USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The granting of the right to possess real prop - erty without the transfer of title is usually accom - plished by a lease. Leases grant a right of pos - session, typically for a term of years. A limited right of possession or use may also be granted by way of a licence; typically, however, a licence is for a very short, transitory period and for a limited, specific purpose. Moreover, leases granting an exclusive right of posses - sion are considered an interest in real property; licences do not grant an exclusive right of pos - session and are not considered an interest in real property. The right to use another’s property for a spe - cific purpose may also be granted by way of an easement. Easements may be perpetual or for a specified term and may be classified as appur - tenant, meaning that the easement benefits transfer with the benefited property, or person - al, meaning that the easement benefits are not transferable. Personal easements are frequently for a limited term. Easements are considered an interest in real property. 6.2 Types of Commercial Leases Commercial leases are generally classified based on the nature of the property leased. A commer - cial lease that grants the right to possession to unimproved land only is commonly referred to as a ground lease and is typically used where the lessee intends to construct and own title to the buildings, with title to the ground remain - ing with the lessor. Commercial leases may also grant the right to possession of an entire facility or property – both land and improvements. Like -
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 ten 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.
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