USA – NEW YORK Law and Practice Contributed by: Lindsey Haubenreich, Joseph Heins, Timothy Moriarty, Kimberly Nason and Matthew Fitzgerald, Phillips Lytle LLP
share of operating expenses. Reimbursement some - times commences from the first dollar and sometimes over a base amount, depending on negotiations and the structure of the lease. Ground leases are triple net leases whereby the ten - ant covers all expenses for maintenance and repair
uses of the space, and allows the landlord to declare a default and exercise available remedies if the ten - ant engages in an unpermitted use. The tenant’s use can also be restricted by local zoning laws, as well as building and health regulations. Retail leases often also grant exclusive uses to tenants, which are lim - ited to the tenant’s specific product line and/or other competitors. 6.14 Tenant’s Ability to Alter and Improve Real Estate Tenants are typically permitted to alter or improve the real estate during the lease with the landlord’s approval, and landlords generally allow merely cos - metic alterations without prior approval. A lease usu - ally contains a limit on the cost and type of alterations a tenant can make without the landlord’s approval. 6.15 Specific Regulations Commercial Leases Commercial leases are generally governed by the agreement between the parties. However, there are laws and licensing requirements that are specific to particular uses, such as the operation of hotels, res - The regulations and laws that apply to residential leas - es were overhauled by the Statewide Housing Stabil - ity and Tenant Protection Act of 2019 (HSTPA). Some residential buildings are subject to rent stabilisation regulations that establish caps on the amount of rent landlords can charge and the amount of increases they can impose. In addition, some residential ten - ancies are protected by older rent control laws. The HSTPA has made it more difficult for landlords to “deregulate” units that are subject to such regulations. Carbon Emissions In New York City, Local Law 97 targets greenhouse gas emissions from several classes of buildings by mandating significant emissions reductions. Owners of covered buildings will need to retrofit and upgrade systems to meet stringent energy standards, which ramp up over time. 2030 is a significant target date for many such upgrades. In the leasing context, landlords typically seek to shift the expense of Local Law 97 compliance to their tenants, but the extent of tenants’ taurants, banks, etc. Residential Leases
obligations of the leased properties. 6.10 Payment of Utilities and Telecommunications
Telecommunications and utilities are typically paid for by the tenants. Each tenant’s space is either metered or submetered for electricity, or the tenant reimburses the landlord for electric costs pursuant to a formula. The charges for heating, ventilation and air condition - ing (HVAC) depend on how the property is engineered. Each tenant may have its own cooling system, or the tenants may be served by a building-wide cooling sys - tem during business hours and subject to significant charges for after-hours HVAC. Tenants may also con - trol supplemental HVAC systems to provide overnight cooling, typically for IT and telecom installations. 6.11 Payment of Property Taxes Other than under a gross lease or if the parties oth - erwise agree, a tenant is typically responsible for its share of real estate taxes or its share of increases in real estate taxes. When a tenant is the sole occupant of a property (eg, under a ground lease), the tenant will pay 100% of the real estate taxes, assuming its parcel is separately assessed, and will likely be required to pay those taxes directly to the municipality. 6.12 Insurance Issues The landlord and tenant each have to insure their respective interests in the real estate, subject to the terms negotiated and included in the lease. Negoti - ated issues include whether rent abates because the space becomes unusable, for example, due to a casualty, pandemic or other force majeure, and who is required to maintain business interruption insurance. 6.13 Restrictions on the Use of Real Estate A landlord can impose restrictions on a tenant’s use of the real estate via the permitted use provision, which typically lists specific permissible and prohibited
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