Cam Appleton | Tenant improvements (TI): Vancouver Commercial Real Estate Encyclopedia

For example: A tenant negotiates a TI allowance. (Illustration only, not a real deal.)

This is a general industry term with no single official definition. Your lease or contract wording controls.

Example only, not a real client. Say you negotiate an allowance for your clinic fit-out. We agree the scope, when the money is paid and what you must remove at the end. The build runs on time and you are not surprised when you move out years later.

What I’d tell a friend

Get the scope, the allowance amount and the payment timing in writing, and ask what you must remove when you leave.

Why it matters to you

Build-out can be one of the biggest costs of moving. Who pays, who owns the work and what you must remove at the end all need to be clear, or you can pay twice.

How to use it in your deal

Tenants should get pricing for your improvements before signing, so you know whether the landlord's allowance covers them. Agree in the lease who designs and builds, who chooses contractors, the timeline, how the allowance is paid, and what happens with cost overruns. Check permits and building code requirements, including accessibility and fire separation, since these add cost.

Ask whether improvements must be removed at the end. Landlords should control quality, require permits and insurance, and tie allowances to lease commitments. Buyers should note improvements in place and any unpaid allowances. Owners can use improvements to attract tenants but should consider whether they'll suit the next tenant too. Lenders may fund improvements through construction loans.

Mistakes I see

Signing before pricing the work. Unclear allowance payment. Ignoring code upgrades. Not planning for restoration.

In BC and Vancouver

Building permits follow municipal bylaws and the BC Building Code. Lien rules apply under the Builders Lien Act.

Official sources: Builders Lien Act (BC Laws) · Zoning and Development By-law (City of Vancouver)

How allowances are paid

Many landlords pay allowances once work is done and invoices are provided, sometimes in stages. You may need to fund the work first, so plan your cash.

Ask whether unused allowance can go toward rent or other costs. Some landlords agree.

Who owns the improvements

Improvements fixed to the building often belong to the landlord at the end of the lease. Some leases require you to remove them and restore the space.

Agree which items stay and which go before you build. That avoids a large bill when you leave.

Questions to ask before you sign

What will the work cost?
How is the allowance paid?
Who manages construction?
What permits are needed?
Must I remove it later?

Keep reading

Related terms: Fixturing period, Tenant inducement

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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.