USA – ALABAMA Law and Practice Contributed by: Adam J. Sigman, Crystal H. Walls, Nathan Stotser, Katie Sinclair and Courtney Dow, Dentons
6.14 Tenant’s Ability to Alter and Improve Real Estate The terms of a lease will dictate whether a tenant is permitted to alter or add improvements. Often, ten - ants may receive a tenant improvement allowance to induce signing the lease, requiring that a landlord either installs certain improvements on the premises or reimburses the tenant for its costs. Often, a lease requires a tenant to obtain the landlord’s written approval for materials, plans, contractors, etc, involved in such improvements before starting the construction or installation of such improvements. Furthermore, trade fixtures may generally be removed by a tenant, though the tenant may be held liable if they damage the underlying real property in the pro - cess of removal. See LaFarge Bldg Materials, Inc v Stribling , 880 So 2d 415, 419 and 424 (Alabama 2003). 6.15 Specific Regulations The Alabama Uniform Residential Landlord Tenant Act (Section 35-9A-101 et seq) governs any rental agree - ment (“all agreements, written or oral, and valid rules and regulations adopted under Section 35-9A-302 embodying the terms and conditions concerning the use and occupancy of a dwelling unit and premises”) related to the rental of any dwelling unit (a “structure or the part of a structure, including a manufactured home, that is rented as a home, residence or sleeping place by one or more persons”) to a tenant (“a person entitled under a rental agreement to occupy a dwelling unit to the exclusion of others”); Section 35-9A-141. This statute includes additional rules and regulations for both landlords and tenants in the residential con - text. Non-residential real estate leases may include specific restrictions related to the category or use of the leased premises, but such leases are generally not subject to specific regulations or laws due to the use or category of the underlying leased premises. 6.16 Effect of the Tenant’s Insolvency Leases often contain language stating that a tenant’s insolvency or the filing of any bankruptcy petition, vol - untary or involuntary, constitutes a default under the lease. However, if the lease remained in force at the filing of a bankruptcy petition, the leasehold estate is
costs are also typically priced into the rent paid by the tenant. For a residential lease, the landlord is required to “keep all common areas of the premises in a clean and safe condition”, along with other requirements for the leased premises’ working order and condition (Section 35-9A-204). 6.10 Payment of Utilities and Telecommunications Net commercial leases often include utilities and tel - ecommunications services serving an entire property (not just an individual tenant) in the operating expens - es that are charged to tenants on a pro rata basis, while gross commercial leases may include the costs of such services, utilities and telecommunications in the rent charged to the tenant. If such utilities or ser - vices are separately metered and service only a single tenant’s leased premises, that tenant is often respon - sible for the payment for such utilities or services. 6.11 Payment of Property Taxes The tenant is not obligated to pay real estate taxes and assessments unless the lease provides for the tenant to pay or contribute to such costs. 6.12 Insurance Issues Payment of insurance premiums insuring leased real estate is typically done by a landlord, but such costs are often passed through to tenants as an operating expense in net commercial leases. Insurance cover - ages vary by property, but many commercial landlords carry general liability, casualty, flood and fire insur - ance, as well as coverage for bodily injury, property damage, lost rents, etc. 6.13 Restrictions on the Use of Real Estate Landlords may limit the way that commercial tenants use leased real estate and often prohibit tenants from using the leased premises for certain exclusive uses negotiated with other parties. Applicable zoning laws and private restrictive covenants in the property’s chain of title may impose further restrictions on ten - ant uses.
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