Avoiding Contract Conflicts: Five Key AIA Provisions to Align with Lease Agreements

This article continues a series offering practical guidance to developers, owners, and project teams on how to proactively harmonize American Institute of Architects (AIA) construction documents with the broader contractual framework governing a project. The previous installment explored how to align AIA terms with construction loan agreements. This edition shifts focus to commercial lease provisions — especially in ground-leased retail, mixed-use, or anchor-tenant developments — that often dictate delivery milestones, risk allocation, and default remedies.

For many developers and owners, the problem starts with timing: lease negotiations conclude well in advance of development commencing, and include detailed construction timelines, force majeure notice periods, and delivery conditions. But, by the time construction counsel is brought in to negotiate the AIA contract with the general contractor, contractual requirements have already been determined. The result? A contractor could perform exactly as promised under the AIA agreement and still leave the owner in default under the lease.

We recommend reviewing and aligning the following five provisions between the commercial lease and the AIA A101-2017 Standard Form of Agreement and A201-2017 general conditions to avoid the disconnect between lease and AIA terms. These aren’t just legal issues — they’re business-critical alignment points that can make or break project delivery and financial performance.

1. Notice of Delay and Force Majeure

AIA Contract Term (A201-2017, §15.1.3.1): Allows the contractor to provide written notice of a delay claim within 21 days of the event giving rise to the delay. Separately, force majeure events are addressed under A201 §8.3.1, which permits an extension of time for causes beyond the contractor’s control, including acts of God, labor disputes, and adverse weather, among others.

Common Commercial Lease Terms: Leases frequently impose stricter timing requirements and narrower definitions than the AIA standard:

• Notice of delay or force majeure is often required within 5 to 10 days.
• Many leases exclude contractor non-performance, labor or material shortages, or permitting delays from qualifying as force majeure.
• Some define tenant-specific opening covenants — requirements for a business to commence operation on a date certain — and link landlord’s delivery obligations or tenant remedies to whether turnover occurs in time to meet those windows.

Practical Solutions:

• Modify AIA A201 §15.1.3.1 to reduce the default 21-day notice period to match the lease requirement — typically five days.
• Align the definition of force majeure in A201 §8.3.1 with the lease. If the lease excludes certain causes (e.g., contractor financial issues, material shortages), consider conforming the AIA clause or adding carveouts.
• Alternatively, address timing and scope of notice obligations in the supplementary conditions to preserve the owner’s rights under both documents.
• Carry through specific lease notice provisions and addresses to AIA documents to avoid technical non-delivery of notice.

2. Liquidated Damages (LDs)

AIA Contract Term (A101-2017, §4.5): Provides space for inserting liquidated damages terms, but does not include a default mechanism or formula.

Common Commercial Lease Terms: Many ground and turnkey leases contain escalating LD provisions if the landlord misses the tenant delivery deadline. Common formulations include:

• LD structures vary from simple daily charges (e.g., one day of rent per day of delay) to hybrid formulas.
• Many leases include rent abatement paired with fixed cash penalties (e.g., $100,000 lump sum).
• Termination rights sometimes arise after a threshold period of delay (e.g., 90+ days).

Practical Solutions:

• Negotiate LD provisions into A101 §4.5 that directly track the lease formula.
• Tie the start date for LDs in the GC contract to the lease-defined construction completion date, not substantial completion.
• If the lease provides tiered LDs (e.g., 1x, 2x, 3x rent), structure the GC’s LDs to escalate similarly.
• In the lease, consider limiting a tenant’s right to terminate where liquidated damages in AIA documents will adequately protect against monetary loss for delivery delays.

3. Substantial Completion and Delivery Milestones

AIA Contract Terms (A101-2017, §3.3.1; A201-2017, §9.8.1): A101 §3.3.1 allows the parties to insert a specific date or duration for substantial completion — typically used to drive the contractor’s project schedule and LDs. A201 §9.8.1 defines substantial completion as the stage when the work is sufficiently complete for the owner to occupy or use the project for its intended purpose. However, neither provision ensures the premises are actually ready for tenant buildout, turnover, or opening under the lease.

