Location: Tennessee
So my fiance and I recently leased a property in a multi-unit building from a landlord. We did it without any leasing agents.
My fiance had a salon suite she was renting out for barbering and the business was doing well so she wanted to expand. She has a business license and LLC already set up for that unit so we figured transfer a few things to the new address and we were pretty much good to go.
The landlord said she needed to put a new HVAC unit in and an electrical box as the electric in that unit was hooked up to the other tenant and she wanted to separate it. She was also going to give us the first 3 months rent free while that was happening and told us we could start on any changes we wanted to make during that time(the place was a wreck and so we threw up some drywall in a few spots, painted walls, put down epoxy on floors and installed a hot water tank) all while the electricians were in there doing their thing with HVAC, lighting, and installing new breaker box and meter.
The landlord told us about a month into the process that she hadn’t pulled any permits for the electrical work so we needed to finish any renovations we did before she’d call the electric company to setup inspection and get the meter turned on. Obviously we thought this was extremely shady but after all the money we’ve put into the place, we decided to go ahead and finish the minimum and let her know.
Now this week after speaking to the electricians and the landlord it’s become clear that we needed a bunch of permits, specifically an occupancy permit as this unit hadn’t been registered with utilities on its own before us. The landlord wants us to do this.
This is our first time doing anything commercial like this so we were pretty ignorant to this kind of stuff and thought this was all above board until she told us it wasn’t after we had already did half the work.
So long story short, should we be the ones going to the city for the occupancy permit or is it her mess to deal with since she owns the building, hired the electricians, and never told us in the beginning she didn’t plan on getting any permits. Is it something she has to do or do we? If the occupancy permit gets shut down because no building permits were filed do we stand a chance for any legal recourse against her where we can try to recoup the money put into renovating the place?
All we wanted to do is start a small business, hire a few folks to work it, and try to start something for ourselves that could sustain us.
Comments
Not mentioned here: What your commercial contract states, whether you have the right of first refusal at renewal, right to fixtures and furnishings, or even what your municipal commercial construction code is.
In other words, Reddit can’t really help you with this. Whose problems these are should problems arise in the future depends a lot on specific contract language that we don’t have visibility into and municipal standards that we cannot determine. Most municipalities have a small business booster (basically a bureaucrat who knows what paper to push) – you’d be well served to find that entity and ask for advice.
There are a few different levels of commercial multi-unit construction, permitting, and certificates of occupancy. You have the shell which is the actual building itself. Generally the developer/landlord will be fully responsible for all permits and CO’s of it. Their responsibility may extend into the core if they are developing a substantial portion of the layout and systems of the various units. The tenant may have responsibilities for permits and CO’s if they are doing a fit out of their space. Responsibilities are generally decided during the lease negotiation. That clearly didn’t happen here. While some of your work sounds like it might have required a permit, the bulk of that requiring them was done by your landlord. You also have NO idea if the electrical work meets code much less fire suppression, alarm, and other mechanical work. As such, I don’t think you should be getting involved in the CO. Don’t touch that.
That said, you need to review your lease and possibly with an attorney. In commercial leases a lot of the responsibilities and your recourse comes down to its terms.