There are special rules that apply when a Tenant makes improvements to the Landlord’s property….
An improvement is any addition or alteration to the leased property, other than a trade fixture that can be removed without substantial injury to the leased property. The landlord is under no obligation to make improvements or alterations, absent an agreement to do so.
In the absence of an agreement to the contrary, a tenant has no right to make material or permanent alterations to the leased premises. Such an alteration without the landlord’s consent constitutes waste. However, when a tenant has been allowed to make improvements, they may be removed at the termination of the lease, so long as the removal will not cause damage to the realty.
However, the right of removal must be exercised within a reasonable time, or the right is forfeited. The reasonableness of the time a tenant takes to exercise the right of removal depends on the particular facts and circumstances of the case.
If improvements have been made without the landlord’s approval, there is no right of removal, nor may the landlord be required to pay for the improvement at the termination of the lease.
A fixture is something personal in nature, but so attached to realty as to become a permanent part of it. Determining whether an object has become a fixture becomes important when a lease is terminated and a tenant seeks to remove property that he or she has erected or installed on the leased premises. In the absence of an agreement to the contrary, a tenant has no right to remove improvements of a permanent character, such as fixtures.
The lease contract may govern installation and removal of fixtures. However, whether an object is a fixture depends on several factors, including (1) the manner in which the object is attached to the property; (2) whether the object has been specifically adapted for the purposes of the lease; and (3) whether the tenant intended that the object become a permanent part of the property. When a tenant installs fixtures under a contractual agreement with the landlord, the tenant’s intent to make the fixture become a permanent part of the property is determined from the provisions of the contract.
The term “fixture” must be distinguished from the term “trade fixture.” A trade fixture is an article annexed to the leasehold by the tenant to enable him or her to carry on the trade, profession, or business contemplated by the lease agreement or that the tenant is engaged in while occupying the premises, and that can be removed without causing material or permanent injury to the leasehold.
As a general rule, in the absence of a contract between the landlord and tenant to the contrary, a tenant may remove and take away trade fixtures at the end of the lease term. The tenant will be liable to the landlord only for physical injury to the freehold caused by the removal.
Frequently Asked Questions
Does a tenant have the right to make improvements to a rental property?
Not without the landlord's consent. In the absence of an agreement, a tenant has no right to make material or permanent alterations to the leased premises. Unauthorized alterations constitute waste and can expose the tenant to liability.
Can a tenant remove improvements they made with the landlord's approval?
Generally yes, if the removal will not cause damage to the property. However, the right of removal must be exercised within a reasonable time after the lease ends, or the right is forfeited. What is reasonable depends on the facts and circumstances.
What is the difference between an improvement and a trade fixture?
An improvement is any addition or alteration other than a trade fixture that can be removed without substantial injury to the property. A trade fixture is something installed by the tenant to enable a trade or business, which can be removed without causing material or permanent injury to the property. Trade fixtures can generally be removed at the end of the lease; permanent improvements typically cannot.
What makes something a fixture under Texas law?
Whether an item is a fixture depends on: (1) how it is attached to the property; (2) whether it has been specifically adapted for the purposes of the lease; and (3) whether the tenant intended it to become a permanent part of the property.
Can a tenant force a landlord to pay for improvements made with consent?
No. Even if the landlord consents to improvements, the landlord is not required to pay for them at lease termination unless there is a specific agreement to do so.
What if a tenant makes improvements without permission?
There is no right of removal, and the landlord cannot be required to pay for the improvement. The tenant may be liable for damages if the unauthorized alterations harmed the property.
How should a landlord protect themselves regarding tenant improvements?
Address improvements in the lease itself: specify what is and is not permitted, under what conditions consent will be given, and what happens to improvements at lease termination. Addressing these issues before work begins avoids disputes later, particularly in commercial leases where improvements can be significant in value.