The following topics must be worked out in the contract for the usage phase:
(leasing) payments and amortisation
- almost all real estate leasing agreements, under the financial terms, contain
- leasing payments
- amortisation
- amortisation is oriented to the presumed reduction in value of the leasing property
- the presumed reduction in value is regularly oriented to the permissible taxation depreciation rates for similar types of real estate
net land lease interest (if land is built on under building rights)
- leasing property = building construction under building rights
- asserting building rights triggers net land lease interest
- generally, net land lease interest is paid by the lessor to the building rights holder and passed on as a charge to the lessee without a surcharge as an outside expense; capitalisation and “one-time net land lease interest payment” is the exception
adjustment clauses
- to adjust the interest portion and the amortisation portion to financial market conditions at agreed revolving financing points contained in practically all real estate leasing agreement adjustment clauses
- adjustment clauses based on reference dimensions, such as
- an index
- the Libor rate
- etc.
payment modalities
- due periods
- periodic
- often quarter but also monthly
- payment deadlines
- generally: end of quarter, end of month
- pre-numbered payment
transfer of risk and third-party liability
- lessee bears all the risks related to the leasing property
- destruction of the leasing property
- damage to the leasing property
- business interruptions
- among other things
- the transfer of risk is the same as that under equipment and furnishings leasing
- lessee’s insurance requirement
- lessor’s substitute performance right
warranties
- the lessee does not have any claim to a warranty vis-à-vis the lessor, neither for replacement, reduction or improvement
- purchase and or construction on the building site
- pursuance of warranty claims against third parties in the name of – at the request of and at the expense of the lessor – by the lessee at its expense
usage
- usage and right to use with appropriate care
- in their agreements, lessors regularly stipulate a damage replacement requirement in case of overuse
maintenance
- lessor’s maintenance requirement at its own expense
- fulfilment of officially mandated measures by the lessor, possible replacement by the lessor at the lessee’s expense
other services
- besides the obligation to transfer the leasing property, other services may only be assigned by the lessor on an individual basis when specifically agreed to
ordinary termination
- fixed agreement duration
- maximum ordinary leasing duration without accounting for the duration of a leasing extension after exercising this option
- between 5 and 20 years
- termination right depending on the standard agreement or negotiation with the lessor, then often mutual
extraordinary termination
- in cases of payment default
- possibility for the lessor to uphold the leasing agreement by waiving subsequent fulfilment of the lessee and asserting damage claims as part of the positive interest of the agreement
- similar application of the default terms in OR 83
