A built-to-suit lease is a type of commercial real estate agreement in which the lessor builds or substantially renovates a property owned by him or her, by itself or by third parties, so that it can be used by the lessee according to business needs pre-established in the mutual agreement. All the costs must be cover by the lessor with the plan of making back the money through a long-term lease agreement with the applicant.
The performance of the Built to Suit can generate several benefits for both parties. For the occupant, it generates the possibility of having a suitable place and built according to the desired specifications, without having to depart from their social object to build the place on their own. As for the contractor, it is the possibility of a venture with a long-term financial return, with the possibility of securitizing the credits arising from the agreement.
On the other hand, there is a divergence regarding the classification of the Built to Suit Agreement in Brazil, some qualify it as a kind of commercial lease, others consider it a agreement of assignment of use of property for a determined period. However, in Brazil, it was decided to treat this contractual type within the scope of Law 8245/91 – Tenancy Law, from art. 54 A, inserted through Law 12,744/2012, as follows:
“Art. 54-A. Na locação não residencial de imóvel urbano na qual o locador procede à prévia aquisição, construção ou substancial reforma, por si mesmo ou por terceiros, do imóvel então especificado pelo pretendente à locação, a fim de que seja a este locado por prazo determinado, prevalecerão as condições livremente pactuadas no contrato respectivo e as disposições procedimentais previstas nesta Lei.”
Translating the above text freely, the law provides to treat the Built to Suit Agreement as a kind of commercial lease agreement, prevailing the private autonomy, and the parties may even reject the application of the Tenancy Law.
Another particularity of BTS is the possibility of waiving the right to review the rent amount. The law expressly provides in §1º, Article 54-A.
The reason for this possibility is the same as already explained about the composition of the rent. As already explained, the rent in BTS is not only intended to remunerate the use and enjoyment of the leased property. Its composition includes the return on capital invested in carrying out the commissioned project. So, doesn’t make sense to revise the rent to suit the market price, right?
In addition to the points covered here, there are many other details on BTS due it is a structured and complex operation. In this sense, it is a contractual type that can bring many benefits to the parties and can be used for many perspectives. Therefore, the study of this type of commercial agreement deserves full relevance to the Brazilian business environment.
