USA - NEW YORK Law and Practice Contributed by: Adam S. Walters, Erin C. Borek, Timothy P. Moriarty and Kelly E. Marks, Phillips Lytle LLP
Since the COVID-19 pandemic, the definition of force majeure has been scrutinised as to wheth - er or not the provision refers to pandemics such as the COVID-19 pandemic. Landlords and ten - ants often have differing opinions and practices with regard to the treatment of pandemics and force majeure under a lease. 6.4 Typical Terms of a Lease The term of a typical commercial lease is five to ten years. However, the term of a typical ground lease is 30 to 100 years. The tenant is typically responsible for maintain - ing and repairing the space it occupies, whereas a landlord is typically responsible for repairing and maintaining the common areas, the struc - ture, the exterior of the building and surrounding property. Rent payments are typically made on a monthly basis, although in a ground lease, rent may be paid annually or quarterly. 6.5 Rent Variation Rent typically increases either annually or once every three or five years, usually by a predeter - mined amount, depending on the terms of the lease. 6.6 Determination of New Rent Increases in rent under a commercial lease are typically determined by negotiation prior to enter - ing into a lease. Increases can be expressed in terms of a fixed dollar amount, a per-square-foot amount or a formula based on, for example, the
cial Rent Tax (CRT) that is imposed on the rent paid by tenants of commercial property located south of the centreline of 96th Street in Manhat - tan. Generally, the CRT applies to tenants whose gross annual rent is at least USD250,000. The tax rate is 6% of the base rent. However, all taxpayers are given a 35% base rent reduction, effectively reducing the number of taxpayers that are subject to the CRT, as well as reducing the tax rate to 3.9%. In addition, a tax credit is given to those tenants whose annual base rent is between USD250,000 and USD300,000 before the 35% reduction. 6.8 Costs Payable by a Tenant at the Start of a Lease In a net lease, the tenant is responsible for con - structing or remodelling any existing improve - ments, and for the payment of all associated expenses. In a gross lease, landlords often deliv - er the space with mechanical services stubbed to the premises, or sheetrocked in “white box” condition, and give the tenant a negotiated allowance for the construction of improvements. Alternatively, the landlord may be responsible for building out the space to meet the tenant’s needs. This is known as a “turnkey” lease. Such leases may include a cap on the landlord’s con - struction costs, with the tenant responsible for excess costs. 6.9 Payment of Maintenance and Repair Landlords are typically responsible for pay - ing for the maintenance and repair of common areas used by several tenants, such as lobbies, elevators, parking lots and gardens. However, tenants are often responsible for reimbursing the landlord for their pro rata share of operat - ing expenses. Sometimes reimbursement com - mences from the first dollar and sometimes over
Consumer Price Index. 6.7 Payment of VAT
Value-added tax, or other taxes or governmen - tal levies, are typically not payable on New York rent. An exception is the New York City Commer -
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