Excerpt
Tenant Negotiating Strategies for Utilities and Energy In Commercial Leases
TWO PRO-TENANT RIDERS FOR LEASE SERVICES: ONE SEMI-TOUGH, ONE REALLY TOUGH
This LARG looks at two riders concerning commercial lease service clauses. They are both pro-tenant in orientation, and are designed to modify landlord form leases which contain pro-landlord services clauses.
THE SEMI-TOUGH SERVICES RIDER
Rider #1 addresses a number of tenant concerns pertaining to building services. The rider:
- itemizes the specific services provided by the landlord under the lease;
- defines precisely when such services will be furnished;
- outlines the circumstances in which the landlord may install utility submeters and supplemental HVAC systems, and at whose expense;
- prohibits payments to landlord affiliates for building services which are not competitive with the market for such services; and
- provides for an abatement of rent and operating costs when services cannot be provided as called for in the lease for more than five consecutive days.
THE REALLY TOUGH SERVICES RIDER
Rider #2 is even more aggressive in favor of the tenant. Its provisions:
- feature a landlord warranty that the services called for in the lease will be available during the term of the lease;
- give the tenant a right to terminate if such services are not available for a period of sixty consecutive days;
- contain a series of clauses pertaining to utilities furnished by the landlord which, among other things:
--provide that the rates charged by the landlord for utility services must be competitive with rates charges by independent utilities;
--obligate the landlord to connect the tenant to a successor utility if the landlord decides to discontinue providing utilities during the term of the lease;
--prevent the landlord from cutting off utility service except for nonpayment of charges for the particular service involved;
--require the landlord to spend money for overtime, evening and weekend work to fix problems interrupting the utilities serving the premises;
--provide for rent abatement until interrupted utilities are restored to working order; and
--require the landlord to do everything in its power to reduce the impact of modifications to utility systems upon the tenant's business operations.
(continued)
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