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All About Commercial Tenant Allowances

Sugar Land Small Business AttorneyUnderstanding the role of commercial tenant allowances in attracting quality occupants for your commercial properties can help you to achieve an improved position in the competitive real estate marketplace. Your Katy small business attorney is an excellent source of information about these arrangements and can help you create the right package to attract and retain tenants for your properties.

What Are Tenant Allowances?

Tenant allowances serve as incentives for businesses to move into your commercial buildings and properties. These financial transactions are intended to provide the cash on hand needed for your tenants to customize their spaces to suit their needs. The funds disbursed to tenants are usually earmarked for permanent improvements that will add to the value of the property. As a result, it makes sense for landlords to subsidize these initial expenses to promote interest in their properties and to defray some of the costs incurred by tenants in remodeling their premises.

Provisions of Tenant Allowances

Most tenant allowance agreements include restrictions and conditions that govern the way in which these contracts are administered:

  • The landlord can outline the acceptable purposes for which the funds disbursed can be spent by the tenant. In general, these funds should be used to make meaningful improvements to the property and not for regular operating expenses.
  • The date of disbursement is also usually included in the tenant allowance contract.
  • The landlord can set a specific dollar amount or a maximum amount payable for the tenant allowance. Any unused portion of the agreed-upon amount may be applied to the rent for the space or disbursed as a lump-sum payment.
  • Restrictions and requirements for the quality of work performed may also be written into the contract language of the tenant allowance document. The landlord may also require proof that contractors and subcontractors have been paid for their work before reimbursing the tenant for the costs of these services.
  • Provisions should also be included to address what happens if either the tenant or the landlord default on their responsibilities under the letter of the contract.

Working with a firm in Sugar Land real estate law can ensure that all the details of these commercial tenant allowance agreements are handled correctly and in full accordance with the letter of the law in the state of Texas.

The legal professionals at The Law Office of Henry Jakob can help you manage your real estate transactions in the most practical and effective ways possible. We offer Katy estate planning, civil litigation and real estate law services for businesses throughout our area. Call us today at 713.640.5700 to discuss your needs with one of our experienced and knowledgeable attorneys. We look forward to the opportunity to work with you.