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Updated 7 months ago,
Mixed Use - Need Help - Can I rent apartments as NON-Residential?
It is time to ask for some help making a new strategy for my mixed-use property.
Background:
I have a mixed use multi-family building in a commercial district zoned as Urban Mix. I've owned it for 7 years and it has not gone well with the residential units. I operate another business out of the ground floor storefront. There are four apartments on the upper floors.
The neighborhood is 10 years into the early-artist phase and shows signs of other development activity happening, but is still has a lot of drug and prostitution activity. The people willing to live there have made horrible tenants. Because of this I have rented two of the apartments to people using them as office/meeting space. They have been good as tenants, but I'm charging well below market with the agreement that the units are as-is and non-residential.
The building is partially renovated, partially demo'd, has ancient plumbing and electrical. New roof.
Questions and Concerns:
The non-residential lease I had them sign was just a modified residential lease. I'm looking for feedback on what distinctions need to be in a lease like this. They are basically renting an apartment with a kitchen and bathroom, but I am telling them they are not allowed to live there. I also put in exclusions for the water heater and furnace so that they are responsible for those.
What type of language will make the AS-IS language stick and make it very clear that they are required to maintain the heating and water systems?
What requirements am I opening myself up to if the units are being used as offices or group meeting spaces?
More generally, what is an overall strategy for a building on a commercial street with a storefront and multiple apartments?
Thank you for any feedback or answers.