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PLAYBOOK TEMPLATES

Construction Build-Out Agreement

A Construction & Build-Out Agreement governs property improvements or fit-outs between owner and contractor. This playbook discusses scheduling, change order processes, and liability for defects.

Rent and Payments

Why This Matters: Unclear or unfavorable payment terms can create cash flow challenges and disputes over costs. Defined terms protect both parties against surprise charges and ensure timely performance.

Negotiation strategy

If you're the Tenant:

Negotiate for a fixed rent amount with minimal escalation. Ensure any additional charges are clearly itemized and justified.

If you're the Contractor:

Ensure rent escalation aligns with market trends and is based on a recognized index. Clearly define penalties for late payments to encourage timely payment.

Essential elements

1

Payment Schedule

Defines timing of payments.
2

Escalation Formula

Details rent increase method.
3

Additional Charges

Lists extra fees like CAM.

Action framework

ACCEPT

Propose edits if escalation formula lacks specificity or if additional charges are not itemized.

EDIT

Reject if payment terms are vague or non-compliant with market standards.

ADD

Add language if payment terms are missing or incomplete.

PRO TIP

Always ensure that escalation formulas are tied to a specific index to avoid future disputes.

Example clauses

FAVORABLE

Clear Payment Terms

"Tenant shall pay a monthly rent of [amount] on the first day of each month. Rent shall escalate annually by [percentage/index]. Late payments will incur a penalty of [percentage/amount]. Additional charges include CAM fees, calculated as [method]."
NEUTRAL

Basic Payment Clause

"Tenant agrees to pay rent as per the agreed schedule. Additional charges may apply."
UNFAVORABLE

Vague Payment Terms

"Rent and additional charges will be determined as needed."

Fallbacks

High-Inflation Environment

In high-inflation scenarios, ensure rent escalation is capped to prevent excessive increases.

Short-Term Lease

For short-term leases, negotiate for fixed rent without escalation to maintain predictability.

Shared Spaces

In shared spaces, ensure CAM charges are proportionate to the space used.
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