What Happens When Your Tenant Decides to Remodel?

Navigating Tenant Renovations: What Every Landlord Should Know

Understanding Tenant Remodels and Their Impacts

Tenant renovations can significantly impact the condition and value of your rental property, both positively and negatively. While some tenants view remodels as a way to enhance their living space, landlords must carefully assess these changes to ensure they comply with property standards and legal requirements. Unapproved tenant modifications, such as repainting walls, installing shelves, or making structural alterations, can lead to potential damages, building code violations, and costly repairs.

The best tenants treat your rental like their own home. They keep the unit clean, handle minor issues like replacing light bulbs without involving you, and may even apply a fresh coat of paint or plant a flower garden. On the other hand, some tenants may come to see your unit as their own property, leading them to undertake major remodeling without your approval.

You might have heard stories about tenants making unauthorized changes. For instance, there could be a tenant who built a deck off the house, replaced kitchen and bathroom fixtures, or laid new flooring—all while surprising the landlord with a bill for the work.

A recent case in New York City highlights this issue in a dramatic way. Property owner CPW Towers is suing Central Park West resident Josefina Berman in Manhattan Supreme Court, seeking an injunction and $85,000 in damages. CPW claims that the 64-year-old tenant decided to “combine” her rental unit with an adjacent condominium that she owns within the same building. The lawsuit states that she is preventing the landlord from entering the rental to assess the situation.

According to the suit, no one was aware of what Berman was doing until neighbors reported loud noises from hammering and sawing, which were related to her alleged attempts to remove and construct new walls, as well as to merge the plumbing and electrical systems of her long-term rental with those of the adjoining condominium she purchased in 1998.

The noise and concerns about potential damage to surrounding units became so severe that some tenants in the 414-unit building requested rent abatements or asked to break their leases and move out. Meanwhile, CPW asserts in its lawsuit that Berman failed to submit drawings or obtain permits for the work, that the project is uninsured, and that unlicensed workers are carrying out the construction.

Addressing Unauthorized Tenant Renovations

Unauthorized renovations by tenants are a common concern for landlords. Some tenants may take it upon themselves to make alterations without considering their lease agreement or obtaining prior approval. These changes can sometimes result in poor workmanship or modifications that decrease the property’s value. For example, a poorly executed plumbing upgrade could cause leaks and water damage. To prevent these issues, landlords should include a clear clause in the lease agreement that prohibits unauthorized renovations and specifies the consequences for any violations.

Why do some tenants think they own the place?

It would take a team of psychologists to probe all the thought that goes into a tenant developing a feeling of ownership toward a rental.  Doubtless, the longer tenants live in a rental, the more attached they become to the property.  But what prompts tenants to cross that line as Josefina Berman is charged with doing?  We’ll follow that lawsuit, which was filed on Nov.  23, 2015, and keep you posted.  But another case – this one on the West Coast – may offer insight.

The scene of conflict is actually outside the Berkeley, Ca., apartment owned by the Anderson family.  Tenant Wally Gorell is fighting the Andersons for the right to maintain the trees, shrubs and flowers he started planting in 1979, when he first moved in.  The Andersons want to cut back the front yard plot, which now includes a two-story palm tree Gorell grew from seed and an irrigation system he installed on his own dime.

Gorell says the garden conflict is a veiled attempt to get him out of the rent-stabilized unit.  He claims the original Anderson landlords loved the green space.  But there is a record of complaints and efforts over the years to rein in the garden.  Currently, the landlord wants to trim back the growth in order to paint the house.  Gorell claims there is plenty of space to paint.  He even organized neighbors in his resistance effort, some of whom joined him in blocking the landlord’s workers.

An apparent hands-off approach early on seems to have set the stage for this current crisis.  What if the landlord had performed regular inspections of the garden and required Gorell to limit the spread of greenery, instead of just responding to complaints?  During lease renewals, the Andersons could have used a lease addendum that would have spelled out future terms governing the garden.  If the issue really is about wanting Gorell to move out, the landlord could have simply non-renewed the lease.

Judges rely heavily on lease agreements when deciding cases of tenants renovating rental property.  Clauses can lead a judge to approve or reject tenant demands for payment for unauthorized changes.  A judge can order a tenant to undo renovations and restore a unit to its previous condition, or order the tenant to pay the landlord for unapproved renovations.

