Thanks so much for your post. It’s great to get the benefit of your many years of practical experience. I’d love to see the full EPO. Could you please post it here? It also sounds as though you’re structuring the lease so that landlord or tenant will be positioned for future public or private mandates. That’s a good idea. I assume you’re thinking of climate change but what are the other 3? Thanks, Brian

The EPO is used in the MGL to establish the intent of both Landlord & Tenant(s) in board terms. Yet at the same time limit the EPO to four specific areas which may be subject to future government mandates.

The Model Green Lease includes very specific requirements for operational performance, the measurement and verifcation of that performance, and an Annual Enviromental Report from the Landord to the Tenant.

It also places the financial incentives in the right place to reward the landlord for operational excellance.

For more info on the Model Green Lease, and the Model Green Lease Workshops go to http://www.squarefootage.net

Alan Whitson, RPA
Chair – Model Green Lease Task Force

Great post. A few thoughts.

1. Aspirational? As you argue, the green lease clause you cite is not “aspirational”. The clause is being inserted into a lease, a contract. Not a marketing brochure. While the language might be vague, it is no less enforceable. As with the case of any shoddily drafted, inexact clause that lacks clear mechanisms for measuring compliance and providing remedies, this clause only increases the potential for dispute, litigation and mismatched expectations between landlord and tenant.

2. Reasonableness. The provision you cite contains 2 main clauses. Both would be interpreted by a court under the usual rubric of contractual analysis-plain language, context, intent, reasonableness, etc. After all, the first is an unqualified obligation of landlord–the landlord “will” do the the things that follow. The second is that time-honored contract chestnut of “reasonable efforts”. Whether in a broker agreement, manufacturing agreement, asset purchase agreement, or lease, “reasonable efforts” provisions have a long history of interpretation in caselaw. For example, in a matter I’m handling now the issue would be interpreting the purchase agreement requirement that the seller make reasonable efforts to obtain a release of easement prior to closing. Now, the green lease clause. Imagine I’m a mid-sized tenant in a mall with such a clause in my lease. Anchor tenant in mall does a huge remodel. I see massive dumpsters outside my entrance being filled, dumped and refilled every day with zero effort to reuse/recycle. My green-oriented customers tell me they won’t go to my mall anymore because they’re forced to walk past the eco-carnage en route to my store. The local newspaper writes a story about green hypocrisy. Did the landlord make reasonable efforts to enforce the EPO? Change the hypo to have the landlord or its affiliate construction company handling the build.

3. Analogy to Use Restrictions in Leases. The analogy to use clauses in leases is interesting, but I think it’s not quite on point. After all, use restrictions are in no way aspirational. In the context of a mall lease, for example, the use restrictions mesh with the non-compete and radius clauses to restrict, e.g., the number of shoe stores in a certain area. Therefore, these clauses are often carefully bargained for and understood to be strictly binding and not at all aspriational. Maybe a more direct analogy is to the lease provisions where landlord agrees to equitably enforce building rules/regs against other tenants. That’s a common lease provision and it is enforceable and does have a caselaw history of interpretation and enforcability. More generally, though,is the issue of “reasonable efforts”. Though innocuous sounding, “reasonable efforts” is not an unenforceable, aspirational phrase. It is used and enforced in a wide range of contracts–e.g., in a matter I’m working on now the seller has to make reasonable efforts to get an easement released.

4. Where is the term Environmental Performance Objective defined? Is it the same for every tenant in the building? Does every lease contain the same EPO? How does the EPO differ from the smallish litany of requirements in the first sentence of this clause?

Thanks again for a thoughtful post! Brian