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Premises Condition Upon Delivery

Posted by Capital Retail on April 27, 2018
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When negotiating a commercial lease, the landlord and the tenant should specifically agree upon the premises delivery condition by the landlord to the tenant. Too often phrases such as “vanilla box,” “warm vanilla box” and “as-is condition” are utilized by the landlord’s leasing representatives to describe generically the condition that the premises will be in at the time of delivery. However, the differences between what each party means by those terms can be dramatic. By specifically addressing the condition of the premises, landlords and tenants may avoid costly disputes once the lease has been executed and the landlord delivers the premises.  As either a tenant or landlord, you should not assume that the other party’s definitions of premises condition lease terminology are the same as yours. The term “as-is” means the landlord has no responsibility to improve or update the space. What you see is what you get upon lease execution, all the way down to the bare floors and damaged holes in the walls. Any improvements you want to make to the space will be your responsibility, which also means the cost of construction is on you. This is the classic “tenant beware” situation, where the careful tenant should take the time to examine the space before accepting it, or obtain expert advice. The owner’s responsibilities will be limited to providing basic services outlined in the lease such as stubbing utilities to the space.  Vanilla Box: The interior condition of the space in which the improvements generally consist of lighting, electrical switches and outlets, lavatories, a finished ceiling, walls that are prepped for painting, and a concrete slab floor. Also called a “white box”. Sometimes a vanilla box is delivered with an installed heating, ventilation, and cooling (HVAC) system. This is a “warm vanilla” box. It’s essentially the same as a vanilla box but with an HVAC system installed.

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