LEASE AGREEMENT REFERENCE GUIDE 1250: DRAFTING THE TENANT WORK LETTER ADDENDUM $24.95
Drafting the Pro-Tenant Work Letter Addendum
Major tenants who lease large chunks of space must routinely deal with a numbing variety of work letters governing the construction of improvements in the premises. Such work letters are often attached to the lease as exhibits, and their contents can sometimes make for less than fascinating reading. This is because work letters typically specify the exact construction materials and standards applicable to the construction of the tenant's improvements in the premises.
Mundane But Necessary Details
This level of specificity requires the tenant to sort through constructions details such as:
The "Expanded" Work Letter
But the tenant's review of the work letter doesn't end with construction details. During the seventies and eighties landlords began to expand the scope of work letters beyond their traditional content regarding specifications for leasehold improvements. Landlords typically added a host of substantive new provisions which were related to construction, but which affected important issues normally covered in the body of the lease such as commencement of the term, the rent start date, indemnification, insurance, access to the premises during construction, limitations on contractors used by the tenant, and so forth.
Examples of such provisions include:
The Role of the Tenant's Addendum
The major tenant will always have to review the work letter's language describing the individual business deal for the leasehold improvements with care. Details concerning who builds exactly what in the space, and how that construction is paid for are critical components of the lease's economics.
That being said, the major tenant can substantially improve the boiler plate ultimately contained in the work letter by submitting its own work letter addendum at the outset of lease negotiations. That approach is probably the best way to get pro-tenant language on the table concerning important work letter matters such as the definition of substantial completion, punchlists, delays, credits and substitutions, warranties and building standard work exclusions.
Getting Down to the Details
The following section contains several clauses from a standard form addendum drafted in favor of a major office building tenant. The addendum is meant to be attached to either the lease or the work letter, and it contains the following sort of pro-tenant provisions: