Commercially leased space may have to be customized to fit a renter's needs. You and the property manager will need to reach an arrangement about these adjustments and choose:

- who'll come up with the personalizations

• who is accountable for finishing or hiring the personalization work
• when the task will get done, and
• who should pay 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 an Attorney
  What Is an Occupant Improvement Allowance?
  
  The most common method for proprietors and tenants to allocate the expenditure of improving business area is for the property owner to give you what's referred to as a tenant enhancement allowance (TIA). The TIA represents the amount of cash that the property owner wants to invest in your enhancements. It's stated either as a per-foot quantity or a total dollar sum. Generally, if the enhancements cost more than the agreed-upon sum, you pay the additional.
  
  The lease stipulation that resolves these concerns is usually titled "Improvements and Alterations."
  
  Negotiating the Payment Method for Your TIA
  
  You usually do not receive the TIA directly. Instead, the property owner pays the professionals and providers up to the TIA limit-after that, you pay. Or, the property owner might decide to offer you a month or 2 of "totally free" lease, which implies that you need to accomplish all that you want to make with the cash you've "conserved" by not having to pay the rent.
  
  If you have an option, press for the former arrangement. If the property manager gives you the TIA and you foot the bill, you run the threat that the IRS will think about that income, and tax you accordingly. When the property owner physically keeps the cash and pays the costs, you can potentially avoid this result.
  
  Negotiating the Size of Your TIA
  
  You'll be in a great position to plan on an appropriate TIA if you already understand what your improvements are most likely to cost. You'll require to rely on your space planners or designers for their suggestions. If the property manager isn't ready to provide you a TIA that'll fulfill the spending plan, you might still decide that it's worth your while to fork over a few of your own cash to get the appearance and configuration you want.
  
  Because you'll be accountable for any costs above the TIA, you'll assume the danger (and expenditure) of construction overruns. The threat will increase if the proprietor, instead of you and your specialist, does the construction. After all, the property owner has little incentive to keep costs within the TIA amount because the property manager will not spend for any excess. For this reason, it may be more suitable for you to suggest another method to deal with enhancements (as described later on).
  
  Negotiating Protections for Your TIA
  
  One way to control the ultimate expense of your enhancements is to insist in the lease stipulation that the landlord need to seek out competitive bids if the landlord does the work. Specify that the landlord ought to request sealed quotes and that the quotes be opened in your presence. That method, the possibilities that the property manager will choose an unnecessarily costly contractor-or one with whom they have a comfortable relationship-are decreased.
  
  Besides controlling construction overruns, you'll wish to restrict the fees that come out of your TIA. Landlords usually charge overhead and "administrative" for occupant improvement work, even if the landlord doesn't take charge of the work.
  
  These charges (which might also be charged by the property manager's specialist, if they're included) will come out of your TIA, which the property manager is merely using as an earnings source. The more your TIA is diminished by fees, the less you have to invest in the real work.
  
  During lease negotiations, ensure you discover out:
  
  - what these fees are going to be and
• whether they follow the leasing practice in your area.
  
  Check with your broker or other well-informed company tenants.
  
  Negotiating How You Can Use Your TIA
  
  Don't let your proprietor tell you that your TIA is a concession or a gift. Landlords are typically accountable for the costs of capital enhancements (improving the structure in such a way that will benefit any future occupant). If the work under your TIA is a capital improvement, then the property manager should most likely pay for it anyway.
  
  But even if the work is genuinely specific-in reaction to your tastes or unusual company requirements-and the landlord has actually nonetheless ponied up some money, the landlord isn't even worse off. You can be sure that proprietors peg their rent requires high enough to compensate them at least in part for the TIA they're paying you.
  
  Once you understand that the TIA is rightfully yours (you have actually spent for it, one way or the other), you'll wish to have some leeway when it pertains to investing it. Consider bargaining for the following two agreements in the enhancements provision:
  
  You can utilize the TIA for a wide variety of expenditures. Especially if the property owner has secured the right to keep any unused TIA, make sure that you have broad discretion as to how you can spend it. For example, you need to be able to use your TIA to architects' and lawyers' fees, allow charges, moving costs, and even your own time invested protecting zoning differences or authorizations. If you don't use the whole TIA, you'll get a setoff versus lease. In the unlikely occasion that the last costs are less than the TIA, the balance needs to be credited against your rent. Returning it to the proprietor, in essence, deprives you of the advantage of all your hard bargaining over who spends for enhancements.
  
  Alternatives to a TIA: Build-Out and Turnkey
  
  While working out a tenant-friendly improvements and alterations clause might appear more effective, don't be too enamored of a TIA. It isn't "totally free 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 property owner, will be accountable for cost overruns. The following 3 options do not run that risk.
  
  Building Standard Allowance, or "Build-Out"
  nih.gov
  In this plan, the proprietor offers you a specified bundle of improvements and you spend for anything fancier or extra. This alternative puts the danger of overruns on the property manager unless you alter the agreed-upon improvements. You're likely to experience this method in brand-new buildings especially, where the property owner has a building crew and materials currently on website.
  
  The deal provided to you (the "structure requirement") might include:
  
  - a certain grade of carpets or vinyl flooring covering
• a specific kind of drop-ceiling
• a set variety of fluorescent lights per square feet of floor space, and
• a defined number of feet of drywall partitions with 2 coats of paint.
  
  Basically, it resembles a fixed-price meal in a restaurant-if you desire anything fancier, you pay the distinction or schedule your own specialists to come in and do the task.
  
  If the landlord's deal suits you, the structure requirement could be the simplest and most affordable way to go. Its big benefit is that the property manager, not you, pays for any cost overruns (unless you have actually bought additional products). And if the work isn't done on time, there can be no concern regarding who's accountable (as long as you've not obstructed).
  lawdepot.com
  If you don't take place to require the entire plan the property manager is offering, you can also work out for a credit for those items you don't use. Your property owner may decline, however, if they've currently purchased the products.
  
  You Pay a Fixed Rate, the Landlord Pays the Rest
  
  This plan is the reverse of the TIA, where the proprietor pays a set amount and you pay the balance.
  
  Your proprietor isn't likely to be thinking about this technique unless you have plans that are clear, firm, and exempt to unanticipated boost. That method, the landlord can reasonably assess what the enhancements will cost them and the probability of expense overruns.
  
  For example, suppose your plans call for the installation of counter tops made of Italian marble. If the stone remains in stock in your area, excellent