USA - NEW YORK Law and Practice Contributed by: Adam S. Walters, Erin C. Borek, Timothy P. Moriarty and Kelly E. Marks, Phillips Lytle LLP
a base amount, depending on negotiations and the structure of the lease. Ground leases are triple net leases whereby the tenant covers all expenses for maintenance and repair obligations. 6.10 Payment of Utilities and Telecommunications Telecommunications and utilities are typically paid for by the tenants. Each tenant’s space is either metered or submetered for electricity, or the tenant reimburses the landlord for electric costs pursuant to a formula. The charges for heating, ventilation and air con - ditioning (HVAC) depend on how the property is engineered. Each tenant may have its own cooling system, or the tenants may be served by a building-wide cooling system during busi - ness hours and subject to significant charges for after-hours HVAC. Tenants may also control sup - plemental HVAC systems to provide overnight cooling, typically for IT and telecom installations. Tenants should determine the availability of tel - ecommunication services and the availability of any particular providers, including distributed antenna systems during the selection of a prop - erty to lease. 6.11 Insurance Issues The landlord and tenant each have to insure their respective interests in the real estate, sub - ject to the terms negotiated and included in the lease. Negotiated issues include whether rent abates because the space becomes unusable, for example, due to a pandemic or other force majeure, and who is required to maintain busi - ness interruption insurance.
The COVID-19 pandemic resulted in the rene - gotiation of many leases. For example, many tenants extended the term of their lease in exchange for a reduction of the rent during the period of the pandemic. 6.12 Restrictions on the Use of Real Estate A landlord can impose restrictions on a tenant’s use of the real estate via the permitted use pro - vision, which typically lists specific permissible and prohibited uses of the space, and allows the landlord to declare a default and exercise available remedies if the tenant engages in an unpermitted use. The tenant’s use can also be restricted by local zoning laws, as well as build - ing and health regulations. Retail leases often also grant exclusive uses to tenants, which are limited to the tenant’s specific product line. 6.13 Tenant’s Ability to Alter and Improve Real Estate Tenants are typically permitted to alter or improve the real estate during the lease with the land - lord’s approval, and landlords generally allow cosmetic alterations without prior approval. A lease usually contains a limit on the cost and type of alterations a tenant can make without the landlord’s approval. 6.14 Specific Regulations Commercial Leases Commercial leases are generally governed by the agreement between the parties. However, there are laws and licensing requirements that are specific to particular uses, such as the oper - ation of hotels, restaurants, banks, etc. A new issue frequently overlooked by tenant attorneys in New York City is Local Law 97, which was passed as a part of the Climate Mobi - lization Act in 2019. Local Law 97 requires the
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