Section 29 Green Lease Considerations

• Library: Real Estate Leasing and Landlord-Tenant Actions and Remedies 2011

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As clients and governmental bodies alike place a higher priority on energy efficiency, clean air, and related issues affecting the environment, so-called “green” buildings and “green” tenant spaces are becoming more common in commercial real estate. As an attorney preparing a lease agreement for a building or a portion of a building that has been designed and constructed to be energy efficient or to provide other energy, health, or environmental benefits, it is important to consider lease provisions that should be included, in addition to the traditional lease provisions, to accomplish the client’s particular energy, health, or environmental goals.

Generally, the terms “green” or “sustainable” are used interchangeably with regard to buildings. When these terms are used, they usually refer to buildings with the following characteristics:

· Reduced use of energy, water, and nonrenewable resources
(in comparison to other buildings) to minimize environmental impact of the building

· Improved comfort and health of occupants by improving the indoor environment

· Reduced strain on local infrastructure because of a reduction of energy, water consumption, and waste and selection of a location with access to public transportation or that otherwise encourages use of alternative transportation

For purposes of this discussion, the term “green building” or “green space” is sometimes used to refer to a building, or part of a building, that incorporates some or all of the above concepts.

A number of rating systems exist to rate or certify a building or tenant space based on its impact on the environment, and some of these rating systems include various levels of certification. The most common rating systems for buildings or building components include the following:

· Leadership in Energy and Environmental Design Green Building Rating System developed by the U.S. Green Building Council

· Green Globes rating system developed by the Green Building Initiative

· ENERGY STAR program, jointly developed by the U.S. Department of Energy and the U.S. Environmental Protection Agency

Each of these rating systems includes a standard of measurement and criteria for rating or certification.

An attorney whose client has invested, or plans to invest, time and money to build or renovate a building or leased space based on green building concepts should discuss with the client the importance of incorporating appropriate contract provisions into the client’s standard lease agreement. Ideally, the client will involve the attorney early in the process of negotiating and drafting lease agreements for buildings or tenant space incorporating green building concepts because specific lease terms that relate to the green building and sustainable operations concepts should be addressed in detail in any term sheet or letter of intent.

Before beginning work on a lease that includes...