ORLANDO—You may have heard the term “green lease,” but should you sign one? It's a question more attorneys are answering for their clients.

Green leases, also known as energy-efficient leases, high-performance leases, or aligned leases, work to match the landlord and tenant's financial and energy incentives. The goal is to conserve energy and reduce costs for both parties.

GlobeSt.com caught up with Bert Amason, a commercial real estate attorney with Balch & Bingham, to get his insights on provisions and legal language that need to be included in green leases. He also offers some strong examples.

GlobeSt.com: What provisions and legal language do you need to include in a green lease?

Amason: A “green lease” is basically like any other lease—it is a negotiated agreement between the tenant and the landlord. However, a “green lease” also includes provisions that allocate the benefits and risks of the building's energy efficient performance—or investments in improving such performance—and, in some cases, the behavior of the tenants inside the building. 

In a “green lease,” the landlord and tenant attempt to economically align their mutual interests in areas such as energy efficiency, indoor air quality, or other areas of green or sustainable design or operations. Various model “green lease” forms do exist, but there is no one universally agreed upon set of “green lease” provisions.

Therefore, because a green lease is a negotiated contract like any other, the specific provisions and legal language that “need to be included” depend on whether you are approaching the lease from the perspective of the tenant or the landlord. In either case, the provisions would ideally set forth in sufficient detail each party's rights and obligations, as well as potential consequences and contingencies.

GlobeSt.com: Can you give me some examples?

Amason: For instance, a green lease should include language addressing whether LEED certification is expected, and if so, who is responsible for the certification process and what are the consequences if the building fails to achieve certification. By way of another example, it should also define whether any investments made by the landlord in clean energy or other energy efficient upgrades are “operating expenses” to be included and passed through the rent and, if so, whether there are any limitations on these expenses.

GlobeSt.com: Do tenants need to agree to and understand these provisions? To what extent must they be discussed prior to signing the lease?

Amason: In short, yes. Both the tenant and the landlord should discuss these provisions and understand the expectations of each party. The tenant and landlord should then ensure that such provisions are clearly laid out in the provisions of the lease agreement.