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Tenant Improvement Allowance Agreement

A Tenant Improvement Allowance Agreement defines funding and construction terms for tenant space modifications. This playbook provides negotiation insights on payment schedules, approval rights, and completion standards.

Rent & Payment Terms

Why This Matters: Unclear payment terms can result in cash flow issues, disputes over adjustments, and unexpected liabilities for both parties.

Negotiation strategy

If you're the Landlord:

Ensure the rent amount reflects current market rates and includes a clear adjustment mechanism. Consider offering incentives for early payments to encourage timely transactions.

If you're the Tenant:

Negotiate for a payment schedule that aligns with your cash flow. Request a cap on rent increases to protect against significant financial strain.

Essential elements

1

Rent Amount

Specified in numerical and written form.
2

Payment Schedule

Exact dates for rent payments.
3

Late Payment Penalties

Fees and grace periods for late payments.

Action framework

ACCEPT

Propose edits if the rent amount is above market rates or if the adjustment mechanism is unclear.

EDIT

Reject if the clause lacks a clear payment schedule or imposes unreasonable penalties.

ADD

Add language to specify adjustment mechanisms or to cap rent increases.

PRO TIP

Link rent adjustments to a recognized index like the Consumer Price Index for transparency.

Real-world examples

FAVORABLE

Preferred Rent Terms

"The monthly rent shall be $2,000, payable on the first day of each month. Rent adjustments will be based on the annual change in the Consumer Price Index. A late fee of 5% will apply if payment is not received within 10 days of the due date."
NEUTRAL

Inflation Cap Clause

"Rent increases shall not exceed 5% annually, regardless of CPI changes."
UNFAVORABLE

Unclear Payment Terms

"The rent amount is subject to change without prior notice, and late fees will be determined at the landlord's discretion."

Alternative scenarios & positions

High-Inflation Environment

Adjust the adjustment mechanism to include a cap on annual increases in jurisdictions experiencing high inflation.

Tenant with Variable Income

Propose a flexible payment schedule for tenants with variable or seasonal income, allowing for bi-monthly payments or seasonal adjustments.

Short-Term Lease

For short-term leases, ensure rent terms are simplified and penalties are minimized to accommodate the temporary nature of the agreement.

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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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