Construction and escrow obligations

[tah111]

What is the name of your state (only U.S. law)? Florida

I'm soon to be starting construction on a commercial building I am leasing. Construction is $200k and will go for about 8 weeks. Building owner is trying to pass all risk to me. I've agreed to put everthing in escrow to ensure that GC or subs get paid and can't place a lien on his building.

He's now concerned that if I die/skip town in the middle of construction he will be left with a building not in rentable condition. He's proposing the if I do die/skip town he gets all remaining money to do as he pleases on the building.

Do I have any obligations beyond paying GC and subs for work performed?

 

[LdiJ]

What is the name of your state (only U.S. law)? Florida

I'm soon to be starting construction on a commercial building I am leasing. Construction is $200k and will go for about 8 weeks. Building owner is trying to pass all risk to me. I've agreed to put everthing in escrow to ensure that GC or subs get paid and can't place a lien on his building.

He's now concerned that if I die/skip town in the middle of construction he will be left with a building not in rentable condition. He's proposing the if I do die/skip town he gets all remaining money to do as he pleases on the building.

Do I have any obligations beyond paying GC and subs for work performed?

There is too much information missing. When that kind of money is involved you cannot afford NOT to consult an attorney who can read over the entire proposed contract.

Am I correct in assuming that this is a build out of a plain commercial space? If so, I agree with the landlord, he should not accept any risk. However, he shouldn't have any risk anyway, the GC's should not be able to place liens against the actual property. I absolutely not think that you should agree that he gets to have your money if something happens to you so that he can finish the space as he sees fit. He can charge a LOT more rent to someone when its "built to suit". However, if its a total deal breaker(AND you are getting a decent deal on the the lease) you might offer to allow him to insure your life as long as he pays the premiums.

Again though, run the proposed contract by an attorney that deals with commercial real estate leasing.

 

[tah111]

My attorney drafted the escrow document. The building owner is now proposing to add the clause that he gets all remaining $'s should something happen to me. The total construction contract is about $200k.

It is a buildout of a building that used to be a small retail store and office. I'm turning it into a pet care facility.

He's is making these demands because he doesn't want to get stuck with the building if construction had to stop right after they gut the inside of the building.

I was planning on basically agreeing with whatever he proposed since the odds of me dying or becoming incapacitated in the 8-10 week period of construction is astronomically small, but I also don't want to agree to anything unreasonable. I also don't like the idea of being worth more dead than alive.

 

[LdiJ]

My attorney drafted the escrow document. The building owner is now proposing to add the clause that he gets all remaining $'s should something happen to me. The total construction contract is about $200k.

It is a buildout of a building that used to be a small retail store and office. I'm turning it into a pet care facility.

He's is making these demands because he doesn't want to get stuck with the building if construction had to stop right after they gut the inside of the building.

I was planning on basically agreeing with whatever he proposed since the odds of me dying or becoming incapacitated in the 8-10 week period of construction is astronomically small, but I also don't want to agree to anything unreasonable. I also don't like the idea of being worth more dead than alive.

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Again, I don't think that what the landlord wants is in any way reasonable or standard. If something where to happen to you your estate would be responsible for the lease until the space was re-rented and the new tenant would be responsible to do a build out to suit. I see no reason to gift the landlord the escrow fund as well. Again, run the whole thing by a local attorney.

 

[STEPHAN]

My attorney drafted the escrow document. The building owner is now proposing to add the clause that he gets all remaining $'s should something happen to me.

Let your attorney handle this. His should have more information on the specifics.