USA – NEW YORK Law and Practice Contributed by: Lindsey E. Haubenreich, Joseph P. Heins, Timothy P. Moriarty and Kimberly R. Nason, Phillips Lytle LLP
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, a percentage increase or a formu - la based on, for example, the Consumer Price Index or fair market rental value. 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 - cial Rent Tax (CRT) that is imposed on the rent paid by tenants of commercial property located south of the centerline of 96th Street in Manhat - tan. 6.8 Costs Payable by a Tenant at the Start of a Lease Tenants may be responsible for all or a portion of the cost to build out its leased premises to the specifications required for its operation. Land - lords and tenants will negotiate the condition in which the landlord must deliver the space to the tenant, which can range from as-is to “white box” to turn key. Landlords are responsible for all costs associated with bringing the premises to the required condition, and tenants perform and pay for all additional work necessary for its use. Landlords will often also agree to pay a tenant improvement allowance, which the tenant can use to offset costs of its work. Alternatively, the landlord may be responsible for building out the space to meet the tenant’s needs. This is known as “turnkey” lease. Such leases may include a cap on the landlord’s con - struction costs, with the tenant responsible for excess costs.
Ground Leases The landlord leases the land to the tenant. The tenant pays ground rent, covers all costs and expenses, and owns and is responsible for all improvements to the premises. Upon the expi - ration of the lease, possession of the land and ownership of any improvements revert to the landlord. 6.3 Regulation of Rents or Lease Terms There is no commercial rent regulation in New York State. The terms of commercial leases are a matter of negotiation between the parties, sub - ject to case law and statutes pertaining to spe - cific issues. For example, statutes provide that a lease cannot contain a waiver of a landlord’s The term of a typical commercial lease is five to fifteen years. However, the term of a typical ground lease is 30 to 100 years. It should be not - ed that New York State and City Transfer Taxes may be due on any lease with a term of more than 49 years, and under other circumstances. 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. responsibility for its negligence. 6.4 Typical Terms of a Lease
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