Construction of improvements: Overview, definition, and example
What is construction of improvements?
Construction of improvements refers to the process of building or making changes to a property that enhance its value, utility, or appearance. These improvements may include additions, renovations, or alterations to an existing structure or infrastructure, such as installing new plumbing, adding a room, or upgrading a building's exterior. The term often appears in real estate, construction contracts, and lease agreements to outline responsibilities for the work to be done and the scope of the improvements.
For example, a tenant might agree to construct improvements in a leased commercial space, such as installing new shelving or upgrading the electrical system, with approval from the landlord.
Why is construction of improvements important?
The construction of improvements is important because it adds value to the property, improves functionality, and can increase the overall appeal of a space. Whether in a residential, commercial, or industrial context, improvements often enhance the usability of a property and may be necessary for maintaining or enhancing market value.
For businesses, ensuring that the construction of improvements is clearly defined in contracts helps set expectations regarding timelines, responsibilities, and costs. It also clarifies whether the improvements will benefit the property owner, tenant, or both.
Understanding construction of improvements through an example
A company leases office space and agrees to construct improvements to accommodate its specific needs, such as adding office partitions, installing a kitchen area, or upgrading the HVAC system. The lease agreement specifies that these improvements will be completed within three months and at the tenant’s expense, but they will remain part of the property after the lease ends.
In another scenario, a developer buys an old building and begins the construction of improvements to convert it into luxury apartments. The project includes extensive renovations, such as new plumbing, upgraded electrical systems, and modern finishes. The improvements are intended to increase the building's value and make it more marketable to potential buyers.
An example of a construction of improvements clause
Here’s how this type of clause might appear in a contract or lease agreement:
“The Tenant shall have the right to make improvements to the Premises, subject to the prior written approval of the Landlord. All improvements shall be completed in a workmanlike manner and in compliance with applicable laws. Upon expiration or termination of the lease, the Tenant shall remove any improvements made, unless otherwise agreed in writing.”
Conclusion
The construction of improvements is a crucial process for enhancing property value and functionality. It is especially important to clearly define the scope, responsibilities, and expectations surrounding improvements in contracts or lease agreements to avoid misunderstandings. Whether for business operations, real estate investments, or personal property, this process ensures that both parties—owners and tenants—are aligned on the terms of any changes or upgrades to the property.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.