Background

With the increased focus on Environmental Social and Governance (ESG) factors in real estate transactions, green leases are becoming increasingly important. Green leases are leases incorporating clauses which promote the sustainable operation and management of buildings.

The Chancery Lane Project (TCLP) has published a suite of green lease clauses for use in commercial leases in Ireland. The clauses were produced by the Irish Property Working Group of TCLP. TCLP is a collaborative effort of lawyers from around the world working pro bono to develop new contract provisions to help fight climate change. These clauses are available on TCLP’s website for colleagues to use in their leases of commercial property in Ireland, subject to the terms of use.

• Access green lease clauses from the TCLP website

About the clauses

The clauses are drafted primarily for a lease of new office premises within a multi-let building where the tenants contribute to the maintenance of the building common areas via a service charge regime. Some of the clauses may be suitable for use in leases of other types of premises. 

The clauses should be treated as a menu, from which landlords and tenants can select clauses that are suitable for their premises and their appetite for sustainability measures. Colleagues are advised that the sample clauses are not to be treated as precedents and are for negotiation in every individual case.

Today’s article focuses on clauses incorporating circular economy and sustainability principles into a service charge regime, landlord’s regulations and landlord’s works, known as Amélie and Lauri’s Clause.

• View Amélie and Lauri’s Clause

Amélie and Lauri’s Clause

Amélie and Lauri’s Clause includes:

• a tenant’s covenant to comply with any landlord regulations relating to sustainability, waste management, environmental performance etc. and corresponding inserts for landlord regulations clause;   

• service charge clauses including sample environmental performance related items in the service charge costs;

• provisions requiring the landlord/management company to use [reasonable] endeavours when delivering services under a service charge regime to comply with the environmental performance plan/efficiency objectives, to maintain and share environmental performance data and to prioritise the use of re-used, reclaimed, sustainable, recycled or recyclable products or materials; 

• a landlord’s right of access to the demised premises to carry out works to maintain or improve environmental performance and to carry out works to remedy a breach by the tenant of its green obligations or, for example, to carry out an environmental audit;

• restrictions on the landlord carrying out works which would adversely impact on the certification, environmental performance or BER of the building or which would be contrary to efficiency objectives or objectives set out in any environmental performance plan; and

• a tenant’s right to enter and carry out remedial works to the common areas/retained parts in the event of the landlord breaching its obligations to achieve a certification or maintain a rating.

Environmental laws and practices are constantly changing as governments, businesses, NGOs and individuals seek to find solutions to climate change. These clauses are likely to evolve and change over time to reflect changes in law and practice.

Further information

For information on clauses dealing with repair and alteration covenants, rent review assumptions and covenants for the protection of energy and sustainability ratings, see the previous article on Emily and Tom's Clause.

For information on clauses promoting co-operation between landlords and tenants in relation to the environmental performance of buildings, see the previous article on Odhran’s Clause.

Further information on the TCLP green lease clauses will be included in the March 2023 edition of the Law Society Gazette.