Common Commercial Lease Terms: Leases often define substantial completion with greater specificity than the AIA, tying it to a fixed construction completion date and detailed delivery conditions (e.g., CO issued, utilities connected, storefront and HVAC complete). Substantial completion may be defined to contemplate delaying substantial completion where tenant’s early access or failure to timely respond hinders landlord’s work. Many leases require tenant walkthrough approval and provide remedies for late delivery, such as rent deferral or shifting opening covenants. Common examples include:

• Milestone schedules with deadlines for key components of landlord’s work.
• Delivery contingent on site access, life safety systems, and broom-swept condition.
• Tenant’s right to confirm completion before rent or turnover triggers apply.

Practical Solutions:

• Use A101 §3.3.1 to insert the construction completion date from the lease, not a duration from commencement.
• Define substantial completion in the lease by reference to AIA standards and condition it on delivery of a fully executed AIA G704 Certificate of Substantial Completion.
• Amend A201 §9.8.1 to define substantial completion as fit for tenant occupancy and fixturing, and subject to tenant delay.
• Mirror lease delivery conditions, including life safety systems, utilities, and site access.
• Make tenant walkthrough or sign-off a condition precedent to rent commencement, LDs, or final GC payments.
• Attach lease milestone schedules and list them as contract documents under A101 §9.1.

4. Warranties and Third-Party Rights 

AIA Contract Term (A201-2017, §3.5.1): The contractor warrants that all materials and workmanship will be free of defects and in accordance with the contract documents for a period of one year following substantial completion. This is a default provision in the AIA A201 general conditions and forms the baseline warranty period for core and shell construction.

Common Commercial Lease Terms: Many leases require a one-year warranty on landlord’s delivery work, but also include additional protections for the tenant. These often include assignment of contractor and subcontractor warranties, third-party enforcement rights, and operational guarantees for HVAC, MEP, and life safety systems. Typical provisions include:

• Warranty-covered defects must be corrected at landlord’s expense.
• Tenant maintenance obligations may be deferred until GC remedies are exhausted.
• Warranties must be assignable and transferred to the tenant at turnover.

Practical Solutions:

• Amend A201 §3.5.1 to assign all contractor and subcontractor warranties to the tenant at closeout.
• Name tenant as a third-party beneficiary to enforce warranty obligations directly.
• Require correction of defects impacting occupancy (e.g., HVAC, leaks) at contractor’s cost, pre- or post-turnover.
• Include warranties and contact info in closeout documents, and ensure owner pursues claims on tenant’s behalf.

5. Exhibit and Document Incorporation

AIA Contract Terms (A101-2017, §9.1; A201-2017, §1.1.1): A101 §9.1 requires that any drawings, exhibits, or other materials be specifically listed as “contract documents” in order to be binding on the parties. A201 §1.1.1 defines the contract documents collectively, but similarly requires proper enumeration and referencing. Without clear incorporation, critical delivery standards, scope requirements, or milestone expectations may not be enforceable against the general contractor.

Common Commercial Lease Terms: Leases often attach and define critical construction-related documents, including:

• Site plans and space layouts tailored to a tenant’s branding and operational needs;
• Landlord work letters detailing scope, materials, or construction standards;
• Construction milestone schedules, often tied to seasonal turnover or anchor delivery obligations;
• Tenant criteria manuals, signage specifications, and prototype store layouts;
• Design control guidelines in mixed-use or lifestyle centers.

These documents are typically binding on the landlord—but unless they are expressly referenced in the GC contract, they may not be enforceable against the contractor.

Practical Solutions:

• In A101 §9.1, list all lease exhibits relevant to construction — such as work letters, space plans, milestone schedules, and tenant criteria manuals.
• Clarify in A201 §1.1.1 or the supplementary conditions that listed exhibits are binding on the contractor.
• For incomplete exhibits (e.g., signage guidelines), include placeholders and require future compliance.
• For branded tenants, incorporate design packages and coordination drawings as contract documents.
• Include lease terms requiring automatic lease amendments to update exhibits or terms when AIA contract documents are approved by both parties.

Conclusion

Construction documents don’t exist in a vacuum, and neither do leases. The AIA A101 and A201 are downstream agreements that must align with the upstream obligations already embedded in leases, loan documents, and development agreements. Developers and landlords can reduce negotiation time and avoid future conflict by incorporating AIA terms early and recognizing where industry-standard provisions reflect accepted market positions.

For developers and owners, that means ensuring internal teams and outside counsel are working from the same playbook. A contractor may meet every term in the AIA contract — but if those terms aren’t reconciled with the lease, the project can still miss the mark. To avoid that disconnect, build alignment early — and revisit it often.