In the Spotlight: Pay Attention to the Work Letter

The work letter that is attached to a lease, particularly an office lease, is a very important part of the lease document. Because it is an exhibit, and because many leasing professionals are not especially well versed in construction issues, the work letter is frequently given little attention during a lease negotiation. Some inexperienced tenant representatives assume that the work letter is simply a boilerplate exhibit and that somehow, magically, the landlord will design and construct the space automatically following the lease execution, without any further hassle. This, of course, is never the case. The keys to any successful construction project are planning and communication. The parties need to decide well before lease execution what kind of work letter will be attached to the lease. Work letters come in many flavors, including turnkey, tenant improvement allowance, base building, and landlord as construction manager. It is very important for the parties negotiating the lease to understand who is designing the space, who is responsible for construction, and, perhaps most importantly of all, who is responsible to pay whom. It is equally important to document these points effectively. Unless the work letter is carefully vetted by someone with construction experience and integrated into the lease, the result is likely to be disastrous, particularly for the tenant.

The work letter that is attached to a lease, particularly an office lease, is a very important part of the lease document. Because it is an exhibit, and because many leasing professionals are not especially well versed in construction issues, the work letter is frequently given little attention during a lease negotiation. Some inexperienced tenant representatives assume that the work letter is simply a boilerplate exhibit and that somehow, magically, the landlord will design and construct the space automatically following the lease execution, without any further hassle. This, of course, is never the case. The keys to any successful construction project are planning and communication. The parties need to decide well before lease execution what kind of work letter will be attached to the lease. Work letters come in many flavors, including turnkey, tenant improvement allowance, base building, and landlord as construction manager. It is very important for the parties negotiating the lease to understand who is designing the space, who is responsible for construction, and, perhaps most importantly of all, who is responsible to pay whom. It is equally important to document these points effectively. Unless the work letter is carefully vetted by someone with construction experience and integrated into the lease, the result is likely to be disastrous, particularly for the tenant.