Get Tenant’s Timely Consent to Buildout Changes

Q: Suppose an owner leases retail space to a prominent national chain for which it builds out space, but needs to get the chain’s written consent each time it makes changes to the construction plans. If the chain is slow responding, it may force the owner to work around the clock at substantial cost in order to complete the space by the set deadline. Is there anything the owner can do?

A: Yes. Most owners have leases that not only give tenants the right to consent to construction changes, but also require the owners to substantially complete the buildout by a set deadline. If a tenant delays in responding to the buildout request, it may force the owner to stop the buildout for days, or even weeks. The owner can protect itself, and plug this loophole, by saying in the lease that the substantial completion deadline will be postponed one day for each day the tenant delays in responding to the owner’s consent requests. So, for example, if the owner wants to make changes to the construction plans and is forced to wait five days for the tenant’s consent, the completion date will likewise be postponed five days.

You’ll need to define how to measure this waiting period in the lease. Since the owner may be forced to halt a project on the day that it requests the tenant’s consent, the lease should say that this waiting period will be measured from, and including, the day the owner sends the consent request to, and including, the day the owner gets the tenant’s response. So, for example, if the owner sends the consent request on Monday, and the tenant gives its consent on Thursday, the substantial completion deadline will be extended by four days. Show your attorney the following Model Lease Language to adapt for your leases.

            Model Lease Language

All proposed changes to the Final Plans by the Landlord shall be subject to Tenant’s prior written consent, which shall not be unreasonably withheld. The Substantial Completion Deadline (as defined in Clause [insert #] hereof) shall be postponed by one (1) day for each day from and including the date that Landlord sends to Tenant its request for consent to such changes, to and including the date Landlord receives Tenant’s written consent or denial of consent. A denial of consent by Tenant shall specify the reasons for such denial.