Still, a court will also consider the unwritten history between tenant and landlord.  A landlord’s lack of action in the face of alterations he knew the tenant was making can be interpreted as tacit agreement with the changes.  Landlords can even end up paying for tenants’ remodeling.  All the more reason to conduct regular inspections and halt any mistreatment or modifications a tenant undertakes.

Routine inspections should be done by every property manager.  To strengthen any case you may later have against a tenant who remodeled without permission, follow these steps:

• Maintain a record of inspections, including the date, who conducted it, and which areas of the unit were inspected.
• Note any unauthorized work.
• Give the tenant notices that address improper alterations and any corrections you require
• Note follow-up inspections to confirm corrections were made.

Is it ever a good idea to let the tenant remodels?

In most areas, a tenant can only make their own repairs in emergencies that pose an immediate danger or make a unit uninhabitable.  States and provinces each define circumstances differently, but most specify that tenants must first notify the landlord of serious issues such as having no hot water.  If a landlord fails to make repairs, a tenant may be permitted to pay for repairs and give the bill to the landlord.

Certainly there are handy tenants who offer in advance to make minor repairs on their rental in exchange for reduced rent.  Many landlords willingly incorporate agreements like this in the lease.

There could even be a good payoff for the landlord who permits a tenant to make a major renovation.  Improvements that a landlord may not have the time or money to make herself could boost the property value and bring in higher future rents.

Make sure that any such agreements are in writing and review contracts personally or call in professionals to assess work that you don’t have the expertise to judge.  Always follow the progress of agreed-upon work with routine inspections, else be prepared for some nasty surprises later.

FAQs:

1. Does the tenant need permission to remodel?In most cases, yes. Tenants typically need to seek permission from the landlord before undertaking any remodeling projects. The terms regarding tenant alterations should be outlined in the lease agreement or rental contract.
2. What should landlords consider before granting permission for a tenant remodel?
   Landlords should consider the scope of the remodel, potential impact on the property’s structure or systems, compliance with local building codes and regulations, and any potential increase in property value or rental income.
3. Can landlords require tenants to restore the property to its original condition after remodeling?
   Yes, landlords can include provisions in the lease agreement requiring tenants to restore the property to its original condition at the end of the tenancy. This helps ensure that any alterations made by the tenant do not negatively affect the property’s marketability or value.
4. How can landlords protect their interests when tenants remodel?
   Landlords can protect their interests by clearly outlining the terms and conditions regarding tenant alterations in the lease agreement. This may include obtaining written consent for remodeling projects, specifying the scope and duration of the remodel, and addressing liability for damages or injuries resulting from the remodel.
5. What happens if the tenant’s remodel causes damage to the property?
   If the tenant’s remodel causes damage to the property, the landlord may be entitled to seek compensation for repairs or restoration costs. Landlords should document the condition of the property before and after the remodel to support any claims for damages.
6. How can landlords and tenants communicate effectively about remodeling projects?
   Effective communication is key to successful remodeling projects. Landlords and tenants should discuss remodeling plans openly, address any concerns or restrictions, and document agreements in writing to avoid misunderstandings or disputes. Regular communication throughout the remodeling process can help ensure a positive outcome for both parties.
7. What should a landlord do if a tenant remodels without permission?
   
   If a tenant remodels without permission, the landlord can request the tenant to restore the property to its original condition or charge for the costs of doing so. Depending on the situation, it may also be grounds for eviction, especially if the modifications violate local housing regulations. Open communication is key to resolving the issue amicably.
8. Can a landlord renovate with tenants still living in the property?
   
   Yes, a landlord can renovate with tenants still occupying the property, but they must follow local laws regarding notice and habitability. Landlords are typically required to provide reasonable notice (often 24-48 hours) before entering for renovations, and the work should not interfere with the tenant’s right to a safe, habitable living environment. Major tenant renovations that render the property uninhabitable may require the landlord to offer alternative housing or compensation.
9. Should remodeling be allowed in a rental agreement?
   
   Allowing tenants to remodel can lead to complications, so it’s wise to include a clear clause in the lease agreement about whether remodeling is permitted. Specify what types of changes are allowed, require written permission for any alterations, and outline consequences for unauthorized modifications. This helps protect the property while setting clear expectations for tenants.
10. Can remodeling increase the value of the rental property?
    
    In some cases, tenant-initiated remodeling, when done with permission and to a high standard, can increase the property’s value. However, landlords should carefully evaluate the proposed changes before approving them to ensure the modifications are beneficial and aligned with the property’s long-term goals. It’s important to assess whether the remodel enhances or detracts from the rental’s overall appeal.