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Work Letter 'What Ifs': Practical Solutions to Possible Problems
The work letter agreement of the lease (the “Work Letter”) sets forth the rights and obligations of the landlord and the tenant relating to the construction of improvements at the leased premises. For both landlord and tenant, the areas of concern will vary, depending on, among other things, whether the building in which the premises is located already exists or is under construction, and which party is responsible for the payment and performance of the base building work and tenant improvements. During the parties' preparation and negotiation of the lease agreement, various construction-related issues will inevitably need to be considered and addressed by both landlord and tenant.
To help anticipate problems and mitigate associated risks, this two-part article summarizes six “what if” scenarios that should be considered by landlords and tenants when negotiating Work Letters.
1. What if the Building Does Not Support the Tenant's Improvement Requirements?
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