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A clause tenants often do not realize is included in a commercial lease is one in regards to compliance with anti-terrorism. Terrorism impacts the world constantly in my aspects of peoples' lives, including work. It is therefore important to help protect one another from any future issues that may arise. In the case of the United States of America, the USA Patriot Act comes into play.
The first step to ensuring commercial lease compliance with anti-terrorism laws is to investigate the lessee (tenant). The easiest way to go about this investigation is to use the rules stated by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
These rules allow for the identification of suspected terrorists, narcotics traffickers, and individuals who threaten international stabilization, as well as anyone else who may be a suspect.
What follows this identification is the freezing of assets. Landlords are able to access the national list and search for someone by name. This list can be found on the U.S. Department of the Treasury website. It is important for landlords to ensure they have a screening process set in place during any transactions.
The Gramm-Leach-Bliley Act, previously used only for the banking industry, but is now also used for real estate, is in regards to the release of nonpublic personal financial information.
When necessary, this act requests that a landlord discloses their privacy policies and procedures to a prospective tenant before releasing any of the tenant’s own nonpublic personal information to a third party. Although many say that this act should only apply to residential real estate transactions, commercial landlords should be aware of as well as it may affect them too.
An Anti-Terrorism representation is not always included in every lease; however, when it is there are a few main points that should be mentioned.
We have found that only 3% of commercial leases that we review have an anti-terrorism clause, mostly because landlords live old lease templates, but we have seen more and more leases that address this concern. Here Is an example of such an anti-terrorism clause in a commercial lease:
Tenant is not, and shall not during the Term become, a person or entity with whom Landlord Is restricted from doing business under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H.R. 3162, Public Law 107-56 (commonly known as the "USA Patriot Act") and Executive Order Number 13224 on Terrorism Financing, effective September 24, 2001 and regulations promulgated pursuant thereto (collectively, "Anti-Terrorism Laws"), including without limitation persons and entities named on the Office of Foreign Asset Control Specially Designated Nationals and Blocked Persons List (collectively, Prohibited Persons"). To the best of Its knowledge, Tenant Is not currently engaged in any transactions or dealings, or otherwise associated with, any Prohibited Persons in connection with the use or occupancy of the Premises. Tenant will not in the future during the Term engage in any transactions or dealings, or be otherwise associated with, any Prohibited Persons in connection with the use of occupancy of the Premises. Breach of these representations constitutes a default under this Lease without further notice and shall entitle Landlord to any and all remedies available thereunder, or at law, or in equity, including without limitation the right to Immediately terminate this Lease.
It is rare that anti-terrorism laws are mentioned in commercial leases and we have not yet recommended any alterations to the clauses we have reviewed for our clients. So long as they follow all of the existing legislation such as the Patriot Act, we recommend you abide by what you clause says, provided it does not give the landlord additional powers (such as saying "Notwithstanding the Patriot Act, the landlord has further privileges of …..). Good luck negotiating!
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