You're not likely to find rental space for your business that is perfect in every way. Maybe you'd like the interior walls to be positioned just right. Or maybe you'd prefer an oversized restroom or a ceiling with special lighting. How do you deal with the landlord regarding these issues?

Let's start with a building under construction. Your lease should define what the landlord will do before turning the space over to you. At the very least your landlord should agree to pay for a "base building" or "core shell." This covers the cost of finishing the building so it is ready for any tenant.

Finishing the building includes such details as floors, plumbing and electrical systems, as well as the heating, ventilating and air-conditioning system (HVAC). But you may want the landlord to do more. For example, you may want interior walls, window treatments, floor coverings and lighting fixtures. Obviously, the more the landlord agrees to pay for, the less your business has to spend on improvements.

What about construction quality? Seek a lease provision that requires the landlord to have the local building and safety inspector check out the space before it is turned over to you. The inspector will make sure the landlord has correctly installed the electrical lines, water pipes and HVAC system. By having an inspector double-check, you won't wind up paying for mistakes that the landlord's contractor makes.

Previously Occupied Space
A common situation faced by renters is renting space that was occupied by a prior tenant. Most likely the space will need to be fixed up or modified for your use. Maybe it just needs re-painting or re-carpeting, which are relatively inexpensive to do. However, you may need some more expensive improvements.

For example, your business may need more lighting and electrical outlets, a new air-conditioning system or a kitchen area. Or it may need a new layout, which requires taking down, installing or moving walls.

When reading your lease, look for these details to be covered:

• Who will design your improvements?
• Who will do the construction?
• Who will pay for the improvements?
• Who will decide whether the work is acceptable, triggering your duty to pay rent?

Maybe you have had a space planner or an architect draw up some plans. If not, for most small businesses it is reasonable to have the landlord do the design work, which is subject to your approval.

Once you and the landlord have agreed on the plans, letting the landlord hire people to do the work is often the best route. The landlord probably has contractors available who are familiar with the building and can work efficiently on the improvements.

But you may decide you want to have more control over work schedules, workers and materials. If this is the case and you have the time and expertise to oversee the job, specify that you will be in charge. If you go this route, your landlord will want to make sure that you have adequate insurance, that workers are properly bonded and that no liens are placed on the building.

Who Will Pay?
Regardless of who is in charge of the work, you and the landlord need to agree on who pays for it. This is always negotiable, though a few principles do apply. Normally, a landlord should pay for capital improvements, which are items such as new plate-glass windows or a modern heating system. In short, the landlord is responsible for any permanent improvements that will enhance the value of the property for years to come.

By contrast, you should pick up the tab for non-capital improvements such as items that will be usable only by you or would be unnecessary otherwise. This might include a reinforced floor to support heavy machinery, or repainting the recently painted walls with a color more to your liking.

In negotiating who will pay for the improvements, try to avoid a formula in which the landlord pays a certain part of the costs, and you pay the rest. This is sometimes called a "tenant improvement allowance," which means you may have to open your wallet wider if there are cost overruns.

Here are three alternative options in which you avoid having to pay for unanticipated costs:

• The Standard Building Allowance. The landlord pays for a specified package of improvements, no matter what the costs. You pay for anything additional.
• Fixed Amount for Tenant. You pay a fixed amount for improvements. The landlord pays the rest.
• No Tenant Payment. The landlord pays for everything.

Finally, unless you are taking charge of the work, you want a way to make sure the job is up to par before you accept it. See if the landlord will agree that an architect or experienced inspector will make this final determination.