What is the test for determining whether a landlord has a right to demolish or replace a building on a commercial lease?
California, United States of America
The following excerpt is from Phelps v. Orange County Assessment Appeals Bd. No. 1, 114 Cal.Rptr.3d 463, 187 Cal.App.4th 653 (Cal. App. 2010):
Auerbach v. Assessment Appeals Bd. No. 1 for the County of Los Angeles (2006) 39 Cal.4th 153, 45 Cal.Rptr.3d 774, 137 P.3d 951 ( Auerbach ), is instructive. There, a retailer leased property owned by a trust. The lease required the retailer at its own expense to either renovate the existing building, or demolish it and construct a new one, but required the trust's approval before undertaking the improvements. The lease provided that the retailer owned the alterations or new improvements during the lease term, but the retailer agreed to turn over all improvements on the property in good condition to the trust at the conclusion of the lease. The lease required the retailer to repair any damage to the property at its expense, but required the lessor to make any insurance proceeds available to the retailer for the repairs. Although the lease was silent
[187 Cal.App.4th 660]
on the issue, the evidence established that the retailer paid rent for the land, not the building on it. The retailer elected to demolish the existing building, and constructed a new one.[187 Cal.App.4th 660]
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