This seems like a sim­ple mat­ter, but money can get com­pli­cated. Let’s break down each piece.

Ten­ant Improvements

If your land­lord gives you a ten­ant improve­ment allowance, you should decide how and when it will be paid, what it includes (includ­ing soft costs such as archi­tec­tural fees, legal fees, build­ing per­mit fees, sig­nage costs, mov­ing costs, etc.), and what hap­pens if the land­lord fails to pay you back for reim­bursable costs. You may want to require the land­lord to place the money in escrow.

Rent Cal­cu­la­tion

Rent can be as easy as pay­ing a flat amount monthly for every­thing you need to oper­ate in your space. It can also include com­pli­cated for­mu­las bro­ken into parts. Here are some items that might be included in your rent:

  • Prop­erty Taxes: address spe­cial assess­ments in this item.
  • Insur­ance: find out about pre­mi­ums and what hap­pens when prices increase.
  • Com­mon Areas Main­te­nance: this is often shared between the land­lord and other ten­ants; but the wrong for­mula can be costly.
  • Util­i­ties: make a detailed list of who pays what. If the land­lord pays util­i­ties, make sure that it’s not a profit cen­ter for them.
  • Cap­i­tal Expenses: do you have to pay for any cap­i­tal expenses? If so, how and when?

If any part of your rent is based on a for­mula, then get the right to audit and review the books and records and to rec­on­cile statements.

Rent Abate­ment

The abil­ity to abate your rent based on defaults is one of the most pow­er­ful ways to force your land­lord to com­ply with the lease. Oth­er­wise you have to take them to court and get an order, which can take a long time.