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Wins & Insights

Tenant Leasing Illustrated – May 2019 – Sprinklering around the Emojis

My good friend Owen has been known to say after receiving a text from my good friend Joe “put your hands up and step away from the emojis.”

Yes, Joe is kinda fond of his emojis.

Unfortunately for those who think like Owen, emojis seem to be spreading rapidly from informal texts to office emails.

Emojis have even raised head-scratching legal questions as attorneys debate their meaning in lawsuits.

In one employment harassment case, the emoji combo platter of horses and something that looked like a pastry was held part of the “stud muffin’s” unwanted advances.

In an Israeli case, a couple that responded to a landlord with a smiley face, comet, champagne bottle, dancing yellow playboy bunnies and a chipmunk were held to have agreed to rent an apartment and found liable when they backed out.

Someone is going to have to explain to me the chipmunk.

The meaning behind emojis can be hard to decipher, although in one case an emoji of a smiling piece of excrement was deemed pretty clear.

And no, very funny, but that was not from one of our readers.

The league leading emoji is apparently a goat.

The goat was once a pejorative sports reference but now is often meant to convey “Greatest Of All Time” (G.O.A.T.) and pops up most often when Tom Brady or LeBron James do something significant (often followed by rebuttal goats from fans of Joe Montana and Michael Jordan).

Not to brag, but barnyard animal emojis pop up all the time after people read one of our lease clauses, although more often jackasses than goats.

Over the past few years, New York City commercial tenants have called their leasing attorneys either the “G.O.A.T.” or the “goat” depending on whether their leases adequately addressed compliance with Local Law 26 of 2004 requiring office buildings of a certain height to be fully equipped with automatic sprinkler systems by July 1, 2019.

Yes, this July 1 and right around the corner.

It is not terribly costly to install code compliant sprinkler systems when building out new space but it can be a huge expense to pull down (or work around) an existing ceiling, especially if the tenant is not sure what systems (HVAC, ductwork, wiring, etc.) it might find behind that ceiling.

The law was passed in 2004 and included certain filing and certification requirements in the intervening years so it is not a surprise at this point and tenants constructing new space in affected buildings today make sure to include sprinkler compliance.

But tenants caught in the middle were often stuck as landlords and tenants scrambled to review their leases and use all available Talmudic interpretations to come to the desired result.

Some landlords claimed that typical lease provisions requiring compliance with laws by tenants with respect to their premises put the onus fully on the tenants.

Many leases require such compliance by tenants except to the extent of structural alterations and generally sprinklers are not viewed as structural. However, some landlords have taken the position that their tenants are responsible for bringing risers from the ground up to the tenant’s floor even though most would interpret this type of work as structural.

Not surprisingly, some landlords also used their superior industry knowledge to place the burden on their less aware tenants after the law was enacted.

We have worked with a group of doctors whose lease (extended after the law was enacted) specifically provided that installation of the non-existent sprinkler was on the tenant and the already installed risers and sprinkler loop were on the landlord, something missed by the attorney and broker for the doctors while the landlord conveniently stayed quiet.

A reasonable position for both tenants and landlords is that any “vertical” work or compliance (e.g., risers) or common area work (e.g., sprinkler loops on a multi-tenant floor) should be on the landlord and the “horizontal” distribution within the individual premises should be on the tenant, but much depends on the language of the lease.

As you consider how to handle the sprinkler system compliance in your new or existing lease with a and a , protect yourself with the following seven suggestions:

  • With an old lease, focus on lease language. If your lease did not address Local Law 26, review (if you have not already reviewed) your lease language to determine which party is responsible for compliance. To the extent there is any ambiguity, try to put this obligation on your landlord. Notwithstanding such language, ideally look to achieve the vertical/horizontal distribution of responsibility outlined above.
  • If stuck, be creative. If your lease does not adequately address sprinklers and leaves you with an expensive and disruptive construction project, think out of the box for solutions.
  • It is possible that your landlord may be willing to share the cost of installation, particularly if the lease language is ambiguous and/or if any of the work can be classified as “structural.”
  • You may be able to sweeten the pot for your landlord and achieve lease benefits at the same time. For example, your landlord may be willing to shoulder the cost of sprinkler compliance and provide market (or better) terms if you agree to extend the term of your lease. Landlords prefer the certainty of a longer-term lease with a solid tenant and can spread the compliance costs out over the extended term.
  • With a new lease, address in construction. If you are entering into a new lease in NYC today, you will need to comply with Local Law 26 and this should not be a great burden to handle as part of your initial construction (whether performed by you or by your landlord on a turnkey basis).
  • Address known potential problems. There will undoubtedly be future Local Law 26 doppelgangers. If you are aware of any impending change in the law, make sure that your lease (and/or your build out of the premises) covers the issue up front.
  • Consider known unknowns (unforeseen compliance issues). We have discussed in past newsletters how your lease should allocate legal compliance responsibility between you and your landlord. Sprinklers are today’s example but there will be others in the future. You should limit your compliance obligations to those arising due to your “particular manner of use” (as opposed to permitted use under your lease), or at a minimum limit your obligation with respect to such compliance to non-structural alterations unless due to your particular manner of use, your default under the lease or unusual conditions (e.g., alterations) created by you or at your request.
  • Specify your landlord’s obligations. Such as those affecting the structure of the Building, (e.g., roof, foundation, etc.), base building mechanical, HVAC, electrical, fire/life safety and plumbing systems and hazardous materials.
  • Maintain the right to contest. You should have the right (at your expense) to contest by appropriate proceedings the validity or applicability of any future law or requirement. You can expect that your landlord may require that (a) it not be subject to criminal or civil fines or liens, (b) you provide some form of security and/or indemnification, (c) such contest not violate any mortgage or superior lease and (d) it not be prevented from obtaining any of its own permits.

As Joe would say, “do not or around with your lease provision since it will feel like you are upstream. Instead, be a leasing and put a on your face by ing at the issues and ing down this provision as you home with the seven suggestions above. Gotta and shhhh, please don’t tell Owen about the emojis!”