USA - NEW JERSEY Law and Practice Contributed by: Steven Fleissig, David Freylikhman, Cory Mitchell Gray and David Jensen, Greenberg Traurig LLP
6.7 Payment of VAT There is no VAT payable in New Jersey. 6.8 Costs Payable by a Tenant at the Start of a Lease Other than rent payments, diligence costs, legal fees, and costs associated with posting a securi - ty deposit, the tenant may incur costs associated with obtaining permits for its intended use and any construction or fit-out costs associated with constructing or remodelling the premises. Typi - cally, with a gross lease, the landlord will provide the tenant with a broom-swept empty space in a stated condition and provide a monetary sum to be used as a “construction allowance” for the tenant’s fit-out. The tenant factors this allowance in its economics and is responsible for any costs exceeding the allowance. Alternatively, the landlord may agree to a “build- to-suit” lease or provide a “turnkey” space to the tenant where the landlord would handle all con - struction and deliver a space to the tenant that is substantially complete. Of course, the cost differential is factored into the rent specified in the lease and directly affects the security that the tenant provides to the landlord. 6.9 Payment of Maintenance and Repair In this jurisdiction, the landlord is generally responsible for all maintenance and repair of common areas such as hallways, lobbies, ele - vators, parking lots, and gardens. Leases will specify the services that will be provided by the landlord and will often include seasonal servic - es such as landscaping and snow removal. The costs are passed to tenants as either operating expenses or common area maintenance and each tenant pays its pro rata share based on the percentage set forth in the lease.
Often these costs are estimated at the start of the year and billed monthly to tenants but are reconciled when actual costs and expenses are determined. In a ground lease, the tenant is commonly responsible for all maintenance and repair costs. 6.10 Payment of Utilities and Telecommunications The method of payment for telecommunica - tions and utilities will vary based on the property. For electricity, the cost to the tenant is usually determined by a direct meter or a submeter. The landlord may also reserve the right to charge a flat rate to the tenant. Charges for heating, ven - tilation, and air conditioning (HVAC) will also depend on each property. Most commonly, tenants are all served by a single universal HVAC system during business hours (with the expenses to be built into the base rent and escalations) and are typically subject to additional charges for after-hours HVAC ser - vice. In some buildings, the HVAC system is designed so that each tenant has its own, with such expenses being charged to the respec - tive tenant. Additionally, tenants may have their own supplemental air conditioning and cooling systems for data and telecom rooms, or to pro - vide after-hours service, the expense of which is borne by each tenant. 6.11 Insurance Issues The structure of the Global Practice Guides is fixed (for ease of cross-jurisdictional compari - son), so every section requires some content, even if only to say that the issues involved do not apply in a given jurisdiction. The absence of an answer for this this sec- tion, however, seemed more like an oversight than a choice. I have therefore added the firm’s
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