...installed by the tenant is an improvement; but counters or shelves, no matter how firmly attached to the building, ordinarily are considered trade fixtures. 4
The term “repair” has been defined in a variety of ways. It means to mend, fix, restore, or renovate, and contemplates an existing structure or object that has been subject to damage or decay, and restored or put back in good condition.
Are repairs or maintenance performed by the tenant considered to be improvements and betterments? For example, does painting or wall papering, or replacing a small section of tile or wood flooring, constitute improvements or betterments? To some extent, it depends on one’s viewpoint.
One view takes the position that anything a tenant does to enhance the building and that cannot be removed is an improvement to the building. This view would undoubtedly include painting or wall papering as an improvement. Another view holds that the improvement must be significant and, for instance, would likely require replacing an entire floor instead of just a small section, or installing a new heating or air conditioning system.
This latter view was supported by the decision in Modern Music Shop v. Concordia Fire Ins. Co. of Milwaukee, 226 N.Y.S. 630 (1927). The case involved an older coverage form that referred simply to “the insured’s interest in improvements and betterments.” The court held that these words imply a substantial or fairly substantial alteration or change to the premises, surpassing that of a simple or minor repair. 5
In another case, U.S. Fire Ins. Co. v. Martin, 282 S.E, 2d 2 (Va. 1981), the Virginia Supreme Court ruled that air conditioners the insured tenant had repaired but not installed were not improvements or betterments. Since the tenant had not paid for the original installation of the air conditioners, the expenses paid by the tenant involved repairs only and did not constitute improvements or betterments.
In view of these decisions, there is some support for the position that an improvement must substantially change or modify the building. Thus, common maintenance or repairs, e.g., painting, or fixing a leaky faucet or unsightly marks on a wall, likely would not be considered an improvement or betterment. But again, circumstances vary and each case must be decided on its own merits. Another point to consider is that tenants often agree, either in the lease or voluntarily, to perform such tasks as keeping the premises reasonably clean, checking and replacing smoke detector batteries, and performing minor repairs.
The Building and Personal Property Coverage Form (CP 0010) provides three methods for handling damage to improvements: