USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
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
in the gross income of the owner for general income tax purposes. 6.8 Costs Payable by a Tenant at the Start of a Lease Tenants typically pay a security deposit equal to one or more months’ rent at the inception of the lease. Alternatively, the landlord may require a letter of credit to serve as a security deposit. Tenants are also generally required to pay the first month’s rent upon signing the lease. 6.9 Payment of Maintenance and Repair Where there are multiple tenants in a property, the cost of maintenance and repair of the com - mon areas (CAM charges) is divided among the tenants. Generally, each lease will specify a fixed, specified proportionate share of the CAM In most cases, utilities are directly metered to the separate tenant spaces and paid for by the ten - ant. Otherwise, where there are multiple tenants, each tenant is typically charged a percentage of the total utility bill based upon an agreed-upon percentage set forth in the lease at inception. 6.11 Payment of Property Taxes In most commercial leases, the landlord pays the cost of real property taxes on the leased prem - ises, but the tenant is responsible for reimbursing landlord for such costs, either in a lump sum with - in, say, 30 days of the landlord’s payment to the taxing authority, or in advance in equal monthly instalments. Where real property taxes are paid to the landlord by the tenant in advance in equal monthly instalments, the lease will often provide that the payments are subject to “true-up” to bal- ance the amounts paid with the amounts actually owed to the taxing authority during the subject charges attributable to that tenant. 6.10 Payment of Utilities and Telecommunications
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