and property damage (unless her Llc goes bankrupt or she is personally liable on the lease). And for what? A bunch of used sinks? I can barely get any money out of used construction materials.

Do the past 13 years this family hosted your mom’s business mean nothing? Did they ignore you every time you had a maintenance request or did they help out? Did they keep rent below market? (Nobody expects a landlord to pay for your fixtures).

I’m sorry covid encouraged her to shut down and I hope she can find another opportunity.

[EJ K.]

@Natalie Schanne

Maintenance requests were abysmal actually. It wasn’t a daycare before only after what we did to it. I’m not seeing it the same way. Even as it’s it’s more valuable.

[Mike Dymski]

If she wanted the landlord to pay for leasehold improvements or take care of deferred maintenance, she should have addressed it at the time of the improvements and maintenance.  There is nothing cutthroat about that fact.  She and the landlord both made that decision.  And tenant improvements are common in most every business lease.

COVID caused her to lose her business and not be able to pay rent.  Until you deal with reality, stop blaming other people, and own it (whether it's fair or not), you won't have control over your happiness.  I am sorry to hear what your family is going through.