Legal Question in Real Estate Law in California

Sublease Agreement and Improvement Costs

A friend has a machine shop. He agreed to sublease a unit in an industrial building for one year beginning Feb. 1st, 02. When he looked at the unit prior to renting it, he asked the lessor if the unit had 3 phase power. The lessor said he'd ask the building's owner and get back to him. He later told my friend the unit did have 3 phase power.

My friend just found out the unit has single phase power. He had a couple of big machines moved into the unit and during the move a neighbor (an electrician) looked at the power box and noticed it was single phase.

My question is how does he work out who pays for power to be brought into the unit? My friend would not have taken the unit if he was told it was single phase. The sublease agreement is for a machine shop but my friend cannot run any of his machines with single phase. The land owner told my friend's lessor that he'd pay for 1/2 the cost to make the unit 3 phase. Should my friend have his lessor pay the other 1/2? The sublease agreement is for a year and the lessor may take the unit back at the end of the term. My friend doesn't want to spend a lot on a 10 month use period. What would be the best arrangement in this situation?

Thank you in advance.


Asked on 2/01/02, 3:34 pm

2 Answers from Attorneys
Ken Koenen Koenen & Tokunaga, P.C.

Re: Sublease Agreement and Improvement Costs

Since a) the lessor told him that it was 3 phase, the sublessor acted in reliance of that statement. The lessor should pay the other half.

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Answered on 2/01/02, 8:00 pm
Wayne Smith Wayne V. R. Smith

Re: Sublease Agreement and Improvement Costs

Sounds like the lessor misrepresented, or the owner did, or both. You are now in a tough spot. With only a one year lease, cost is a factor, but having those machines idle is also costly. Best to compare those two costs. You could break away from the lease and move elsewhere to mitigate damages. You have a duty to minimize your damages. The lease is no good as it was procured by fraud - even an innocent misrepresentation is fraud. If your damages are less than $5,000, you might then consider a small claims action to get back some of your losses.

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Answered on 2/02/02, 1:02 am


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