ISRA Compliance Clause
(Commercial Lease) (NJ)

Summary

This ISRA compliance clause may be included in a commercial lease of real property in New Jersey to require the tenant to comply with the New Jersey Industrial Site Recovery Act. This clause contains practical guidance and drafting notes. The New Jersey Industrial Site Recovery Act (N.J. Stat. § 13:1K-6 et seq.) (ISRA) requires owners of certain industrial facilities in New Jersey to investigate and remediate their property prior to a sale or transfer of the facility. However, only operations with certain North American Industry Classification System (NAICS) numbers are subject to ISRA. The termination of a commercial lease can trigger ISRA reporting requirements as can an assignment of the lease or a sublease of the premises. This clause is intended for use when the tenant's permitted use under the lease is not subject to ISRA. The clause places the responsibility for any future ISRA compliance on the tenant, but only when the tenant's activities trigger the need for ISRA compliance. If the owner of a facility is a landlord and the operator is a tenant, and there is a failure to comply with ISRA provisions, the landlord or the tenant may petition the New Jersey Department of Environmental Protection (NJDEP) to seek ISRA compliance from the party who is responsible under the lease. If the NJDEP determines that the lease clearly defines the responsibility of either party to comply with ISRA, it will seek ISRA compliance from that party. N.J. Admin. Code § 7:26B-1.10(f). If the NJDEP determines that the lease does not clearly define the parties' responsibilities, it can compel compliance by both parties. N.J. Admin. Code § 7:26B-1.10(g). Thus, it is important for the lease to clearly lay out which party is responsible for compliance. For further guidance on commercial leasing in New Jersey see Commercial Real Estate Leasing (NJ). For guidance on real estate ownership in New Jersey see Commercial Real Estate Ownership (NJ). For lease templates see Retail Lease Agreement (Long Form) (NJ), Retail Lease Agreement (Short Form) (Pro-Landlord) (NJ), and Retail Lease Agreement (Long Form) (NJ). For guidance on ISRA see New Jersey Transaction Guide § 123.40 and New Jersey Transaction Guide § 123.50.