You’ve probably spotted those articles about artists, craftsmen and other creative types who lease vacant industrial or commercial space at rock-bottom rates and convert them into stunning, personalized studios and living quarters.
Have you been tempted to follow suit?
Even if you’re not that ambitious, you may at some time, while searching for that perfect apartment, stumble across a unit with really outstanding possibilities. It’s spacious, light and airy. The view is outstanding. The location is ideal for you and the rent is surprisingly low. The only problem is that the place is a mess and the landlord obviously has no inclination to refurbish it. It’s yours if you want it but you’ll have to take it “as is.”
For that matter, almost every apartment dweller looks around at his or her space from time to time and comes up with some really neat ways to improve it. Often, ideas for improvements come flying at you before you even sign the lease. . . . if only there were some built-in shelves in this little nook, or a free-standing gas fireplace in front of that wall, or a Jacuzzi in the bath. Then it would be perfect.
In all cases, from the most complex conversion to a few less complicated, and far less expensive, additions or modifications you might consider making to adapt rental space to your needs, you must realize the property you propose to improve does not, after all, belong to you. That’s why attorneys, and others who have had experience with such tenant-generated space alterations, advise that you proceed with caution.
If the improvements you envision are important to you, you will still need to have a lot of questions answered before you commit to making them.
For starters, “If I agreed to do it myself, will the owner permit it, what’s in it for me and what kind of deal can I make in order to protect my investment?” And that’s just the beginning.
Arlene Rakoncay, executive director of the Chicago Artists Coalition, has had a wealth of experience attempting to help her members who have been burned in the process of converting rental space or, even worse, after having completed a conversion at considerable cost in terms of money, time, effort and stress.
“You wouldn’t believe the horror stories I hear,” she said. “Usually by the time members contact me, they are wanting me to refer them to a lawyer.”
Even before considering an industrial or commercial conversion, check the zoning to be sure you’ll be allowed to live in the space legally, said Rakoncay. If the building is zoned industrial, you won’t be, which means the Chicago Residential Landlord and Tenant Ordinance, and other residential building codes, will not apply to you.
“For example,” she explained, “if you’ve invested a lot of money and effort and created a beautiful live/work space and the roof starts to leak, the landlord may not be legally required to fix it.”
Chicago attorney Glenn Udell is even more explicit in his cautions against undertaking a conversion in a property that is not legally zoned for residential occupancy. He said that many people either don’t know, or choose to ignore, the fact that a city permit is required to undertake a conversion.
“Even if the landlord of industrial property leases space as live/work, you will still have no legal protection if the zoning is strictly industrial,” he said. “Not only that, but if you’re converting illegally, you won’t be able to get a permit and the city can issue a cease and desist order at any time, no matter how much you have invested in the conversion or how far along it is.”
While zoning is certainly the most important factor to consider before committing to a renovation, Rakoncay stressed that there are several additional obstacles that can lead to a lot of grief and potential disaster.
“You must be sure that any alterations you make are in compliance with the city code as it applies to that space,” she said, “and that there are no hazardous materials that will have to be removed.”
She also warned against dishonest or incompetent workers.
“Often our artists are victimized by unscrupulous contractors who may just take their money and run,” she said, “or, just as often, simply don’t know what they’re doing.”
As a final warning, Rakoncay noted that, even after the tenant has completed a successful conversion and all appears to have gone well, there is still the possibility for an unpleasant surprise, if the terms of the conversion and the tenant’s right to occupy that space for a specific period is not spelled out clearly in the lease.
“It’s very easy for an artist to invest a lot of money in finishing off space, only to have the owner sell the building to a developer and force him or her to move, since there is often a clause in the lease saying that if the property changes hands, tenants may be required to move on a 30-day notice,” she cautioned.
“I always highly recommend that anybody who is considering refurbishing space have a lawyer check the lease before reaching a final agreement,” she concluded.
Of course not all tenant-generated alterations are as complicated and expensive as industrial space conversions and most prospective tenants probably wouldn’t want to waste that much time and money anyway. So, what happens if you just want to make one or two modest improvements? For that matter, how do you decide if it’s worth your while to agree to some plaster patching, painting, floor refinishing and/or other clean-up work on a messy, but otherwise ideal, rental?
Again, attorneys advise caution, particularly when it comes to any negotiated agreements between you and the landlord. In brief, they say get it in writing and be sure it’s signed by both parties.
According to George Hausen of the Lawyers Committee for Better Housing, “The first thing you should realize is that, as long as the property is in compliance with the Tenants code, any improvements in your rented space are purely voluntary on your part. You can’t legally demand that your landlord pay for them.”
Which means that you will have to negotiate any agreements about such things as a reciprocal rent reduction, an extended lease, the quality of materials and workmanship and who pays for labor and/or materials. The attorneys emphasize that it doesn’t make much sense to invest your time and money in improving a rental property unless your lease term is long enough to make the investment worthwhile.
Udell noted that, contrary to what many people may believe, a tenant’s right to occupy a space, under the terms of a lease, is not subject to change of building ownership, unless that is stated in the lease.
“Right of ownership and right to occupy are two distinct and separate concepts,” he noted. In other words, unless your lease specifically invalidates your tenancy in case of a sale (as most leases do), you may remain in your space no matter how many times the building changes hands. You may want to have an attorney check the lease, though, to be sure the wording protects you.
In addition, Hausen pointed out that if you install anything that becomes a fixture of the building (defined as anything which would be costly or defacing to remove), it becomes part of the building and you probably won’t be able to take it with you when you move.
Whatever improvements you might wish to make on your rented space, even if you propose to pay for them yourself, check with your landlord before proceeding.
Although most landlords will not object to a few decorative touches, such as a new and more imaginative paint job or some wall-mounted shelving, some may object rather strenuously to any additions they may consider bizarre, inappropriate or in conflict with conventional taste.
