Deposit, Allowances, Credit and Fees

Security Deposit

Security deposit is an guarantee from the tenant that covers for any default and related cost of re-leasing space. The landlord determine how much deposit is required. First of all, checking and understanding the tenant’s credit. Secondly, how much the landlord has to invest to get a tenant (i.e. free rent, brokerage commissions, and cash or work offered by landlord). Lastly, it depend on market conditions.


TI allowances:

TI allowances are also known as the tenant improvement allowances. The landlord provide you this as a part of the lease. This is for modification, interior finish, and reconfiguring existing space to your business need. The landlord give you a check for that.


Leasehold improvement

With this type of improvement, you can negotiate for the landlord to build out the space, lay new carpet, paint walls, windows, etc. In this case, the landlord will be taking care of what you negotiated for improvement. The cost of leasehold improvement is calculated into your base rent. For example, you have to choose between paying $8 per square foot with no improvements and $10 per square foot with improvement done by the landlord.


Maintenance and common area

Common area and maintenance charges are for maintenance of some or all areas of the property, which are, consider convenience for the tenants’ access (shared by all tenants). (e.g. maintenance of lawn and tree trimming, any repairs related to all tenants usage, maintenance of parking lot, security, exterior lights and management).

Landlord sometimes set up a rent guideline or structure so that when payment of these experiences are needed, the landlord may pay these costs. Otherwise, the landlord may choose to drive the expenses when they occur to management).

Most leases are billed on their percentage of total square footage and some are billed by common area and maintenance fees. Charges imposed vary from landlord to landlord. Please consult you landlord before hand regarding these fees.


Penalty fees

It is recommended that you should make sure that your lease agreement states that the landlord may not include late payment penalty charge in recoverable operating cost. Penalty charges may occur if your landlord delay paying the property taxes, trash bill, or parking lot repair, even if you paid on time. By doing this, you have protected yourself from being passed on the cost of late property taxes by your landlord.



  • Security Deposit
  • TI allowances
  • Leasehold improvement
  • Maintenance charges common area (CAM)
  • Penalty fees