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Tenant improvement…. done any?

davidmeiland | Posted in Business on March 2, 2005 08:02am

This is the second time in a few months I’ve been asked about doing some remodeling of rented office space. The first one was done by someone else and apparently turned into a nightmare. The second one seems likely. The space is for an office, and the occupant (my potential customer) does not own the building.

My contract language is geared 100% towards the client being a homeowner. So, I’d have to rewrite that to reflect that they’re not. And, what does it take for a renter to have the right to remodel a space? What might I need in order to be clear that the work desired is OK with the actual owner? I know this is done all the time, I just have no idea how the contract is structured and what a guy does to be sure it’s legit. Oh, and of course I imagine there’s no lien possible if I’m not paid.

Good advice appreciated.

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  1. BobKovacs | Mar 02, 2005 03:06pm | #1

    David-

    Having done millions of dollars in TI work, I can tell you a few of the key items to cover:

    - Make sure that the plans are signed off by the landlord, and/or have a clause in your contract making it the client's responsibility to get approval for all work.  It's not your place to have to review his lease and confirm what he's allowed to do.

    - Confirm if there are any working hour restrictions,  loading dock area requirements, restrictions on where you can stock materials or put dumpsters, limits on hours for smelly work (painting, etc).  Multi-tenant buildings can be a mess for some of that stuff.

    - Check with your insurance agent regarding "additional insureds".  You'll be required to name the landlord, any property management company involved with the building, the landlord's insurance company, and God knows who else on your policy.  The required limits of insurance may also be greater than you're used to providing.

    - If it's a multi-tenant building, either check the condition of the existing tenant separation walls, or qualify in your proposal that any work to repair/update the walls to meet fire codes is additional (unless it's specified or obvious).

    - Exclude any ADA/code compliance upgrades/life safety system upgrades, except as specifically indicated on the drawings.

    Lastly- are you bidding against other GC's who do commercial TI work all the time?  If so, are you familiar with commercial "standards"?  Generally, the level of finish is slightly lower, especially with drywall work, and your costs may be higher based on what you're used to providing.  Are you familiar with metal stud work, acoustical ceilings, fire alarm work, sprinklers, and the other items that don't show up in residential work?

    Bob

     

    1. blue_eyed_devil | Mar 02, 2005 04:18pm | #2

      David, it looks like you got your good advice by Bob! I've had a coupla' years in Tenant work back in the 80's but none from the GC's perspective.

      blueJust because you can, doesn't mean you should!

      Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!

  2. nwilhelm1 | Mar 02, 2005 04:21pm | #3

    Having appx. 16 years worth of commercial, industrial, and TI work under my belt, I heartily agree with each and every item in Mr. Kovacs response.

    Additionally it has been my experience that a mechanics lien can be filed in any state so long as you have followed the language in that particular state's statute. Most states require that a Notice to Owner be filed within 'x' number of days after a project has started. This document must be filed with the court clerk on behalf of your company and typically lists legal desc of property where improvements are to be made, etc. etc. The law library at your county courthouse will be of great assistance in preparing your own, there are services that charge a nominal fee to produce and record these documents, or you coul google mechanics lien laws for you particular state and see what pops up.

    Best Regards

    1. blue_eyed_devil | Mar 02, 2005 04:45pm | #4

      That's a good point NWilhelm. Mechanics always have some sort of rights to lien, but every state has their own laws and laws differ from residential to commercial too.

      The law library at your county courthouse will be of great assistance...

      I just ran across a fairly comprehensive collection of public domain legal documents. I was searching through a list of favorite links  http://investorpro.com/news-0205.htm  provided by an investors newsletter that I subscribe to. The specific site for the list of "public domain resources" is http://resources.lawinfo.com/fsc/. This list covers all states and is free for anyone. You don't need to be involved with the sponsoring site although I am. Please don't take this as spamming...I just happened to follow a lot of links and was pleased to find that one. It's especially nice that they are State Specific.

      I did find some broken links that were supposed to be attached to some federal forms that I wanted.

      blueJust because you can, doesn't mean you should!

      Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!

    2. davidmeiland | Mar 02, 2005 05:39pm | #5

      Thanks, Bob 'Magnum' Kovacs, that's a great list of items to cover in contract. This is a small job and no one else will bid. It's some door install and related work referred from a local guy that sells doors and hardware. The tenant is a lawyer. Maybe that in itself is enough to pass?!

      NWilhelm, since I always do residential work I always give the state-required Notice to Owner to the Owner. I 'll have to figure out in this case who gets it. I am quite sure in this case that the actual building owner will not want it.

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