Helmut Seitz & Peter Fassl
by Helmut Seitz & Peter Fassl
The green lease
A green lease is a lease agreement that is intended to encourage the tenant to use a property in a sustainable manner, and the landlord to manage the property in a sustainable manner. For a lease to be considered green, it must contain at least one provision for the sustainable use and management of the property, the reduction of waste and emissions, and the implementation of maintenance, modernisation, and other construction measures of an ecological nature. In addition to the three main criteria, green leases often contain additional provisions, such as agreements on the creation of an energy optimisation plan or a sustainability handbook that describes in detail how the property is to be used sustainably.
Drafting of the contract
A green lease agreement is the responsibility of the involved parties, which is why they can also decide on the binding nature of the provisions. A distinction must be made here between binding obligations and mere effort clauses. In the case of the latter, the agreement is to be regarded as a mere contractual recommendation and is not enforceable. In the case of binding commitments, a contractual penalty may be agreed upon in the event of a breach by one party in order to ensure compliance with the green lease agreement. In order to do justice to the idea of a green lease, the use of the payments resulting from a contractual penalty is earmarked, for example, by dedicating it to sustainable construction or maintenance measures on the property.
Growing demand
Properties that rely on green leases are of great interest to investors. They play an essential role in the fulfilment of environmental social governance factors (ESG) for real estate and are often taken into account in the selection of real estate investments. It is therefore all the more important that the green lease agreement is contractually structured accordingly.
GGI member firmHSP Rechtsanwälte GmbHVienna, AustriaT: +43 1 533 0533
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HSP Rechtsanwälte GmbH is an Austrian independent, full-service business law firm with a strong international focus. Since its foundation in September 1997, it has prided itself on a flexible approach to schedules and venues, close cooperation with GGI members from around the globe, and a work ethic defined by quick reaction times, efficiency, and commitment. It covers a particularly wide range of legal services in the fields of private and public law, providing customised solutions for business and private clients.
Helmut Seitz is an Of Counsel at HSP.law, a Vienna-based law firm. He has specialised in real estate transactions for more than 20 years. Contact Helmut.
Peter Fassl has been a Partner at HSP.law, a Vienna-based law firm, since 2002. He has repeatedly been awarded in various rankings in his area of expertise which is Real Estate law. Contact Peter.