FindLaw KnowledgeBasePublished: 2011-07-28
For individuals, being environmentally-conscious and environmentally-friendly is easily controlled in the home. For business owners, the prospects may be a bit more complicated. Going green does not have to be limited to energy conservation and recycling; small business owners also profit from executing "green” leases.
A green lease is a real property rental agreement that incorporates clauses and provisions designed to be beneficial to the environment. By virtue of some of the measures, buildings operate with higher energy efficiency resulting in lower energy costs. Lease provisions can range from obligations to use certain cleaning materials, e-communications, turn off lights, maintain thermostat settings or use specific materials in the construction or repair of the premises. Elements of the lease may include operational procedures, equity rules and tenant work letter agreements.
A tenant should consider what their “green” goals and needs are. In crafting the language of the lease, clauses should be reasonable and specific. Where the lease calls for renovations, detailed timelines, targets and penalties, tenants should understand their role and obligations. Also, exceptions and dispute resolution protocols must be outlined and not inferred. Tenants should realize that if a condition is not in the lease or an addendum, it may not be enforceable.
For small businesses that operate buildings or other premises, many of the tenant tips are applicable on the issues of reasonable clauses, terms, penalties, breach, damages, and roles; however, landlords must be aware that their obligations of performance may be contingent on a tenant and vice versa. Landlords should be sure that repair requirements — including who pays or reimburses — are spelled out. Regular meetings and inspections may be part of the contract to insure compliance.
While first developed in Australia, green leases are becoming more common in the United States. Offering environmentally-friendly solutions, these special leases also help reduce operation costs and other expenses. Still, negotiating a green lease requires general awareness of small business needs and an owner’s ability to perform environmentally-centered contract obligations, assessments that an experienced attorney can provide. Ultimately, leasing green can be very good for business.