Thoughts About Tenant Allowances – Part 2

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Two weeks ago, Ruminations rolled out some thoughts about Tenant Allowances and that triggered a whole bunch of comments, some directly to the blog, and many more on various LinkedIn group discussion boards. Each contribution is sincerely appreciated.

A couple of readers brought up the category of “Trade Fixtures,” and how they, too, were improvements to real property. Those readers are correct – Trade Fixtures are improvements to real property, but of a special kind. They are ones that belong to the tenant and are intended to be removed at the end of the term of the lease. This doesn’t mean that a landlord should or shouldn’t allow the tenant allowance to be used to pay for a trade fixture. Instead, it has tax ramifications as well as raising questions as to whether they are part of a mortgagee’s collateral. We’re not “going” either place in this blog entry. [Read more…]

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