USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler, B. Trevor Wilson and Parker Hufft, Jones Walker LLP
6.3 Regulation of Rents or Lease Terms Rents and lease terms are not regulated in Louisiana, except that the maximum term of a lease is 99 years. Commercial leases are generally considered contracts between sophisticated parties, and courts tend to enforce their terms as written. However, certain pro - visions may be unenforceable as against public policy, such as waivers of the right to a judicial proceeding for eviction. 6.4 Typical Terms of a Lease Ground leases are usually longer, so that the tenant who constructs buildings and improvements on the leased premises may have the opportunity to enjoy the buildings and improvements throughout their useful life. Other commercial leases generally have shorter terms. In the absence of specific provisions in the lease, the Louisiana Civil Code governs the repair and mainte - nance obligations of the landlord and tenant. Most commercial leases have specific provisions governing those responsibilities. Ground leases usually require the tenant to provide all the repairs and maintenance. Other commercial leases usually provide that the land - lord will provide repairs and maintenance, and that the tenant will pay the landlord its proportionate share of the cost of this work as additional rent. Typical commercial lease terms in Louisiana’s major markets currently range from three to ten years, with larger tenants often securing longer terms with renew - al options. Rent payments are typically due monthly on the first day of the month, with grace periods of 3–5 days common before late fees apply. 6.5 Rent Variation Rent remains the same for the full term of the lease, unless the lease provides for future increases in rent. Longer-term commercial leases and ground leases usually provide for periodic increases in rent in spe - cific amounts or as determined by increases in the consumer price index (CPI) or other indexes. Common rent escalation methods include fixed-per - centage increases, CPI adjustments, step-ups at pre -
determined intervals and market rate adjustments for longer-term leases or renewal options. 6.6 Determination of New Rent Any increases in rent, including rent during any renew - al term, must be specifically set forth in the lease. For renewal options, the lease must specify the meth - od for determining the renewal rental rate. Common approaches include specified fixed increases over the last year of the initial term, formula-based calculations or fair market value determinations, often with a pro - cess for resolving disputes if the parties cannot agree. 6.7 Payment of VAT There are no taxes in Louisiana on rentals of real estate, other than as may be payable for US and Louisiana income tax purposes. In Louisiana, state and local sales/use taxes are levied on most rentals of tangible personal property. 6.8 Costs Payable by a Tenant at the Start of a Lease In addition to any required rent payment, the ten - ant may be required to pay all or part of the cost of improvements to the leased premises that are neces - sary for the use intended by the tenant. Common upfront costs include security deposit (typically 1–3 months’ rent), first month’s rent, ten - ant improvement contributions beyond any landlord allowance, design fees and lease documentation fees. 6.9 Payment of Maintenance and Repair The tenant under a commercial lease usually pays a proportionate share of the cost of maintenance and repair of common areas, landscaping and other com - mon costs. In triple-net (NNN) leases, tenants are responsible for virtually all operating costs, including common area maintenance, property taxes and insurance. In multi- tenant buildings, these costs are typically allocated based on the tenant’s proportionate share of the total leasable area.
839 CHAMBERS.COM
Powered by FlippingBook