USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton, Parker Havis and Aaron Lay, K&L Gates
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The granting of the right to possess real property with - out the transfer of title is usually accomplished by a lease. Leases grant a right of possession, typically for a term of years. A limited right of possession or use may also be grant - ed by way of a licence; typically, however, a licence is for a very short, transitory period and for a limited, specific purpose. Moreover, leases granting an exclu - sive right of possession are considered an interest in real property; licences do not grant an exclusive right of possession and are not considered an interest in real property. The right to use another’s property for a specific pur - pose may also be granted by way of an easement. Easements may be perpetual or for a specified term and may be classified as appurtenant, meaning that the easement benefits transfer with the benefited property, or personal, meaning that the easement benefits are not transferable. Personal easements are frequently for a limited term. Easements are consid - ered an interest in real property. 6.2 Types of Commercial Leases Commercial leases are generally classified based on the nature of the property leased. A commercial lease that grants the right to possession to unimproved land only is commonly referred to as a ground lease and is typically used where the lessee intends to construct and own title to the buildings, with title to the ground remaining with the lessor. Commercial leases may also grant the right to possession of an entire facility or property – both land and improvements. Likewise, leases may grant the right to possession of a por - tion of existing improvements, such as in office build - ings. These leases of only a portion of property are frequently referred to as “space leases”. 6.3 Regulation of Rents or Lease Terms Rents and lease terms in commercial leases are, gen - erally, not regulated. For certain property tax regula - tory purposes, however, ground leases having terms
of 90 years or more may be deemed to be full transfers of title to the lessee. There is statutory regulation of residential leases, lim - iting remedies, providing for rights to cure defaults, requiring the provision of essential services and regu - lating security deposits. There is, however, no direct rental amount regulation, except with respect to cer - Lease terms vary based on the nature of the lease and the nature of the property subject to the lease. Typically, commercial leases have a term of between ten and 30 years, with provisions for multiple optional extension terms that may double the initial lease term. Ground leases usually have much longer terms, rang - ing from 30 years to 99 years. Space leases typically have terms in the range of five years to 20 years. It is typical for a tenant to be responsible for repair and maintenance obligations for all matters within their leased premises, while the landlord remains respon - sible for structural components of the building within which the leased premises sit, as well as facilities up to the point of connection with the leased premises. Rent obligations are typically quoted in annual terms but payable monthly in equal instalments. In recent years, construction build-out terms have become more favourable to tenants, as landlords are willing to contribute larger sums toward tenant build- out plans in an effort to attract tenants while maintain - tain federally subsidised housing. 6.4 Typical Terms of a Lease Lease terms vary based on the nature of the lease and the nature of the property subject to the lease. Typically, commercial leases have a term of between ten and 30 years, with provisions for multiple optional extension terms that may double the initial lease term. Ground leases usually have much longer terms, rang - ing from 30 years to 99 years. Space leases typically have terms in the range of five years to 20 years. It is typical for a tenant to be responsible for repair and maintenance obligations for all matters within their ing base rent values. 6.5 Rent Variation
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