Protect Yourself Against Paying Rent for
Space That Isn't Ready for Occupancy

© 1999 by CSI Consultants Inc. 

Everything is negotiated.  The lease is signed.  You set a moving date, print new stationery and pack everything up.  When moving day arrives, though, you can't move in because the painters, plumbers and electricians are still working on the space.  To add insult to injury, the landlord starts charging you rent anyway.

This can easily happen if Rent Commencement is not properly negotiated in your lease.  There are many factors involved in this negotiation, particularly if the landlord is doing the interior construction for you.

Typically, for example, the rent commencement date is tied to "substantial completion of construction".  This is a vague term that needs to be defined more clearly if disputes are to be avoided.

In addition, all foreseeable contingencies must be anticipated in negotiating rent commencement.  Among them . . .

1.  Construction isn't completed on time because your plans were submitted late.

2.   Construction isn't completed on time because the landlord had a dispute with a contractor, or because the contractor's employees went on strike.

3.   The space is completed on time, but the lobby is still under construction, or the elevators don't work.

4.   You can't move in because the building workers are on strike against the landlord.

5.    The space is ready, but there's a delay in getting telephone service.

The lease should also include notice provisions to facilitate your planning, and clauses that penalize the landlord financially if time commitments are not met.

Part of your broker's job is to represent your interests in negotiating these provisions.  Your broker should also review your existing lease to determine the consequences of remaining in your present location beyond the expiration of the lease.  Your costs should be taken into account when negotiating the penalties for landlord delays.

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