• Buil to Suit Contracts
  • January 17, 2018
  • Built to suit. Nowadays leasing can be used by the tenant as means to entrepreneurship and for the leasing companies or individuals to get back what was invested in the property.

    Sometimes the entrepreneur meets limitations in his/her business expansion due to lack of necessary resources to invest in meeting requirements of a certain property in which he/she intends to operate the business. On the other hand, there are properties available for leasing at unbearable prices, which cause losses for the leasing companies or individuals. They cannot get back investments made in the properties. The tenants on their side, need to pay rent as well as spend time and invest in order to make the property suitable for their businesses.

    A solution was found in the Legislation for this matter. There are the leasing contracts in the Built to Suit format, provided by Article 54-A, Leasing Law, disposition included by Law 12.744/12. According to that law, it is possible for both parties to establish that the property to be leased will be built based on the necessities of the tenant. This way, the leasing company or individual can get back the investment made in the construction through rents.

    The leasing contract in the Built to Suit format is different from the conventional leasing in that it can increase the wish autonomy, excluding the vulnerability presupposition of the tenant that is established in the conventional leasing. It enables the halt of contract renew and charge of due rents, which is not allowed in the conventional leasing.

    In the Built to Suit contracts it is not possible for the leasing company or individual to terminate the contract and, in the tenant side, the termination is possible by paying the penalty fee previously fixed. This fee is usually related and limited to rent amount that would be due until the end of the leasing. As mentioned before, this amount is not only a remuneration for the property use, but is also a reimbursement of the investments made by the owner in order to build the property according to tenant’s requests.