--- name: ti-work-letter title: Tenant Improvement Work Letter description: Drafts a Tenant Improvement Work Letter exhibit for commercial leases. Trigger when the user needs a work letter, TI letter, tenant build-out exhibit, or improvement allowance agreement for a commercial leasing transaction. author: CaseMark author_url: https://github.com/CaseMark/skills/tree/main/skills/legal/ti-work-letter license: Apache-2.0 version: 0.1.0 execution_mode: open jurisdiction: us practice: real-estate language: en tags: [agreement, drafting, transactional] --- # Tenant Improvement Work Letter Draft a binding Work Letter exhibit governing design, approval, construction, and payment of tenant improvements under a commercial lease. ## Prerequisites Collect before drafting: 1. **Executed or draft lease** — parties, premises, permitted use, rent commencement mechanics 2. **TI allowance terms** — total amount, per-RSF calculation, eligible cost categories 3. **Base building scope** — Landlord deliverables vs. TI Work 4. **Building rules** — contractor requirements, insurance minimums, working-hour restrictions 5. **Target completion date** — and relationship to rent commencement ## Document Sections ### 1. Header & Recitals - Title as "WORK LETTER" or "TENANT IMPROVEMENT WORK LETTER" — label as Exhibit to Lease - Reference lease date, parties (full legal names), premises - State incorporation into Lease; specify which document controls on conflict - Align effective date with lease execution ### 2. Definitions Define at minimum: | Term | Content | |---|---| | Tenant Improvements / TI Work | All improvements per Approved Plans; distinguish from base building work | | TI Allowance | Total $, per-RSF calculation, one-time vs. replenishable | | Approved Plans | Final space plan + construction drawings + specs approved in writing | | Substantial Completion | Complete for occupancy per intended use; only punch list items remain; reference building codes | | Hard Costs | Direct construction — labor, materials | | Soft Costs | A&E fees, permits, project management | | Over-Allowance Amount | Costs exceeding TI Allowance | ### 3. Design & Approval Process Four-phase flow: 1. Preliminary space plan → Landlord review (10–15 business days) 2. Construction documents (arch/MEP) → Landlord review (10–15 business days) 3. Revisions → shortened review per resubmission 4. Written approval of final Approved Plans → construction may commence Key terms: - Landlord approval not unreasonably withheld, conditioned, or delayed - Permitted withholding bases: building-system impact, code violations, value reduction, use conflict - Change orders require prior written Landlord approval - Address whether approval delays extend completion deadline or rent commencement ### 4. Permitting & Compliance - Tenant responsible for all permits, licenses, certificates of occupancy at Tenant's cost - Permit copies to Landlord before construction; final CO upon completion - Compliance: building codes, ADA, environmental regulations, all applicable law - Contractor insurance minimums: CGL, workers' comp, builder's risk — Landlord as additional insured - Insurance certificates delivered before work commences ### 5. Construction Provisions **Contractor selection** — specify model: Tenant as GC, Landlord-managed, or Landlord-approved contractor list. Require pre-qualification (experience, financial stability, licensing, insurance). **Standards:** - Good and workmanlike manner; new materials ≥ building standard - Minimize interference with other tenants and building operations - Restrict hours, noise, common area use, material storage, debris disposal **Inspection & punch list:** - Landlord right to inspect in progress; non-conforming work corrected promptly - Punch list at Substantial Completion; 30–60 day completion window - Tenant delivers as-built drawings, warranties, O&M manuals ### 6. TI Allowance Structure | Item | Provision | |---|---| | Amount | $__ total ($__ per RSF × __ RSF) | | Eligible costs | Hard costs, A&E fees, permit fees, project management | | Excluded costs | FF&E, telecom/data cabling, security systems, Tenant change-order increases | | Unused allowance | Reverts to Landlord / rent credit / cash payment — specify with conditions and timing | | Subsequent use | Initial improvements only unless otherwise stated | ### 7. Disbursement Procedures **Draw request documentation:** paid invoices, conditional and unconditional lien waivers (all tiers), evidence of payment, certification of compliance with Approved Plans. **Mechanics:** - Monthly progress draws or lump sum at Substantial Completion — specify - 10% retainage until final completion + final unconditional waivers + lien-period expiration - 30-day Landlord processing period after complete documentation - Payment direct to Tenant or to Tenant's GC - Tenant indemnifies against mechanics' liens; must bond or remove liens promptly ### 8. Cost Overruns - Tenant solely responsible for Over-Allowance Amount - Tenant pays excess directly to contractors (or deposits with Landlord if Landlord-managed) - Before construction: Tenant demonstrates overrun funding ability (LOC, cash deposit, or acceptable security) - Specify cost-savings treatment: reversion, credit, or additional improvement use - Change-order cost increases approved and paid by Tenant ### 9. Timeline & Completion | Milestone | Deadline | |---|---| | Plan submission | __ days after lease execution | | Plan approval | __ business days after submission | | Permit issuance | __ days after plan approval | | Construction start | __ days after permits | | Substantial Completion | __ days after construction start | **Delay classification:** | Type | Examples | Rent Commencement Effect | |---|---|---| | Excusable | Force majeure, Landlord-caused, governmental | Day-for-day extension | | Non-excusable | Tenant-caused, contractor performance | No extension | Tenant's written notice of claimed Substantial Completion triggers Landlord inspection. Rent commencement not delayed by Tenant's non-excusable failure. ### 10. Default & Remedies **Tenant defaults:** failure to complete by deadline, failure to pay overruns, non-conforming construction. **Landlord remedies:** complete work and charge Tenant; require removal of non-conforming work + restoration; cross-default under Lease with termination rights. **Early termination:** remove partially completed work and restore premises; reimburse disbursed TI Allowance funds. Improvements become Landlord's property; Tenant maintains during Lease term. ### 11. Signature Blocks Both parties: full legal name, authorized representative signature line, printed name/title, date. Include entity authority representations and notarization blocks if required by jurisdiction. ## Pitfalls & Checks - Cross-reference Lease defined terms consistently with matching capitalization - Verify all dollar amounts, RSF figures, and timeframes are internally consistent - Governing law must match the Lease - Include amendment procedure (written, signed by both parties) - Check local lien-filing periods and mechanic's lien statutes for applicable jurisdiction - Multi-tenant building: address coordination with Landlord's base building contractor - Do not include FF&E procurement — belongs in a separate exhibit