USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler and B. Trevor Wilson, Jones Walker LLP
6.5 Rent Variation Rent remains the same for the full term of the lease, unless the lease provides for future increases in rent. Longer-term commercial leas - es and ground leases usually provide for peri - odic increases in rent in specific amounts or as determined by increases in the consumer price index (CPI) or other indexes. Common rent escalation methods include fixed- percentage increases, CPI adjustments, step- ups at predetermined intervals and market rate adjustments for longer-term leases or renewal options. 6.6 Determination of New Rent Any increases in rent, including rent during any renewal term, must be specifically set forth in the lease. For renewal options, the lease must specify the method for determining the renewal rental rate. Common approaches include specified fixed increases over the last year of the initial term, formula-based calculations or fair market value determinations, often with a process for resolv - ing disputes if the parties cannot agree. 6.7 Payment of VAT There are no taxes in Louisiana on rentals of real estate, other than as may be payable for US and Louisiana income tax purposes. In Loui - siana, state and local sales/use taxes are levied on most rentals of tangible personal property. 6.8 Costs Payable by a Tenant at the Start of a Lease In addition to any required rent payment, the ten - ant may be required to pay all or part of the cost of improvements to the leased premises that are necessary for the use intended by the tenant.
Common upfront costs include security deposit (typically one to three months’ rent), first month’s rent, tenant improvement contributions beyond any landlord allowance, design fees and lease documentation fees. 6.9 Payment of Maintenance and Repair The tenant under a commercial lease usually pays a proportionate share of the cost of mainte - nance and repair of common areas, landscaping and other common costs. In triple-net (NNN) leases, tenants are respon - sible for virtually all operating costs, including common area maintenance, property taxes and insurance. In multi-tenant buildings, these costs are typically allocated based on the tenant’s pro - portionate share of the total leasable area. Landlords typically maintain structural elements (foundation, roof, exterior walls) in most lease structures except absolute NNN arrangements. 6.10 Payment of Utilities and Telecommunications If public services, utilities and telecommunication services may be separately metered, tenants are required to pay for their services directly. If not, each tenant typically pays a proportionate share as additional rent. For multi-tenant buildings without separate metering, landlords typically include utility costs in operating expenses and allocate them based on square footage or other usage formulae. 6.11 Payment of Property Taxes In commercial leases, property taxes are typi - cally the responsibility of the landlord, but ten - ants pay their proportionate share as part of additional rent or common area maintenance charges. This arrangement allows the landlord
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