Get 14 Lease Protections When Letting Tenants Install EV Charging Stations

Jump-start your leases to prepare for tenant demand and legal compliance.

 

With electric vehicle (EV) purchases on the rise, a new fixture has begun to appear in the parking lots of office buildings, shopping centers, medical facilities, and other commercial properties across the country: the EV charging station. The Department of Energy estimates that as of 2022, 46,000 commercial EV stations have been installed in the U.S., as compared to just 10,700 in 2014. Those numbers are expected to increase dramatically in the next few years.

It’s not hard to understand why landlords would consider EV upgrades for their own parking facilities. In addition to helping attract and retain tenants, having EV stations brands your business as modern and environmentally conscious. EV station appeal is especially great at retail properties because it lures customers and keeps them shopping longer while their cars recharge. Even if landlords don’t want to install EV stations, tenants might. End result: Sooner or later, EV stations are bound to become an issue in commercial leasing.

Regrettably, fossil fuel leases are ill-designed to deal with the unique questions posed by the installation and operation of EV stations in commercial parking lots. That’s why you need to give your lease form an electrical makeover. Here’s how to create a legally sound EV stations clause for your own lease.

What EV Stations Are

EV stations supply electrical power for use in recharging electric cars and plug-in hybrids. Vehicle owners may have to pay a fee to access an EV station located on commercial property. There are three types of charging stations:  

• Level 1 chargers are the slowest, carrying a standard 120 volt charge;
• Level 2 chargers allow for 240 volt charging, which makes them three to seven times faster than Level 1 chargers; and
• Level 3 chargers are the fastest, allowing for 480 volt charging.

Level 1 chargers are meant mostly for private, residential rather than commercial or public use. Most public EV stations are Level 2 chargers.

The EV Station Legal Context

What the lease says or doesn’t say about EV stations will depend on the legal requirements in the jurisdiction where the property is located. The first thing landlords must check is whether the particular charger is allowed under local zoning laws. Some municipalities also require a permit to install a Level 3 charger. Local building and fire codes may also apply.

In addition, a few states have adopted laws to incentivize—or at least prevent the disincentivizing of—EV stations in public spaces. These laws may have direct and immediate implications for leasing. The most notable example is California, which bans commercial landlords from entering into leases that include any unreasonable restriction or prohibition on the installation or use of an EV charging station in the property’s parking space. Some municipalities have passed similar laws.

The Commercial Property EV Station Business Model

There are two basic business models for installing and operating EV stations at a commercial property:

• The owner-operator model in which the site host owns and operates the EV charging stations and infrastructure; or
• The third-party model in which the host leases or licenses space to a vendor who then installs, operates, and owns the stations and infrastructure.  

The owner-operator model has the most significant impact on the commercial lease and landlord-tenant relationship, particularly when the EV station is installed by the tenant. Accordingly, this analysis will cover those types of arrangements. Our Model Lease Clause: Set Rules for Tenant Installation of Electric Vehicle Charging Stations, covers 14 issues that a lease clause for these situations must address.

1. Landlord Duty to Install EV Charger

Tenants may seek to require you to install EV stations in the parking lots at your sole cost and expense. Whether you agree to this demand is purely a business decision. Explanation: While state and local laws ban unreasonable restrictions on EV stations, they generally don’t require landlords to install them—although you should check the ordinances in your own city just to be sure. Legal and business circumstances permitting, clarify that you have no duty to install EV stations [Clause, Sec. 1].

2. Tenant Right to Seek Consent to Install EV Stations

If tenants want to install EV stations in their parking areas, allow them to seek your consent to do so in writing. This is especially important in California and other locations subject to EV stations laws. But even in California landlords have the right to impose reasonable restrictions on EV charging stations. Accordingly, indicate that you won’t “unreasonably” withhold consent while also specifying that to receive consent the tenant must comply with all applicable laws and lease provisions [Clause, Sec. 2].

3. Tenant Duty to Install and Maintain EV Stations

Make it clear that the tenant must install and maintain the EV stations at its sole expense and keep them in good working order and condition at all times during the lease term. Adjust this language if the EV station has already been installed so that the maintenance duties apply to the installed equipment [Clause, Sec. 3].   

4. Tenant Duty to Obey Reasonable Landlord Rules

Require the tenant to comply with all of the landlord’s “reasonable standards, requirements, rules, and regulations for the installation, operation, maintenance, repair, and replacement of the EV Station(s),” including any reasonable revisions you may make [Clause, Sec. 3(a)].

5. Tenant Duty to Ensure EV Stations Compliance

Make express what so far has just been implied—namely, that the tenant must comply with all health and safety standards, zoning, environmental, and other legal requirements governing the installation and operation of its EV stations [Clause, Sec. 3(g)].

6. Landlord Right to Designate Locations of EV Stations

You don’t want tenants installing EV stations in parking areas that may cause safety hazards, traffic problems, or inconvenience to other tenants and visitors. So, it’s important to clarify that you have the right to designate the parking spaces and parking areas where EV stations can be installed and operated [Clause, Sec. 3(b)].

7. EV Stations Count Toward Tenant’s Parking Allotment

Landlords with limited space typically allot a specific number of parking spaces or amount of parking area to each tenant. The lease should say that the tenant’s EV stations count toward this allotment [Clause, Sec. 3(c)].

8. Tenant Duty to Use Acceptable Installation Contractor

As with any other tenant construction, you should require tenants to hire a licensed and “reasonably acceptable” contractor to install and maintain the EV stations [Clause, Sec. 3(d)].

9. Tenant Duty to Insure EV Stations

Spell out the tenant’s insurance obligations regarding the EV stations. Rather than specify a policy type or coverage amount, our Model Lease Clause requires the tenant to comply with the landlord’s “reasonable” requirements for installation, operation, and maintenance of the EV stations and related infrastructure. It also gives you the right to request and receive from the tenant a certificate of insurance naming you as an additional insured within 14 days of getting your consent to install the EV station [Clause, Sec. 3(e)].

10. Tenant Duty to Relocate EV Stations at Landlord’s Request

It may be necessary to move the EV stations for safety, future development, or other purposes. So, require the tenant to comply with any reasonable landlord request to relocate the EV stations to a different part of the property [Clause, Secs. 3(c) and (f)].

11. Tenant Duty/Right to Remove EV Stations

The lease should explain what, if anything, the tenant must do with the EV stations once the lease ends. Our Model Clause gives the tenant the right to remove the stations, but you may want to revise that. Thus, for example, ban removal if you want to keep the EV stations in place; require removal if the EV stations are there only for the particular tenant’s use and you don’t want to keep them around after the lease ends [Clause, Sec. 3(h)].

12. Tenant Duty Regarding EV Station Spaces at End of Lease

Require the tenant to deliver the parking spaces or areas where EV stations were installed free of any debris, trash, or hazardous materials [Clause, Sec. 4].

13. Tenant Duty to Indemnify

Require the tenant to indemnify you, your property manager, mortgagee, ground lessor, and other stakeholders for all costs and liabilities incurred in connection with its installation, operation, maintenance, repair, removal, or replacement of the EV stations and related infrastructure [Clause, Sec. 5].

14. No Additional Parking Entitlement

Last but not least, state that none of the EV stations lease provisions are intended to increase the number of parking spaces that the tenant is entitled to use or impose any additional duties on the landlord or other persons with regard to the tenant’s parking space rights and allocations [Clause, Sec. 6].