USA – NORTH CAROLINA Law and Practice Contributed by: John Livingston and Brittani Miller, Kilpatrick Townsend & Stockton LLP
covering the full cost of the repair or maintenance. Under a gross lease, the landlord is responsible for the cost of such repair or maintenance. 6.10 Payment of Utilities and Telecommunications If the premises are individually metered, the tenant will either pay their utility costs directly to the utility pro - vider or reimburse the landlord for their proportionate share of the utilities if the landlord supplies the utilities. If the premises are not separately metered, the tenant typically pays their proportionate share of utility costs directly to the landlord. Landlords cannot charge for electricity more than the cost charged by the utility provider except under specific circumstances. 6.11 Payment of Property Taxes The responsibility for real estate taxes is negotiable. Under a net lease, tenants generally share the costs of real estate taxes based on their proportionate share of their premises relative to the overall property. Under a gross lease, landlord is responsible for the cost of the real estate taxes. 6.12 Insurance Issues The responsibility for the cost of insurance is nego - tiable. Under a net lease, tenants generally share the cost of insurance to insure the overall property based on their proportionate share of the overall prop - erty and they are also required to obtain and main - tain insurance premiums for their personal property, employees, if any, and other insurable items. Under a gross lease, the landlord is responsible for the cost of the insurance. 6.13 Restrictions on the Use of Real Estate Landlords can and often do impose restrictions on how tenants may use the property, and any tenant use must comply with the terms of the lease as well as local laws and regulations. 6.14 Tenant’s Ability to Alter and Improve Real Estate A tenant’s ability to alter or improve leased real estate is typically governed by the lease agreement, which usually requires the landlord’s prior written consent for any modifications. Common conditions include the landlord’s approval of detailed plans or specifica -
tions, the tenant’s compliance with applicable building codes and zoning regulations, and the use of licensed and insured contractors. Additionally, tenants are often required to indemnify the landlord against any liabilities arising from the alterations. At the end of the lease term, tenants may also be required to restore the property to its original condition unless otherwise agreed upon in the lease. 6.15 Specific Regulations Residential leases are subject to the North Carolina Residential Rental Agreements Act, which imposes obligations on landlords to provide habitable prem - ises and outlines tenant rights, including protections against retaliatory eviction and rules for security deposits under the Tenant Security Deposit Act. Com - mercial leases are primarily governed by negotiated lease agreements. 6.16 Effect of the Tenant’s Insolvency If a tenant becomes insolvent and files for bankruptcy, an automatic stay under federal bankruptcy law tem - porarily halts the landlord’s ability to pursue eviction or enforce lease obligations, unless the landlord obtains court permission to proceed. Lease agreements typi - cally remain enforceable, but the tenant may choose to assume or reject the lease during the bankruptcy process. During such period, the tenant must comply with the terms of the lease. If the tenant rejects the lease, the landlord can terminate the agreement and file a claim for damages, including unpaid rent, subject to limitations under bankruptcy law. 6.17 Right to Occupy After Termination or Expiry of a Lease A tenant does not automatically have the right to con - tinue occupying the premises after the expiration or termination of a commercial lease. However, if the ten - ant remains in possession of the premises beyond the agreed-upon term without the landlord’s consent, the tenant becomes a holdover tenant, and the landlord may pursue legal remedies. The lease agreement may specify the consequences of holdover tenancy, such as requiring the tenant to pay a higher rent rate. If the lease does not address holdover tenancy, the landlord may initiate an eviction proceeding to regain posses - sion of the property.
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