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.
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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WEEK 1
CLM Readiness and Design
Our CX team works with you to understand your contracting challenges, prioritize key workflows, and identify the biggest impact areas. We build a tailored implementation plan that fits your needs.
WEEK 2
Install Module
We connect DocJuris to your contract repositories, set up admin and user accounts, and ensure your environment is ready for success.
WEEK 3
Deliver & Test
Your team builds initial playbooks, reviews existing clause libraries, and trains the DocJuris agent to align with your internal standards and negotiation positions.
WEEK 4
Launch
We support you in rolling out DocJuris to a pilot group or your full organization—with launch materials, training, and hands-on support to drive adoption from day one.
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