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PLAYBOOK TEMPLATES
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
Negotiation strategy
Ensure the rent amount reflects current market rates and includes a clear adjustment mechanism. Consider offering incentives for early payments to encourage timely transactions.
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.
Example clauses
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."
Fallbacks
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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