Tenant Improvements (TI): Allowances, Approvals, and Lien Protection
Tenant Improvements (TI): Allowances, Approvals, and Lien Protection
Tenant improvements (TI) are where most commercial lease headaches happen:
- the landlord promises an allowance but the lease is vague
- approvals are slow and the opening is delayed
- change orders explode the budget
- contractors file liens and everyone points fingers
This guide explains the TI terms tenants should lock down before signing. (Not legal advice.)
TI allowance: what it really means
A TI allowance is landlord money intended to help build out the space.
Key questions:
- Is the allowance a cash payment or a reimbursement?
- When is it paid (and what documentation is required)?
- Does unused allowance disappear, or can it be used for rent credits?
- Is it capped and itemized?
Many disputes happen because the allowance sounds generous but is hard to actually collect.
The “work letter” is the real TI deal
TI terms often live in a work letter or exhibit:
- scope of landlord work vs tenant work
- design standards
- timeline
- approval process
- change order process
- who selects contractors
If the work letter is missing or vague, you’re signing a blank check.
Approval delays: protect your rent start
If landlord approval is required for plans, you need:
- an approval timeline (e.g., approve/reject within X business days)
- a “deemed approved” or escalation process if the landlord stalls
Most importantly: make sure rent commencement aligns with opening readiness.
Related: “Rent Commencement” guide:
/blog/rent-commencement-delivery
Lien protection (especially for tenant-funded buildouts)
Contractor liens can create major problems. Tenants should ask for:
- lien waiver process for each payment draw
- proof of contractor insurance
- clear responsibility for paying contractors
Even if you pay your GC, unpaid subs can still cause issues. Paperwork matters.
Change orders: budget killers
The lease and work letter should define:
- who can approve changes
- how pricing is verified
- how timeline impacts are handled
If change orders are expected, define a process now—not during construction chaos.
How BizLeaseCheck helps
BizLeaseCheck flags TI language like:
- missing work letter details
- unclear allowance mechanics
- risky lien and contractor clauses
- rent commencement risk tied to buildout delays
Upload your lease for a first-pass review:
/analyze
Not legal advice
This article is for informational purposes only and is not legal advice. TI practices vary by market, property type, and local rules. Use this as a checklist and confirm key terms with qualified professionals.