DISCLAIMER

You agree, by participating in this webinar, that the information presented does not

constitute legal advice and is being presented for informational purposes only.

You agree that no attorney-client relationship is established or assumed by participating in this webinar and that the information or suggestions presented in

this broad overview may not apply to your specific circumstances.

Balancing Act of Competing Interests

Balancing ActTenant’s Interests

Landlord’s Interests

Landlord InterestsControl The Process

Costs

Timing (Rent Commencement)

TenantInterests

Choice of Materials

Ability to Pay Up Front

Risk: Landlord Could Do It Cheaper

Common Terms• “Tenant Improvements”• “Build-Out Provisions”• “Rent Commencement”• “Substantial Completion”

SAMPLE

SAMPLE

Include a work letter as an addendum to your lease

Letter of Intent• Build-outs usually agreed to as part of

LOI

• Should reflect tenant’s build-out intentions

• Include sufficient detail

Letter of Intent• Build-outs usually agreed to as part of

LOI

• Should reflect tenant’s build-out intentions

• Most people don’t include enough information

Put as much info as possible about your intentions in your LOI

CostSharing

100%Landlor

d

100%Tenant

Shared

Spectrum

CostSharing

Increase Rent

Landlord

Provides

Allotment

Tenant’s Own Costs

100%Landlor

d

100%Tenant

Shared

Spectrum

CostSharing

Make sure to write out each party’s responsibilities

Rent Commencement

Get Ren

t ASAP

Delay

Paying

Rent

When To Start

Charging Rent

Landlord

Tenant

Rent Commencement

Rent commencement is the most contentious issue – so be clear!

Deadlines,Phases, & Delays• Use benchmarks or milestones for

completion of entire project or phase of project

• Include provisions related to responsibilities of either party in the event of a delay

SubstantialCompletion•How is it defined (or is it?)

•Who determines?

Details of the Project• Include as many details as possible, such

as:• Materials• Brands• Minimum/maximum costs• Layouts• Specifications

Details of the Project

Avoid “shell” language or ambiguities about the project

Details of the Project

Involve your contractors early in the process

Details of the Project

Include work letters in the addendum of your lease

Approval RightsFor Landlords:• Contractors• Plans• Review and

Comment

Approval RightsFor Landlords:• Contractors• Plans• Review and

Comment For Tenants:• Plans• Contractors• Final Approval of

project

Approval Rights

Tenants - Use approval provisions to make sure the final product is what you want

Escape Options

Unexpected Improvement

Costs

Compliance Issues

Permitting Issues

Hazardous Waste/Toxic

Materials

SAMPLEa. Lessee Improvement Costs Contingency. The parties agree that should Lessee’s

architects and contractors determine that the total cost of the Lessee Improvements (as such term is defined in the Lessee Improvement Addendum with an even date herewith) are anticipated to exceed $XXXX, Lessee shall have the right to advance the Expiration Date of this Lease to a date that is six (6) months following Lessee’s written notice electing to so advance the Expiration Date of this Lease, which written notice must be delivered not later than XXX, 2015, and, in such event, any rent paid by Lessee through the date of such written notice shall be refundable to Lessee within thirty (30) days of Lessee’s written notice. Lessee shall reimburse Lessor for the unamortized cost of (i) XXXX YYY ZZZ, and (ii) leasing commissions paid by Lessor in connection with this Lease. In the event of any such Expiration Date advancement by Lessee pursuant to this Paragraph, Lessee shall provide Lessor with supporting documentation as to the total estimated costs to complete the Lessee Improvements supporting Lessee’s election to so advance the Expiration Date.

Not Completed in Time

Cannot Get Permits

Exceed Agreed-To Costs

Issues Before Completion

Poor Quality, Workmanship

Latent Defects

Failure to Pay Contractors

Issues After Completion

Breach of Lease• Mediation or

Arbitration

• Lost Rent During Litigation

• Recovery of Attorney Fees

• “Screen” Your Lease

• Fill in the Gaps

• Protect & Advance Your Interests

BeforeThe Process

• Help find resolution

• Collaborative solution

• Protect & Advance Your Interests

AfterThe Process

• Franchisees

• Change Orders

• Contractor Issues

• Mechanic’s Liens

• ADA/Haz Mat

• Insurance

Overtime

Include Work Letter Addendum

Be Detailed In LOI To Set Early Understanding

Specify Each Party’s Cost Responsibilities

Be Clear About Rent Commencement Details

Avoid “Shell” Language & Ambiguous Terms

Involve Contractors Early In The Process

Add Approval Provisions To Ensure Your Satisfaction

Have An Attorney Review Your Lease

FinalThoughts