Environmental provisions in commercial leases: The details lie beneath the surface – Part 1

Commercial lease provisions regarding hazardous materials and environmental compliance are often relegated to standard generic provisions near the end of the document. This can be a mistake. Leases for manufacturing or logistics uses should be treated differently from retail or office use, as should a property with a clean environmental history as compared to a contaminated property. In all such situations, however, environmental risks and the responsibility for dealing with environmental conditions should be carefully allocated.

A landlord’s commercial lease form often prohibits the tenant from using hazardous materials entirely and requires that tenant indemnify landlord against liabilities arising from the release (or mere presence) of hazardous materials on the property. Tenants for their part often mark up such a form by inserting an indemnity against all environmental liabilities caused by anyone other than the tenant itself as well as broad representations and warranties by landlord that the property is free from oil and hazardous materials. Neither position is especially useful.

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