Plan Your Restorations in Advance

Published on Friday, 8 November 2013 11:35:21    Written by Marc
When moving out of a site, it is good to have a restoration checklist of what to do before you can exit the site. While this might sound obvious, simply of a lease with restoration clauses, you will have the legal obligation to restore the lease site at the end of your lease. However, many companies fail to plan these restorations ahead and wait for the last minute to start the planning of the restorations, only to find out that the restoration work will take longer than planned. They also might find themselves having to pay an extra month or two of rent on an empty site, simply because the restoration work extends beyond the lease. Having a restoration plan, with a checklist of things to do, and who to contact well in advance will help. Yes, most of the time, it becomes project management but it does not always have to be so complicated.

Plan Your Restorations in AdvanceStart by finding out exactly what your obligations are.

Knowing precisely what your obligations are will go a long way to clarify what needs to be done. In addition, it seems that the longer you were in the building, the more items you will need to look after. Chances are more items that will need restoration if you are exiting a building after 20 years rather than after two years; simply because over time companies tend to add items. One year it is new equipment that you install, the next year it is an office renovation. Ten years later and you find yourself with a long list of items for which the lease calls for restoration.

In that case, going over the lease in search of all the restoration obligations is a good start. Having a conversation with the landlord to know in details what he/she want you do restore should be planned right after you revised what is in your lease. Because the landlord might ask for less restoration than the lease calls for, which could be a good thing for you, from a monetary point of view. For example, the lease might require you to remove all the data cable that you installed over the term of the lease. If you leased the site for the last 20 years and underwent a number of renovations, it is possible that the site has its share of data cables everywhere.

Removing everything might be just what the lease says, but the landlord might accept that you leave the data cable in place for a new tenant. That might save you money if you can convince the landlord to leave the cable in place. The same applies for offices or other installation. Having a talk with the landlord well before your lease ends will give you the time to define exactly your obligations and then plan for them. There is nothing more frustrating that finding out about additional items that you need to restore a few days before you plan to give back the keys of a site. You find yourself scrambling to do the work as rapidly as possible to avoid over hold of the site (and the related rent to pay) and often have to pay more simply to do the work in accelerated mode.

Do your detailed checklist.

Once you know in details the restorations needed, it is pretty much project management 101.

Are there equipment that you need to replace, items that you installed and for which the lease forces you to remove? These items can range from signage to just about any operations systems or equipment for which the landlord wants you to remove.

Are there any repairs to the building that fall under your obligation and for which you never had time to do? Now will probably be the time to do finally the work.

Who does what, who to call, both internally (i.e. other departments of your company/organization) and externally (contractors, consultants) being a list of things to do from the landlord and finally get a sign off from the landlord (and do not forget that security deposit…..), these are all items that must go into your list of things not to forget. The best scenario ends when you can give back the keys to the site on the last day of your lease and have your landlord signoff. However, it rarely goes that way unless you have planned.

I do not know how many times in my past life we ended leases and although we did plan, some of the restoration work often took a few days to a few weeks past our lease end date. Most of the time we managed to negotiate with the landlord to avoid paying extra rent for the holding period, arguing that we were cleaning up, or restoring the site of the landlord for his/her benefit. However, on some occasions, argument did not hold and the landlord did stick to the terms and conditions of the lease, which specified that withholding would be charged at 150% of normal rent for each extra month. I can say that when you are paying 150% of rent on a site that you are no longer using, you count the days when you will be finished and it can never go fast enough.

Better to plan in advance and start the restoration work well in advance if possible. If it is not possible, like I witnessed often simply because operations sometimes need to continue to the end of the lease and you know you will need extra days or weeks to remove the equipment and restore the site, the best is to at least know this situation in advance and negotiate something with your landlord. Ideally, a free rent period or at least a lease reduction for that restoration period. By letting your landlord know well in advance that you will have to hold the site for longer than expected you can often negotiated something with the landlord that will reduce your lease costs a little, instead of paying 100 or 150% of normal rent during the restoration period.