build-out-allowance-agreement

name	build-out-allowance-agreement
title	Build-Out Allowance Agreement
description	Drafts a Build-Out Allowance Agreement as a commercial lease addendum governing landlord-provided TI allowance terms. Use when structuring TI allowance financing, negotiating landlord work letters, or documenting tenant improvement funds at lease execution.
author	CaseMark
author_url	https://github.com/CaseMark/skills/tree/main/skills/legal/build-out-allowance-agreement
license	Apache-2.0
version	0.1.0
execution_mode	open
jurisdiction	us
practice	real-estate
language	en
tags	["agreement","drafting","transactional"]

Build-Out Allowance Agreement

Lease addendum governing landlord-funded tenant improvements — protects landlord against mechanic's liens and cost overruns while giving tenant clear disbursement procedures.

Prerequisites

Gather before drafting:

• Executed lease (or near-final draft) with premises address, suite/unit, commencement date, SF
• Allowance amount — lump sum or per-SF rate; disposition of unused funds (forfeit vs. rent credit)
• Project budget — hard costs, soft costs, contingency
• Retainage % — typically 5–10%
• Draw review period — typically 10–15 business days
• Completion deadline — utilization cutoff date

Document Sections

1. Recitals & Integration

• Full legal names, lease execution date, premises address
• Agreement supplements the Lease; conflicts resolved in favor of this Agreement

2. Allowance Amount & Scope

Item	Detail
Total Allowance	[$ AMOUNT] lump sum or [$X/SF × _____ RSF]
Unused Funds	Forfeited / rent credit (select one)
Utilization Deadline	[DATE] months after Commencement Date

Reimbursable: hard construction costs, architect/engineer fees, permits, inspection fees, project management (if agreed).

Excluded (Tenant's expense): FF&E, trade fixtures, telecom/AV/security, specialty items unique to Tenant's operations.

3. Construction Approval & Management

• Tenant manages build-out; Landlord retains approval rights (not unreasonably withheld)
• Tenant submits stamped plans from licensed architect/engineer for prior written approval
• All contractors subject to Landlord approval; must name Landlord as additional insured
• Tenant obtains all permits before work commences
• Comply with building codes, ADA, Landlord's building standards, approved plans
• Construction limited to approved hours; minimize disruption to other occupants

4. Disbursement Procedure

Each draw request requires:

• Detailed contractor invoices (labor + materials)
• Conditional lien waivers from all contractors, subs, and suppliers