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Commercially leased area may have to be tailored to fit a renter's needs. You and the property owner will have to reach a contract about these modifications and decide:

- who'll develop the customizations

• who is accountable for finishing or working with out the modification work
• when the task will get done, and
• who should spend for it.
  
  What Is an Occupant Improvement Allowance?
  Negotiating the Payment Method for Your TIA
  Negotiating the Size of Your TIA
  Negotiating Protections for Your TIA
  Negotiating How You Can Use Your TIA
  Alternatives to a TIA: Build-Out and Turnkey
  Speak to a Lawyer
  What Is an Occupant Improvement Allowance?
  
  The most common method for property managers and occupants to designate the expense of improving commercial area is for the proprietor to provide you what's known as a renter improvement allowance (TIA). The TIA represents the amount of money that the property owner is ready to spend on your enhancements. It's specified either as a per-foot amount or an overall dollar amount. Generally, if the improvements cost more than the agreed-upon amount, you pay the extra.
  
  The lease stipulation that attends to these concerns is typically entitled "Improvements and Alterations."
  
  Negotiating the Payment Method for Your TIA
  
  You typically do not get the TIA straight. Instead, the landlord pays the specialists and suppliers approximately the TIA limit-after that, you pay. Or, the property manager might decide to give you a month or more of "free" rent, which implies that you should achieve all that you desire to make with the cash you've "saved" by not having to pay the lease.
  
  If you have a choice, press for the previous plan. If the property owner provides you the TIA and you foot the bill, you run the threat that the IRS will consider that earnings, and tax you accordingly. When the landlord physically keeps the cash and foots the bill, you can potentially avoid this result.
  
  Negotiating the Size of Your TIA
  
  You'll remain in an excellent position to plan on an appropriate TIA if you already know what your improvements are likely to cost. You'll need to rely on your space coordinators or designers for their advice. If the property manager isn't going to provide you a TIA that'll meet the plan, you could still decide that it's worth your while to dish out some of your own cash to get the appearance and configuration you desire.
  
  Because you'll be accountable for any expenses above the TIA, you'll assume the risk (and expenditure) of building and construction overruns. The danger will increase if the proprietor, instead of you and your professional, does the building. After all, the proprietor has little incentive to keep costs within the TIA amount due to the fact that the property owner won't pay for any excess. For this reason, it might be more suitable for you to suggest another way to deal with enhancements (as explained later on).
  
  Negotiating Protections for Your TIA
  
  One method to manage the eventual expense of your improvements is to firmly insist in the lease clause that the property manager should look for competitive bids if the property manager does the work. Specify that the proprietor ought to request sealed bids and that the bids be opened in your existence. That method, the opportunities that the property owner will select a needlessly pricey contractor-or one with whom they have a cozy relationship-are decreased.
  
  Besides controlling building overruns, you'll wish to limit the charges that come out of your TIA. Landlords usually charge overhead and "administrative" costs for renter enhancement work, even if the property manager doesn't take charge of the work.
  
  These costs (which could likewise be charged by the property manager's professional, if they're involved) will come out of your TIA, which the proprietor is simply using as an earnings source. The more your TIA is diminished by fees, the less you have to spend on the real work.
  
  During lease negotiations, ensure you learn:
  
  - what these fees are going to be and
• whether they're consistent with the leasing practice in your location.
  
  Talk to your broker or other knowledgeable company occupants.
  
  Negotiating How You Can Use Your TIA
  
  Don't let your proprietor inform you that your TIA is a concession or a present. Landlords are normally accountable for the costs of capital enhancements (improving the structure in such a way that will benefit any future renter). If the work under your TIA is a capital improvement, then the proprietor ought to most likely pay for it anyway.
  
  But even if the work is truly specific-in action to your tastes or unusual company requirements-and the proprietor has actually nonetheless ponied up some money, the property owner isn't even worse off. You can be sure that property owners peg their lease demands high enough to compensate them a minimum of in part for the TIA they're paying you.
  
  Once you understand that the TIA is rightfully yours (you have actually paid for it, one method or the other), you'll desire to have some freedom when it comes to investing it. Consider bargaining for the following two agreements in the enhancements provision:
  
  You can use the TIA for a wide range of expenses. Especially if the landlord has protected the right to keep any unused TIA, make certain that you have broad discretion as to how you can spend it. For example, you ought to have the ability to use your TIA to designers' and attorneys' fees, allow charges, moving costs, and even your own time spent securing zoning differences or permits. If you don't use the whole TIA, you'll get a setoff against lease. In the not likely occasion that the final expenses are less than the TIA, the balance ought to be credited against your lease. Returning it to the proprietor, in essence, denies you of the advantage of all your tough bargaining over who spends for enhancements.
  
  Alternatives to a TIA: Build-Out and Turnkey
  
  While negotiating a tenant-friendly improvements and modifications stipulation might seem preferable, don't be too enamored of a TIA. It isn't "complimentary rent" or a present from the property manager, and it's not without its drawbacks. The issue with a TIA is that you, not the landlord, will be accountable for cost overruns. The following three options don't run that danger.
  
  Building Standard Allowance, or "Build-Out"
  
  In this plan, the property manager offers you a specified package of improvements and you spend for anything fancier or extra. This option puts the risk of overruns on the landlord unless you alter the agreed-upon improvements. You're likely to encounter this method in brand-new buildings particularly, where the proprietor has a building and construction crew and products currently on site.
  
  The deal provided to you (the "structure standard") may include:
  
  - a specific grade of carpeting or vinyl floor covering
• a specific type of drop-ceiling
• a set variety of fluorescent lights per square feet of flooring space, and
• a defined number of feet of drywall partitions with two coats of paint.
  
  Basically, it resembles a fixed-price meal in a restaurant-if you want anything fancier, you pay the distinction or organize for your own contractors to come in and do the job.
  
  If the proprietor's deal suits you, the building requirement could be the easiest and most affordable way to go. Its big advantage is that the property owner, not you, pays for any cost overruns (unless you have actually ordered extra products). And if the work isn't done on time, there can be no concern as to who's responsible (as long as you have actually not obstructed).
  
  If you do not take place to need the entire plan the proprietor is using, you can likewise negotiate for a credit for those items you do not utilize. Your property owner may decline, nevertheless, if they have actually currently purchased the products.
  
  You Pay a Fixed Rate, the Landlord Pays the Rest
  
  This plan is the reverse of the TIA, where the landlord pays a fixed amount and you pay the balance.
  
  Your proprietor isn't most likely to be interested in this method unless you have strategies that are clear, firm, and not subject to unanticipated boost. That way, the property manager can realistically examine what the improvements will cost them and the probability of cost overruns.
  
  For instance, suppose your strategies require the installation of counter tops made from Italian marble. If the stone is in stock locally, terrific