This week’s eZine article from the Conveyancing Committee focuses on repair and alteration covenants, rent review assumptions and covenants for the protection of energy and sustainability ratings, known as Emily and Tom’s Clause.
Background
With the increased focus on Environmental Social and Governance (ESG) factors in real estate transactions, green leases are becoming increasingly important. Green leases are leases incorporating clauses which promote the sustainable operation and management of buildings.
The Chancery Lane Project (TCLP) has published a suite of green lease clauses for use in commercial leases in Ireland. The clauses were produced by the Irish Property Working Group of TCLP. TCLP is a collaborative effort of lawyers from around the world working pro bono to develop new contract provisions to help fight climate change. These clauses are available on TCLP’s website for colleagues to use in their leases of commercial property in Ireland, subject to the terms of use.
About the clauses
The clauses are drafted primarily for a lease of new office premises within a multi-let building where the tenants contribute to the maintenance of the building common areas via a service charge regime. Some of the clauses may be suitable for use in leases of other types of premises.
The clauses should be treated as a menu, from which landlords and tenants can select clauses that are suitable for their premises and their appetite for sustainability measures. Colleagues are advised that the sample clauses are not to be treated as precedents and are for negotiation in every individual case.
Today’s eZine article focuses on repair and alteration covenants, rent review assumptions and covenants for the protection of energy and sustainability rating, known as Emily and Tom’s Clause.
Emily and Tom’s Clause
Emily and Tom’s Clause includes:
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sustainable and circular economy provisions in the repair, alteration, yielding up and decoration covenants in a lease, which require tenants to prioritise the use of re-used, reclaimed, sustainable, recycled or recyclable products or materials;
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restrictions on a tenant carrying out alterations to the demised premises that might adversely affect any green building certification or the BER or that might be contrary to efficiency objectives or objectives set out in an environmental performance plan;
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provisions allowing a tenant (subject to landlord’s consent) to carry out alterations to the demised premises which improve the certification, environmental performance etc of the demised premises;
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clauses requiring a tenant to yield up the demised premises at the end of the lease having complied with its green obligations under the lease;
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alternative yield up clauses that provide for a mechanism by which a tenant may not be required (subject to certain conditions) to reinstate any alterations which improve the environmental performance or where such reinstatement would adversely affect certification etc.; tenant’s compliance covenants to protect sustainability or any green building certification rating and/or BER; and
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an additional assumption upon a rent review relating to the certification and/or BER of the demised premises.
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Environmental laws and practices are constantly changing as governments, businesses, NGOs and individuals seek to find solutions to climate change. These clauses are likely to evolve and change over time to reflect changes in law and practice.
Further information
For information on clauses promoting co-operation between landlords and tenants in relation to the environmental performance of buildings, see the previous article on Odhran’s Clause.
The next eZine will focus on clauses incorporating circular economy and sustainability principles into a service charge regime, landlord’s regulations and landlord’s works (Amélie and Lauri’s Clause).
Further information on the TCLP green lease clauses will be included in the March 2023 edition of the Law Society Gazette.