With an emphasis today on “green” and sustainable building, landlords and tenants must understand the sustainability standards of their buildings, according to Pepper Hamilton, a multi-practice law firm.


“Whether you are a landlord or a tenant of a green building, it is important for the lease to reflect the sustainability standards of the building and to address each party’s responsibilities with respect to those standards,” said Hannah Dowd McPhelin, a real estate attorney with Pepper Hamilton.


To aid those involved with real estate leases, McPhelin, a LEED Accredited Professional and a member of Pepper Hamilton’s Sustainability and Climate Change Team, has outlined five lease provisions to consider for those involved in managing a building operated under the LEED for Existing Buildings: Operations and Maintenance (LEED-EBOM).


• Sustainability Standards – “Your lease should reference and explain the LEED-EBOM certification and attach the building’s sustainability standards as an exhibit,” said McPhelin.  “The sustainability standards should include guidelines for what the tenant must do to assist in maintaining the building certification, and the standards should be based upon the credits chosen by the landlord for its initial certification and recertification.”


• Real Estate Taxes and Operating Expenses – “The lease section regarding real estate taxes should address how any real estate tax credits, reductions or rebates resulting from sustainability efforts will be allocated,” said McPhelin.  “In the operating expenses section, consider how certain sustainability costs will be handled.”


• Responses – “In order to operate a building under LEED-EBOM, certain information is required from the tenant,” said McPhelin.  “Your lease should stipulate that the tenant must provide the information that is required for the landlord’s achievement of chosen credits.  The tenant’s failure to provide such information will likely cause an event of default, subject to applicable notice and cure provisions.”


• Smoking Policy – “As a prerequisite to certification, LEED-EBOM requires that smoking either be prohibited in the building, or only be permitted in designated areas of the building that meet certain standards,” stressed McPhelin.  “Achievement of this prerequisite is mandatory and as such, your lease must clearly set forth the building’s smoking policy and require that the tenant and any third parties under the tenant’s control adhere to the policy.”


• Cleaning – “If the landlord desires to achieve any of the LEED-EBOM credits regarding cleaning products and policies, the lease must require the tenant to adhere to such policies and to use cleaning products and equipment that comply with the requirements of the credits,” said McPhelin.■