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Attorney 1
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Category: Real Estate Law
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I leased a building and renovated the structure resulting in

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I leased a building and renovated the structure resulting in excess of $35K.The landlord represented to me that the building was up to code. Not only was it riddled with code violations, at the end of my inspections, I was still unable to secure a business license for the structure. The landlord allowed for me to walk away, but would not return in money for the renovations relying on the AS-IS clause that was in my lease. I understand what AS-IS means, but feel that I had reasonable expectation that the structure met minimal conditions and further that I would be able to open for business upon completion of said renovations. Simultaneously, the City was playing nice with the property manager (We Will Deal With him on the Non-Compliance issues) and cited (via written communication) the landlord for unpermitted work (Erected a wall and door to make the space leasable) discovered during my inspections and also cited them for an illegal corridor that recently connected two buildings. The notification specified that the corridor was illegal and would have to come down as it was on the property line, but more importantly deemed a fire hazard. The landlord in turn filed for a consolidation and made it one address thereby resolving the issue with the corridor. It is my opinion that changing the legal description does not make it safe. I tendered the property back to the landlord after I was unable to secure a license. Attorneys are telling me that the judges in my state generally side with the Landlords. My questions are as follows:
1. If the structure was deemed illegal at the time that I signed my lease, does that automatically void the lease?
2. If the building was not in compliance, Is that the same as an illegal structure? I am unable to determine if I can sue for damages, Unjust Enrichment, etc.
3. If I was unable to secure a business license because of existing code violations that the landlord refuses to and/or expected me to correct, does that automatically void my lease?
4. Does a personal guarantee (I signed) prevent me from suing the landlord even if they circumvented the municipal laws to lease the space (i.e. Erected a Wall and a Door without a permit)?
I am not finding straight answers online. If I am unable to re-coupe my funds, I will be forced to file for bankruptcy. I just want to feel confident in what I know before I spend months and months going back and forth with the landlord to only come out with nothing.
I would love to hear your thoughts on the matter.
Submitted: 3 months ago.
Category: Real Estate Law
Expert:  Attorney 1 replied 3 months ago.

Hello, and welcome. I'm a licensed attorney and happy to assist.

You definitely have a lousy landlord, but unfortunately the laws of commercial leases are not the same as those of residential leases, which afford tenants a lot more rights. Commercial leases and laws favor the landlord in the sense that the landlord has virtually no responsibilities to the tenant and answers pretty much only to the City Building Department, etc.

1. Even if the structure was deemed illegal when you signed your lease, the lease is not automatically void in a commercial tenancy. This would be different in a residential tenancy.

2. Since commercial landlords aren't held to the same standard as residential landlords, there may be no grounds to sue for damages under the circumstances. You could sue for damages only if you paid rent and did not get what you bargained for (for instance, if the landlord knew (a) you needed to obtain a permit in order to conduct business in his building; (b) that his building didn't comply; and (c) the noncompliance would necessarily result in denial of the permit). In such a case you could get your money back and perhaps damages under the doctrine of failure of consideration. Other than that, there would be no way around the "as is" provision. Unjust enrichment is applicable only when there was not an actual contract, so it not of use here.

3. See above. While the lease would not automatically be void, you would have grounds for getting out of your lease if the landlord knew you could not actually do business in the building.

4. The personal guarantee should have no effect on whether or not you can sue the landlord.

I hope this helps. If you need additional information or clarification, just let me know and I'll continue to provide assistance. If I have addressed your issue and/or pointed you in a positive direction, please let me know that, as well. Also, please remember to leave a positive rating when prompted, as that is the only way attorneys on this site are credited for the help we provide.

Good luck!


Attorney 1

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