Green Leases - By Hamish Smith
I have had a number of recent cases when acting for a tenant where institutional Landlords in particular are starting to introduce "green" provisions and elements intheir Leases.
These include:
Data sharing provisions whereby Landlords and Tenants share information regarding, in particular, energy usage and waste disposal with a view to identifying excessive usage
Obligations on the Tenant, when making alterations to or reinstating premises, to use sustainable materials
Obligations on the Tenant not to make any alterations to the premises so that they effect the energy rating of the premises as evidenced by an Energy Performance Certificate (which is now required by law if a property is sold or a lease is granted or assigned)
We, as afirm, are very much focussed on green issues and the influence that this willhave on commercial property owners in the future. Not only willgreener, more energy efficient buildings reduce costs for owners or tenants inthe long run, but under recent legislation larger companies with high energyusage who do not reduce their carbon footprint sufficiently may be liable forongoing financial penalties.
There aremany other obligations that can be imposed on both Landlords and Tenants whichI have researched at great length with the objective of creating dark, mediumand light green lease precedents.
Light greenleases will encourage parties to implement green initiatives, albeitnon-binding and without penalties. Dark green leases will impose obligations on the parties to implementgreen initiatives with penalties for any breach. Medium green leases will be somewhere in-between.
Ultimatelyit is for the client how they wish to implement green provisions (if atall). Our focus is to be inposition to give the client (both Landlord and Tenant) the options, and fullyadvise as to the advantages and disadvantages of including such provisions. Then it is simply a matter ofnegotiation and "fitting" green provisions around the transaction that suitsboth parties.
What iscertain, having regard to recent legislation and current practice, is thatgreen commercial leases cannot be ignored and are here to stay.
By Hamish Smith, Solicitor - Commerical Property
