USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton, Parker Havis and Aaron Lay, K&L Gates
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 - ing base rent values. 6.6 Determination of New Rent Changes in rent are frequently based on negotiated fixed increases set forth in the lease at inception. Changes in rent may also be based upon changes in one or more measures of the consumer price index or other governmental indices of inflation. 6.7 Payment of VAT There are no taxes or governmental levies payable with respect to rent in South Carolina, except that rent received by an owner will be included in the gross income of the owner for general income tax purposes. 6.8 Costs Payable by a Tenant at the Start of a Lease Tenants typically pay a security deposit equal to one or more months’ rent at the inception of the lease. Alternatively, the landlord may require a letter of credit to serve as a security deposit. Tenants are also gener - ally required to pay the first month’s rent upon signing the lease. 6.9 Payment of Maintenance and Repair Where there are multiple tenants in a property, the cost of maintenance and repair of the common areas (CAM charges) is divided among the tenants. Gener - ally, each lease will specify a fixed, specified propor - tionate share of the CAM charges attributable to that tenant. 6.10 Payment of Utilities and Telecommunications In most cases, utilities are directly metered to the separate tenant spaces and paid for by the tenant.
Otherwise, where there are multiple tenants, each ten - ant is typically charged a percentage of the total utility bill based upon an agreed-upon percentage set forth in the lease at inception. 6.11 Payment of Property Taxes In most commercial leases, the landlord pays the cost of real property taxes on the leased premises, but the tenant is responsible for reimbursing landlord for such costs, either in a lump sum within, say, 30 days of the landlord’s payment to the taxing authority, or in advance in equal monthly instalments. Where real property taxes are paid to the landlord by the tenant in advance in equal monthly instalments, the lease will often provide that the payments are subject to a “true-up” to balance the amounts paid with the amounts actually owed to the taxing authority during the subject tax year. When there are multiple tenants, each tenant will pay its pro rata share based on its proportionate share as set forth in the lease. 6.12 Insurance Issues In most commercial leases, the tenant pays directly the cost of insurance on the leased premises. When there are multiple tenants, each tenant will pay its pro rata share based on its proportionate share of square footage in the building as set forth in its lease. Alter - natively, the landlord may pay the cost of insurance and be reimbursed on a monthly or annual basis by the tenants. With respect to ground leases, where the tenant typically owns the improvements, the tenant will pay the cost of insurance. Most leased properties are insured against fire and other casualty. In larger projects, terrorism insurance may be included. In certain geographic regions, insur - ance will include one or more of earthquake, ground subsidence, windstorm and hail, and flood insurance. In addition, many owners of a leased property will carry rent loss and business interruption insurance. 6.13 Restrictions on the Use of Real Estate Landlords are free to restrict the use of leased prem - ises by way of restrictive provisions in the leases. In addition, the permitted uses of leased premises will always be subject to general zoning and use limita - tions applicable to the location of the leased premises irrespective of the provisions of the lease.
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