Green leases, sustainable leases

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.

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