A lease provision requiring the tenant to return the premises to a specified condition at the end of the lease term, often including removal of tenant improvements and restoration to the original or "shell" condition.
Surrender and restoration clauses define the tenant's obligations upon lease expiration or termination. Requirements range from "broom clean" condition (minimal cleanup) to full demolition of tenant improvements and restoration to base building shell. The clause should specify which improvements must be removed, the standard of restoration, and the timeline. Failure to comply can result in holdover rent charges while the landlord completes the work at the tenant's expense. Restoration costs can be substantial, often exceeding the original improvement budget.
A landlord required a tenant to restore the space to shell condition at a cost of $150,000, even though the landlord immediately re-leased the space to a new tenant who would have used the existing improvements. The landlord collected restoration costs and re-improvement allowances.
Negotiate the restoration standard during lease signing, not at expiration. Push for "broom clean" condition or a landlord option to keep improvements. If full restoration is required, get a cost estimate early and reserve funds throughout the lease term.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
