by Comunicação - RUCR LawBuilt to Suit (BTS) Contract
The Built to Suit (BTS) contract is a commercial legal model in which the lessor commits to customizing a property — either by constructing it from scratch or by carrying out renovations — according to the specifications requested by the lessee. It is a tailor-made solution designed to meet specific needs, primarily in business operations.
Among its main features are the customization of the property according to the lessee’s needs, the establishment of a necessarily long term, usually exceeding 10 years, and its exclusive use for commercial purposes. Another notable feature is the freedom of the parties to negotiate and agree upon the contractual clauses, given the atypical nature of the BTS, as well as the possibility of stipulating a waiver of the right to review the rental amount during the term of the contract.
The “Superior Tribunal de Justiça” (STJ), in the judgment of “Recurso Especial nº 1.521.448/SP”, consolidated the understanding of the legal nature of the BTS, recognizing its concept, the validity of freely negotiated clauses, and the parity between the contracting parties. The decision emphasized that the BTS is not subject preferentially or exclusively to the “Lei do Inquilinato” and reaffirmed the principle of party autonomy as the guiding principle for this type of agreement.
Regarding the rental amounts, it is common for the rent established in Built to Suit contracts to be higher than the market average. This is because the lessor initially bears all expenses related to the construction or renovation of the property to meet the lessee’s requirements. Furthermore, the rent also reflects the risk assumed by the lessor. Throughout the contract, the lessee reimburses these expenses in a diluted manner: with each installment paid, the lessee covers not only the use of the property (rental) but also the investment made by the lessor in the improvements. For this reason, the total rental amount is higher than that practiced in ordinary leases.
Although the BTS is an atypical contract, it has express legal support under Article 54-A of the “Lei do Inquilinato” (Lei nº 8.245/91). This provision establishes that, in the non-residential lease of an urban property built or substantially renovated by the lessor to meet the lessee’s needs, the freely negotiated conditions shall prevail, including the possibility of waiving the right to rent review during the contractual term.
Among the advantages for the lessor are maintaining ownership of the property, retaining the improvements made, and receiving rent higher than the market average. For the lessee, the BTS offers a property tailored to their needs, the dilution of adaptation costs into the rent, and favorable accounting treatment.
In summary, the Built to Suit contract is a strategic alternative for lessors and lessees, offering legal security, profitability, and customization in commercial leasing.
By: Raphael Mota Chaves
by Comunicação - RUCR LawDoes your company have an appropriate and efficient Contract Management system?
Contract Management is the process that encompasses a set of techniques, tools, and procedures carried out in favor of organizing all the documentary life of a company. This means organizing all the documents that translate the set of rights and obligations assumed by a company contractually.
Managing a contract involves several stages. It starts with the drafting of its first draft and continues even after its termination, ensuring its proper storage. Other stages of this process include: negotiation between the parties; the signing; the execution of the contract and monitoring of its compliance; and, in many cases, termination – whether due to the scope’s completion, the passage of time, a request from one of the parties, or the emergence of a conflict.
In a corporate environment, the organization of contracts is essential to ensure the safe progress of business, as well as to facilitate decision-making.
What practice shows is that many companies end up struggling with Contract Management. Whether due to a lack of technical experience to agree on contractual clauses – which can create a problem between the parties in the future – or the loss of documents relevant to the company, due to poor organizational storage.
At RUCR Law, we offer the service of outsourcing contractual organization, ensuring the highest legal security in all relationships for our clients.
We have a team of lawyers specialized in Contracts, ready to work on the drafting and review of all types of contracts, as well as on negotiation with the opposing parties. Our team also manages the signings, execution, and storage, using various tools.
We have developed a series of processes and tools that assist in Contract Management. One of our key tools is the Contract Dashboard, a type of spreadsheet housed within our internal system that centralizes the main information of each signed contract. By quickly reviewing the line corresponding to a specific contract, managers can easily and directly obtain all necessary information to decide on a possible termination or renewal of the contract, for example. This saves the technical work of contract analysis and simplifies the decision-making process for company executives.
Moreover, we centralize all contracts on our server in an organized and segmented manner, allowing us to share access with the client. This ensures the security of the storage of signed contracts. There is also a complete control of the contract’s lifecycle, as all contracts that come through the office start with a drafting task, whether it involves writing or revising the draft. This means there will be a permanently recorded task in our internal system that includes all negotiation dealings, including all emails exchanged between the parties, contract versions, and any other relevant information.
This means complete and comprehensive management of contracts and their entire lifespan.
Contact us to learn more about our services.