USA - SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
wise, leases may grant the right to possession of a portion of existing improvements, such as in office buildings. 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, generally, not regulated. For certain prop - erty tax regulatory 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, limiting remedies, providing for rights to cure defaults, requiring the provision of essential services and regulating security deposits. There is, however, no direct rental amount regulation, except with respect to certain federally subsi - dised 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 10 and 30 years, with provi - sions for multiple optional extension terms that may double the initial lease term. Ground leases usually have much longer terms, ranging 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 mat - ters within their leased premises, while the land - lord remains responsible for structural compo - nents 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 response to the COVID-19 pandemic, con - struction 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 maintaining base rent values. It is much more common for “pandemics” to be included in the definition of force majeure, which has the consequence of excusing late performance of maintenance obligations by the landlord (and sometimes even the tenant), but it is less likely that a pandemic will excuse timely payment of rent or trigger a right of the tenant to abate rent. 6.5 Rent Variation Most leases provide for periodic, automatic increases in rent during the lease term. The adjustments may occur each lease year or in some multiple thereof (eg, every five years). If the lease provides for renewal or extension terms, the rent will typically increase at the inception of each such additional term. Leases for large retail businesses have tradition - ally included an “override”, meaning that the tenant will, in addition to scheduled rent, owe additional rent calculated as a fixed percentage of its gross sales in excess of an agreed-upon baseline amount. 6.6 Determination of New Rent Changes in rent are frequently based on nego - tiated 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 paya - ble with respect to rent in South Carolina, except that rent received by an owner will be included
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