"Greening" Your Form Lease

Date: August 26, 2009

With the increasing impetus behind the movement to "go green", owners of commercial buildings should be cognizant of strategies for incorporating "green" provisions into new leases and renewals. Even if the owner is not currently in the process of obtaining LEED certification for their building, they should be mindful of when and where green lease provisions should be incorporated.

Unlike the introduction years ago of hazardous materials compliance provisions which could be handled in a single section of the lease, green provisions cover several distinct lease covenants. While there are a variety of green lease provisions that commercial office building owners should consider, some of the more fundamental provisions that they may want include the following:

  • (i) refining the definition of "operating costs" to ensure that costs of obtaining LEED certification, including mechanical and other building systems that reduce operating costs, are not capital items and may be passed through to tenants;
  • (ii) requiring tenants to construct alterations and maintain their premises consistent with the LEED rating system and contract only with landlord-approved green power providers;
  • (iii) requiring tenant to carry green enhancements on its property insurance policy;
  • (iv) expanding the right of access to the tenant space in connection with the owner seeking and maintaining LEED certification;
  • (v) changing the time that office cleaning takes place from after hours to during normal business hours so as not to waste electric energy at night; and
  • (vi) reserving a landlord's right to withhold consent to an assignment or sublease to any party that may impair the building's ability to conform to LEED certification.

This list represents only a handful of the provisions that owners should consider in drafting green leases. As the green movement evolves, there will undoubtedly be a variety of additional lease provisions aimed at protecting building owners' commitment to environmental responsibility and resource efficiency.