Erik, a partner in Pacifica’s Real Estate Practice Group, wrote the article for the Municipal Research and Services Center Insight Blog with Nicole DeNamur, owner of climate-focused law firm Climate Aligned Law.

In the article, “Leases: A Critical Tool for Clean Buildings Act Compliance,” they note that building performance standards (BPS) statutes such as the Act are so new that “traditional” leases “do not even contemplate the unique regulatory and technical issues associated with BPS requirements.”

“Entities that own or lease space in buildings covered by the Act need to understand compliance issues and penalties and manage associated risks and opportunities through updated lease language,” Erik and Nicole write.

Follow the link below to read their explanation of the key BPS-related issues germane to the landlord-tenant relationship, including legal compliance, energy budgets, capital expenditures, allocation of penalties, and more. Erik and Nicole also offer public agency representatives suggestions for next steps as they consider how to leverage leases to comply with the Act and other BPS laws.

“Leases: A Critical Tool for Clean Buildings Act Compliance”

Previously, all commercial leases for a term of more than one year had to be acknowledged by the landlord to be valid and enforceable in Washington. And because such commercial leases must be acknowledged by the landlord, it has been customary for parties to require an acknowledgement by the tenant as well. SB 5480 brings Washington into alignment with the many other states that do not require commercial leases to be acknowledged, such as Oregon and California, and further into alignment with the current era of electronic signatures.

SB 5480 makes it easier to use remote and electronic signatures, which will streamline the lease execution process, particularly for out-of-state signatories. The change in law also benefits unsophisticated tenants, in particular those who may not have understood, or who may have been confused by, Washington’s notary requirements.

It is also important to note that SB 5480 does not completely do away with acknowledgements. Landlord and tenant signatures to a commercial lease and memorandum of lease that will be recorded still must be acknowledged under RCW 64.04.010. And it is in this regard that the State arguably injected ambiguity into the statutory code because RCW 64.04.010 (as amended by SB 5480) will now read that “to be recorded, a lease and a memorandum of lease must have the lessee’s and lessor’s signatures acknowledged,” which can be interpreted to mean that both the lease and memorandum must be acknowledged even though only the memorandum will be recorded. This interpretation, if valid, may create new problems for parties who desire to record a memorandum of lease at a later date if the underlying lease was not acknowledged at the time of execution.

If you have questions or need assistance with a commercial lease agreement, please contact Andrew Zellers or any member of our Real Estate practice group.

Click here to download a PDF of this article.

The novo on 52nd development brings amenity-rich, affordable housing to Lynnwood, WA.

Apartments in novo on 52nd include fully equipped kitchens, full-size washers and dryers, air conditioning, and balconies or patios—ensuring the modern, 1- to 4-bedroom homes are move-in-ready and financially accessible. The novo on 52nd apartments also offer significant amenities to residents, including raised community garden beds, a community clubhouse with a computer room, fitness center, and indoor basketball court, and secure, covered onsite bike storage, among other features. Individuals and families who meet certain income restrictions were able to apply for the apartments, and at the time of writing the development was 84 percent occupied and 99 percent leased.

Pacifica Law Group partners Faith Pettis and Jon Jurich, and associate Katherine Van Gunst, served as bond counsel to HASCO with assistance from John De Lanoy and Erik Jennings, as HASCO’s real estate counsel. The team worked on this redevelopment of a previously existing HASCO apartment, leveraging tax-exempt bonds and low-income housing tax credits.

HASCO entered into a public-private partnership with the Inland Group, an experienced Spokane-based affordable housing developer. HASCO provided access to tax-exempt bonds and low-income housing tax credits. The Inland Group handled all aspects of the development, from demolition of the existing buildings to construction and lease-up of the new community. Now, HASCO will buy the Inland Group’s partnership interests and assume full ownership of novo on 52nd.

“The trust and cooperation between HASCO and the Inland Group allowed each side to do what it did best and ensured a successful, efficient outcome,” said Pettis. “We were so pleased to be part of this groundbreaking public-private partnership.”

With a housing finance practice focused exclusively on representing public entities working to increase affordable housing opportunities, Pacifica is delighted to see and celebrate HASCO’s successful completion of novo on 52nd, which brings 242 beautiful new homes to Lynnwood and the greater Seattle metropolitan area.

For more information about Pacifica’s housing finance services, please visit our practice page.

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January 25, 2023

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Reprinted by permission of the Real Property, Probate, and Trust Section of the Washington State Bar Association.

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