As an active landlord representative, my business model dictates that my services includes protecting my clients investment well after the tenant has executed their lease agreement. With a background of a general contractor for many years, I watch over the quality of construction, the full execution of construction documents and the distribution of construction funds to all parties involved. I am very excited to join theBrokerList blog community and share my insight from the Landlord Represenative perspective. I am honored to be a part of this community.
Since I have been involved in many construction projects, all of which usually involve vendors, materialmen, subcontractors and unless self performed by capable landlords – a general contractor, I wanted to share 4 key steps in tenant improvement payouts, as the first one of my blogs.
We all know how rewarding it can be to construct an interior build-out, after successfully procuring a tenant filling vacancy; or performing a facade makeover, site improvements or an out parcel creation. These projects are always positive for the property, property owner, current tenancy and the community alike. This activity likely creates new jobs, increases tax base and hopefully a long lasting community contribution. With all that said, it is important to dot your i’s and cross your t’s when it comes time to paying out the vendors!
Here is the list of forms that I use in the processing of monthly pay requests:
1. Partial Conditional Waivers of Lien
2. Unconditional Final Waivers of Lien
3. Materialman Certificates
4. Master Affidavit
Now this list can sound rather daunting and makes you want to run and hide thinking about all of these forms and red tape, however, this process insures that all parties receive timely and proper payment for the benefit of the projects completion and the ultimate future value of the asset.
Also, these documents are required whether a capital infusion has been granted of the landlord to the tenant as a result of lease negotiations towards their build out or even if the tenant self performs. I have found the methods below to be a reliable system of checks and balances, for all parties involved, to ensure that all monies are received of all first, second and third party contractors. It is a rookie mistake to overlook the layers of contractors and material supplier, under the general contractor. It is important for the landlord representative to understand that it is not just documents from the general contractor, but the layers below as well.
Partial Conditional Waivers of Lien.
This document will always have a range of dates of service showing goods and services performed or supplied for that pay period. Always look for and only accept original notarized documents.
Unconditional Final Waivers of Lien.
This document will always state a specific “final” date for service showing goods and services performed or supplied for all pay periods that all monies due have been received as agreed in contract documents. Always look for and only accept original notarized documents.
This document is collected prior to final payment to the general contractor and/or subcontractors stating, relevant to each project, that all materialmen and vendors have been paid in full for their respective goods and services provided to the project via separate third party contracts, agreements and purchase orders of subcontractors, general contractors. Always look for and only accept original notarized documents.
This document is to be maintained during construction activity and presented upon project completion listing all parties involved, their contact information and total monies paid to them. All Partial Conditional Waivers of Lien, an Unconditional Final Waivers of Lien, and all Materialman Certificates will be apart of each listed on the Master Affidavit. Always look for and only accept original notarized documents.
The reason for this level of documentation is simple: The goal is to safeguard against mechanics liens, monetary disputes and the like when representing the interests of your commercial real estate clients. I hope you find this information useful and these processes and procedures become your new habit as we begin the 2015 New Year.
I wish you all a Happy and Prosperous New Year and I am so glad to join the community!
Photo Credit: USDA.gov Interior Construction
Disclaimer: This is not to be construed as legal advice, but merely the overall concept of best practice in protecting your clients. Consult your attorney for the specific forms and procedures that apply to your jurisdiction and contracts being used.