Commercially leased area may have to be tailored to fit an occupant's needs. You and the property manager will need to reach an agreement about these modifications and decide:

- who'll come up with the modifications

• who is accountable for completing or hiring the modification work
• when the task will get done, and
• who need to spend for it.
  
  What Is a Renter 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
  Consult with a Lawyer
  What Is an Occupant Improvement Allowance?
  
  The most common method for property owners and occupants to assign the expense of improving commercial area is for the proprietor to give you what's understood as an occupant improvement allowance (TIA). The TIA represents the amount of cash that the property owner is ready to spend on your enhancements. It's stated either as a per-foot quantity or an overall dollar amount. Generally, if the enhancements cost more than the agreed-upon amount, you pay the additional.
  
  The lease stipulation that resolves these issues is normally entitled "Improvements and Alterations."
  
  Negotiating the Payment Method for Your TIA
  
  You normally do not receive the TIA directly. Instead, the property manager pays the professionals and providers approximately the TIA limit-after that, you pay. Or, the property owner might decide to offer you a month or 2 of "complimentary" rent, which indicates that you need to achieve all that you wish to do with the money you've "saved" by not needing to pay the lease.
  
  If you have a choice, press for the previous plan. If the proprietor offers you the TIA and you pay the costs, you run the risk that the IRS will consider that earnings, and tax you appropriately. When the property owner physically keeps the cash and foots the bill, you can possibly prevent this outcome.
  
  Negotiating the Size of Your TIA
  
  You'll be in a good position to plan on an adequate TIA if you currently understand what your enhancements are most likely to cost. You'll require to count on your space coordinators or designers for their recommendations. If the proprietor isn't ready to give you a TIA that'll meet the budget, you could still choose that it's worth your while to dish out a few 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 danger (and expenditure) of building overruns. The risk will increase if the proprietor, rather than you and your professional, does the building and construction. After all, the proprietor has little incentive to keep costs within the TIA quantity because the property manager won't pay for any excess. For this factor, it may be preferable for you to recommend another way to deal with enhancements (as described later).
  
  Negotiating Protections for Your TIA
  
  One method to control the eventual expense of your improvements is to insist in the lease stipulation that the property owner need to look for competitive quotes if the proprietor does the work. Specify that the property manager ought to request sealed quotes and that the quotes be opened in your existence. That way, the opportunities that the property owner will choose an unnecessarily costly contractor-or one with whom they have a relaxing relationship-are decreased.
  
  Besides managing building overruns, you'll wish to limit the fees that come out of your TIA. Landlords usually charge overhead and "administrative" charges for occupant improvement work, even if the property manager does not organize the work.
  
  These charges (which could also be charged by the property owner's professional, if they're involved) will come out of your TIA, which the property manager is merely using as a profit source. The more your TIA is diminished by charges, the less you need to spend on the actual work.
  
  During lease settlements, ensure you learn:
  
  - what these fees are going to be and
• whether they follow the leasing practice in your area.
  
  Consult your broker or other knowledgeable service 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 generally accountable for the costs of capital improvements (enhancing the building in such a way that will benefit any future tenant). If the work under your TIA is a capital enhancement, then the property manager should most likely spend for it anyway.
  
  But even if the work is really specific-in response to your tastes or unusual business requirements-and the property owner has actually nonetheless ponied up some money, the property owner isn't worse off. You can be sure that landlords peg their lease demands high enough to compensate them at least in part for the TIA they're paying you.
  
  Once you comprehend that the TIA is truly yours (you have actually paid for it, one method or the other), you'll want to have some freedom when it comes to investing it. Consider bargaining for the following 2 arrangements in the enhancements provision:
  
  You can use the TIA for a wide variety of costs. Especially if the proprietor has secured the right to keep any unused TIA, be sure that you have broad discretion regarding how you can invest it. For instance, you must have the ability to use your TIA to architects' and attorneys' fees, allow charges, moving costs, and even your own time spent securing zoning variations or licenses. If you do not utilize the whole TIA, you'll get a setoff against rent. In the not likely event that the final expenses are less than the TIA, the balance should be credited against your rent. Returning it to the proprietor, in essence, denies you of the benefit of all your hard bargaining over who spends for improvements.
  
  Alternatives to a TIA: Build-Out and Turnkey
  
  While negotiating a tenant-friendly improvements and alterations clause may seem more suitable, don't be too enamored of a TIA. It isn't "free lease" or a present from the landlord, and it's not without its downsides. The problem with a TIA is that you, not the proprietor, will be responsible for expense overruns. The following three options don't run that threat.
  
  Building Standard Allowance, or "Build-Out"
  
  In this arrangement, the landlord uses you a defined plan of enhancements and you pay for anything fancier or extra. This option puts the threat of overruns on the property owner unless you change the agreed-upon enhancements. You're most likely to experience this approach in brand-new structures especially, where the landlord has a construction crew and products currently on site.
  
  The deal used to you (the "structure requirement") may consist of:
  
  - a particular grade of carpets or vinyl flooring covering
• a particular type of drop-ceiling
• a set number of fluorescent lights per square feet of floor area, 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 contractors to come in and get the job done.
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  If the property owner's deal fits you, the structure standard might be the simplest and most cost-effective way to go. Its huge advantage is that the property owner, not you, spends for any cost overruns (unless you've purchased extra items). 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 don't happen to require the whole plan the landlord is using, you can also negotiate for a credit for those products you don't use. Your property manager might decline, however, if they've currently purchased the products.
  
  You Pay a Fixed Rate, the Landlord Pays the Rest
  
  This arrangement is the opposite of the TIA, where the property manager pays a fixed sum and you pay the balance.
  
  Your landlord isn't likely to be thinking about this method unless you have strategies that are clear, firm, and exempt to unanticipated expense boosts. That way, the property manager can realistically assess what the improvements will cost them and the probability of cost overruns.
  
  For example, suppose your plans call for the setup of counter tops made of Italian marble. If the stone remains in stock in your area, excellent