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Is commercial tenant entitled to Non-refundable payment for improvements to property for business operations when tenant default

Washington |

commercial tenant paid landlord 11,000 so that landlord can make improvements to property for tenant's use. payment was due prior to construction. Tenant approved constructions drawings and moved in. 1 yr. later tenant paid 4,000 in security deposit. Tenancy is for 5 years, with option to renew upon notice for 2 years. After 1 1/2 yr, business slowed and tenant defaults and owes LL for 6 months at 4,000 per month. Landlord asks tenant to vacate. No written notice was provided as required in lease. Is tenant entitled to any portion of the "non-refundable payment"? Lease provides LL may declare lease terminated by giving notice of intention to terminate and if tenant does not move, LL re-enter if after written notice tenant does not leave. What are tenant's rights here?

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Attorney answers 1


The rights and obligations of landlord and tenant under a commercial lease are governed almost exclusivley by the written lease, to the extent the lease covers the disputed issues. Here, it appears the $11,000 paid by tenant was expressly stated to be nonrefundable, so tenant likely gets none of that back. Landlord's request that tenant vacate should have been in writing, but if tenant acknowleges the request, the point is moot. It appears tenant has almost no rights, as a tenant in default. Landlord can re-enter the premises, but only if doing so does not disturb the peace. If tenant resists landlord's entry (ie, changes locks, or otherwise blocks landlord's entry), landlord must file court action and get a sheriff's assistance before entering. Landlord has duty to mitigate damages, by seeking a substitue tenant (ie, list building for lease, using broker or other commercial means). If landlord fails to do so, tenant has right to challenge landlord's claim for lost rent, and likey have such claim reduced by amount lanlord could have received in rent had landlord tried. There are numerous issue in these circumstances, and a careful review of the written lease is critical.