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Lease War Escalation: 5 LL97 Lease Provisions That Determine Who Pays the $268/ton Fine

Landlords and tenants are increasingly disputing who bears the cost of LL97 compliance. Here are the five lease clauses that determine the outcome—and how documented efficiency improvements can strengthen your position.

The Lease War Has Begun

For 2024 and 2025, commercial landlords and tenants played a waiting game. Landlords hoped tenants would quietly pay "compliance costs." Tenants hoped the fines would never be collected. Brokers hoped the issue would resolve itself.

LL97 Lease Provisions That Determine Who Pays

In 2026, the stalemate is over.

$268

Per ton fine
LL97 penalty

$804k

Annual fine
Large office tower

$200+

Class A PSF
Compliant buildings

“

"With this law in effect, scrutiny of data and due diligence are needed to understand how a building will perform before you enter into any [CRE] transaction. Emissions must be cut by 50% by 2030 and 75% by 2035, which is why it's coming to the forefront in leasing negotiations today."

— David Goldstein, President, Savills Tri-State

The Core Question

Who pays? Landlords argue LL97 is a "law" requiring compliance, so costs are operating expenses. Tenants argue fines are "penalties" for owner-controlled inefficiency. The answer depends entirely on lease language.

The 5 Lease Clauses That Decide the Fight

1

Operating Expense

The Question: Does your lease explicitly include "environmental compliance" or "carbon costs"?

Pre-2019 leases rarely mention carbon. That ambiguity is now a battleground.

2

Compliance with Laws

The Question: Does the lease require tenants to pay for landlord's compliance?

Tenants argue this covers their operations, not base building capital.

3

Capital Expenditures

The Question: How are capital improvements amortized and passed through?

Tenants may accept amortized costs with reasonable payback periods.

4

Tax & Govt Charges

The Question: Are LL97 fines treated like taxes (landlord responsibility)?

Fines are generally not considered "taxes" in standard lease interpretation.

5

Penalty Exclusions

The Question: Does your lease exclude "fines" or "penalties" from pass-through?

This single clause can be worth millions.

The Landlord vs. Tenant Arguments

Landlord Position

  • "LL97 is a law I must comply with to operate the building."

  • "Compliance costs—including fines while we retrofit—are operating expenses."

  • "We filed a Good Faith plan; fines are temporary."

  • "Capital improvements benefit tenants through better buildings."

Tenant Position

  • "A fine is a penalty for YOUR building's inefficiency."

  • "We didn't design the boiler system. We won't pay your speeding ticket."

  • "Show us you maintained the equipment before passing costs."

  • "We'll pay for savings, not for neglect."

The party with the clearest, most specific lease language wins. But documentation matters too.

Real Proof: Umpqua Bank Protects Multiple Facilities

Organization: Umpqua Bank (regional bank with multiple branches)

Facilities: Banking locations with both heating and cooling needs

The Challenge

Banks operate on strict schedules with zero tolerance for equipment failure. Mineral scale was affecting hot water boilers and cooling towers across multiple branches.

The Solution

Umpqua Bank installed Vulcan mineral descaling technology across their facilities—targeting both boilers and cooling towers. For banking facilities, the Vulcan S25 or S50 provide ideal capacity.

The Results

  • Boilers operating at design efficiency

  • Cooling towers protected from scale buildup

  • Reduced maintenance across multiple locations

  • Documented efficiency improvements

Umpqua Bank Case Study

Umpqua Bank — Boilers and cooling towers protected across multiple branches

The Documentation Advantage

In any lease dispute, documentation is power. Here's what Vulcan provides:

Installation Date

Proof of capital invested in equipment preservation—not just promises.

Pre-Installation Measurements

Documented baseline showing existing efficiency (or lack thereof).

Post-Installation Improvement

Verifiable 12-18% efficiency gain = proof of proactive maintenance.

Good Faith Exhibit A

When DOB or tenants ask "What did you do?", Vulcan is your answer.

Sample Lease Addendum Language

"Landlord has installed permanent, non-chemical scale prevention technology on the base building mechanical systems, as documented in Exhibit A. Tenant acknowledges that this proactive maintenance reduces the building's carbon emissions and operating costs, and agrees that documented efficiency improvements shall be considered in any dispute over LL97 cost pass-throughs."

Consult with legal counsel before modifying lease language.

The ROI of Documentation

Sample ROI Calculation

Annual fine exposure (300,000 sq ft office, 500 MT excess)

$134,000

10-year lease exposure

$1.34 million

12-18% efficiency gain from scale removal

$16,000 - $24,000 saved/year

Vulcan commercial model (typical installation)

Login for pricing

Estimated payback period

3-12 months*

Get Exact Pricing for Your Building

For precise pricing tailored to your building's specifications and mechanical systems:

Account registration takes less than 2 minutes.

* Savings and payback vary based on building size, water conditions, existing scale buildup, and actual equipment selection.

Selecting the Right Model

Different building sizes require different Vulcan models. Create an account to view detailed specifications and pricing.

Application

Typical Equipment

Recommended Model

Pipe Size

Flow Rate

Small commercial

Boilers, DHW systems

Vulcan S10

Up to 3"

65 GPM

Mid-size commercial

Boilers, heat exchangers

Vulcan S25

Up to 4"

130 GPM

Large commercial

Cooling towers, central plants

Vulcan S50 or S100

5-6"

300-530 GPM

Multi-building portfolio

Multiple systems

Mix of models

Varies

Portfolio assessment

Three Possible Lease Outcomes

Clear Lease Language

Explicitly addresses carbon costs, fines, and capital improvements

Minimal dispute risk

Ambiguous Language

Outcome depends on documentation and negotiation leverage

Moderate to high dispute risk

Silent / Pre-2019 Lease

No mention of carbon or environmental compliance

Highest dispute risk; litigation likely

If you're in Category 2 or 3, documentation becomes your strongest negotiating tool.

About Vulcan Mineral Descaling Technology

All Vulcan units are secured via our specialized anchor mounting system, providing a permanent, vibration-resistant fit for industrial pipes. As a mineral descaler, Vulcan uses custom-tailored impulse bands to treat water flow electronically, preventing calcium and magnesium from forming hard deposits while leaving the water's chemical composition unchanged.

  • Pipe diameters from ½ inch to 40 inch

  • Works on every pipe material: iron, inox, copper, stainless steel, galvanized iron, plastic, PVC, PE-x, hose, compound pipes

  • Fully cast in acrylic for optimal quality endurance

  • Do-it-Yourself installation without cutting pipes

  • Zero salt, zero chemicals, zero maintenance

View Resources for Lease Negotiations

Strengthening Your Position

  1. Review your lease. Identify which of the 5 clauses apply to your situation.

  2. Document your maintenance. Installation dates, efficiency measurements, improvement records.

  3. Calculate your LL97 exposure. Know your numbers before negotiating.

  4. Consider lease amendments. Clear language benefits both parties.

  5. Bring proof to the table. Vulcan documentation shows proactive management.

  6. Create an account to access model specifications and technical documentation.

  7. Contact our commercial team for documentation templates and building assessments.

Strengthen Your Lease Position

Whether you're a landlord or tenant, documented efficiency improvements provide negotiating leverage.

About the Author

Waslix- Clearly Clean Water (Vulcan Mineral Descaler) provides non-chemical, maintenance-free scale prevention solutions that help commercial landlords and tenants document proactive equipment management for LL97 compliance and lease negotiations. Create an account to access detailed model specifications and pricing.

Vulcan Descaler

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Call us: 412-848-5058
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