- The landlord or tenant should retain an architect to prepare a set of plans (known as CDs) describing the TI work. Both parties should approve it.
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- The work letter should be clear and comprehensive. It should specify who pays for the TIs and in what amounts and at what times. TI expenses should be itemized.
- Two types of landlord TI concessions:
- Turnkey – The landlord agrees to pay all costs for the work stated on the CDs, irrespective of the amount. (This does not include changes in the work after the two sides have agreed on a plan).
- TI allowance – calculated as an amount per rentable square foot of the premises. The landlord pays the allowance and the tenant pays all costs above it.
- If the tenant is doing the construction, it must:
- Send the CDs out for bids, select the contractor, obtain the permits and manage construction of the work;
- Provide payment and performance bonds to ensure that the work is completed in accordance with the approved CDs;
- Produce lien waivers from all contractors and suppliers as the work proceeds;
- Ensure that as-built drawings are prepared after completion.
- The work letter should indicate what happens in the event delivery of the premises is delayed due to construction-related issues.
Source: Jeff Bennett – Tenants, Landlords Both Benefit by Planning Improvements. http://jordanramis.com/articles/article0221.html