Specifying Laws in Lease

Q: One of the spaces at my shopping center is set up for a dry cleaning business, which has a higher risk of causing environmental damage. The tenant who moves into that space would be required to follow specific guidelines and be subject to certain environmental laws that other tenants aren’t. Should I refer to these laws by name in the lease?

A: Yes, but you’ll need additional language to protect your interests. Be very careful when mentioning laws by name in your lease with a tenant. While every lease should require the tenant to comply with all laws, some leases go one step further by specifically naming certain laws the tenant must comply with. For example, your lease may say: “Tenant shall not violate the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).”

You might add this specific language to emphasize the importance of compliance with the named laws. But this strategy can backfire; if the law you mention is later renamed or replaced by another law, the tenant may argue—and a court may agree—that it’s not required to comply with the renamed or new law.

You can avoid this problem by giving the name of the law in the lease, but saying that it’s merely one of the laws you want the tenant to follow or not violate. This way, if, for example, CERCLA is later replaced by a new law, the tenant won’t be off the hook. It must comply with the new law and all other environmental laws.

            Model Lease Language

Tenant shall not violate any federal, state, or local environmental laws, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).