Real Estate Weekly
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Property Managers

Don’t let new sprinkler law rain on your parade

By Ross Yustein and William Pena, Kleinberg Kaplan

Office building owners and tenants need to be aware of fire safety sprinkler requirements that must be satisfied by July 1, 2019.

These requirements are contained in an amendment to the New York City Building Code, referred to as Local Law 26. Among the provisions of Local Law 26 is one affecting all office buildings 100 feet or more in height.

The Sprinkler Law sets forth a series of filings that building owners must satisfy by certain deadlines, culminating in the requirement that the building owner must file a report by July 1, 2019, certifying that a full system of automatic sprinklers has been installed in their buildings.

Although the text of the Sprinkler Law imposes the obligation on the owners of the affected buildings, this obligation can be passed on to tenants through their leases. The form of lease used by office building owners often has a provision stating that the tenant will, at its own expense, comply with laws, rules and ordinances affecting the demised premises.

For example, the Standard Form of Office Lease promulgated by the Real Estate Board of New York, Inc. (REBNY Form), (a form often used by landlords, tenants, and their attorneys), includes the following provision:

“Tenant, at Tenant’s sole cost and expense, shall promptly comply with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters, Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant with respect to the demised premises, whether or not arising out of Tenant’s use or manner of use thereof, (including Tenant’s permitted use) or, with respect to the building if arising out of Tenant’s use or manner of use of the premises or the building (including the use permitted under the lease)”
Unless tenant’s counsel has negotiated a revision to the REBNY Form or to the landlord’s form of lease, such provisions could reasonably be interpreted to mean that the tenant is obligated to install sprinklers in its leased space, at its own cost, by July 1, 2019.

Installation of a sprinkler system can be an expensive and disruptive endeavor depending on the size of space and the difficulty of tapping into a water source, breaking into walls or ceilings, and even the possibility of disturbing asbestos.

Tenants negotiating a lease (or an amendment to a lease) are advised to be cognizant of any provisions causing them to comply with applicable law, rules, ordinances, or regulations with respect to their leased space. Tenants should ascertain whether the building and space is in compliance with the pending Local Law 26 requirements, through inspections by consultants and/or by asking the landlord to make a representation.

This is not to say that in all circumstances the landlord should be responsible for sprinklering a tenant’s space. In the event a space is not yet in compliance, it may be appropriate for landlord or tenant to take responsibility, depending on all factors, including the extent of the tenant’s buildout, who is performing it, and how much the landlord is contributing to the buildout costs.

The important thing is for the parties to be aware of the requirement and to make sure they agree as to which party is responsible for sprinkler compliance.
For tenants currently occupying space pursuant to a lease that will not expire until after July, 2019, an inquiry should be made as to whether their demised space is fully sprinklered, and what the tenant’s obligations are with respect to compliance with laws, rules, regulations and ordinances that affect the demised premises.

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