Green Leases

David Toole
Legal Director

Accredited Specialist in
Property Law

Organisations seeking to reduce their impact on the environment are increasingly looking to put green leasing arrangements in place for their premises. To be effective, these arrangements need include appropriate enforcement mechanisms says David Toole, leader of Williams Love & Nicol’s property law team.

David says that a green lease is a conventional leasing arrangement that incorporates the principles of Environmental Sustainable Design and imposes environmental obligations on both the tenant and the landlord in relation to the ongoing use and operation of the building.

‘A significant issue for the drafting of a green lease is that the obligations which a green lease purports to create for one or other of the parties are often difficult to precisely specify.’

‘This may result in the parties entering into a relatively loose arrangement in pursuance of their mutual goal of environmental protection, without specific rights or remedies being provided to the parties if either the landlord or tenant breaches a green provision in the lease.

To overcome this, David recommends the incorporation of the green lease provisions as separate clauses in the conventional lease.

‘We have found the most effective way to ensure the right results are delivered without conflict between the general and green leasing objectives is to marry the standard lease provisions together with the special covenants.’

David says the green lease covenants may include:

• Special landlord’s covenants for green lease imposing detailed environmental obligations upon the landlord over and above its primary obligation to provide the tenant with quiet enjoyment of the leased premises.
•  Special tenant’s covenants for green lease creating positive and negative environmental obligations for the tenant and the enforcement mechanism for the landlord where the tenant is in breach of any such covenants.
• Special mutual covenants for green lease dealing with the environmental performance of the building and the leased premises and the environment objectives of the landlord and the tenant.

David also recommends introducing the green leasing objectives at a very early stage of the lease negotiation process.

‘This enables our client to optimise their bargaining position early on in the process before making a commitment (whether legally or as a matter of practicality) and avoids a position where they need to consider making concession.’