While legal professionals may not possess the solution for upcoming winter to the widely discussed problem of frozen Tesla door handles or expertise in selecting personalized lock sounds for electric vehicles (EVs), we do offer valuable advice for landlords aiming to integrate their current property infrastructure with the growing prevalence of EV charging stations.
Essentials to keep in mind
With primary focus on leasing the parking spaces owned by the property owners already handcuffed by long-term lease agreements (e.g., shopping malls or mixed commercial/residential buildings owners), here are some legal challenges expected to occur while negotiating terms and conditions of parking space leases for installation of EV charging stations:
- REVIEW OF EXISTING PROPERTY LEASE AGREEMENTS: Revision of the lease agreements concluded with the existing tenants of the property to address the installation and use of EV charging infrastructure, is recommended as a first step. Unclear provisions on use of parking spaces can lead to confusion among existing tenants and EV charger users. It is like a game of contractual chess where landlords might find themselves in a checkmate situation, facing contractual breach claims from existing tenants to protect their parking territory or preferential delivery points.
- SUBSTATION, CHARGING DISPENSERS AND RELATED INFRASTRUCTURE: The necessity to construct a substation and other essential infrastructure depends on the extent and quality of the existing infrastructure of particular property. However, the ownership of the infrastructure located both, under and above ground, needs to be clearly defined in the lease agreement, not only in terms of usage rights during the lease period but (and more importantly) once the lease expires. Protecting the existing property’s buildings or infrastructure from potential damage during installation, repair, or its removal (and the right for the compensation) is another crucial aspect for the landlord.
- CONNECTION TO THE GRID: Connecting EV charging stations to the distribution grid involves navigating complex rules and regulations of both energy and real estate sectors. Knowing the legal moves beforehand is key to avoiding delays in the installation process. This includes careful examination of technical specifications and safety measures by the competent technical expects. Do not forget to specify which contracting party's obligation is to lead the entire network connection process technically (and financially) before the competent authorities, and ensure that the other contracting party signs up for the full cooperation.
- MAINTENANCE AND ENHANCEMENT OBLIGATIONS: Prescribing procedures in case the infrastructure needs to be repaired or removed, is essential, including the time frames for doing so. Constant changes in regulations are a daily reality in the legal field, but impactful changes are occurring at an increasingly rapid pace in the world of technology as well. Ensure that the tenant is obligated to constantly monitor and promptly comply with regulatory changes in areas applicable to EVs, charging stations, energy, and the environment in general. Additionally, the tenant should also be obligated to keep an eye on technological innovations. Outdated charging stations surely will not attract users, meaning that the rent will eventually decrease. The last thing you want is for EV users on your property to feel like they have stumbled into a real-life “Nosedive” scenario from Black Mirror, where they are denied access to the latest charging tech like some sort of social outcasts.
- UNAUTHORIZED PARKING: Ensuring that designated EV charging spots do not turn into the Wild West of parking (particularly in mentality where parking in bike lines is, unfortunately, common practice) is an additional factor to consider in advance, especially in lease cases where the rent is calculated as a portion or percentage of the total sales revenue generated via charging stations on the property.
More sustainability, more value
According to information provided on the Croatian Vehicle Centre’s website under the title "Number of Electric and Hybrid Vehicles (2007-2023)", Croatia recorded 7,032 electrically powered vehicles with valid registration in 2023, compared to 4,799 in 2022. Taking into account the data from previous years (e.g., 730 electrically powered vehicles with valid registration in 2019), it is evident that EV revolution is slowly but steadily gaining momentum in Croatia.
By acknowledging changes in energy law regulations (e.g., Regulation (EU) 2023/1804 of the European Parliament and of the Council of 13 September 2023 on the deployment of alternative fuels infrastructure, and repealing Directive 2014/94/EU (“AFIR”), in force since 10 October 2023, with applicability to EU Member States starting from 13 April 2024, setting binding minimum targets for the EU Member States regarding publicly accessible charging infrastructure for road vehicles) and by understanding the technical and legal shortcomings of their properties for respective innovations, landlords will be able to proactively address challenges of integrating EV charging infrastructure, significantly increasing the value of their properties.
By Maja Seat, Partner, Miskovic & Miskovic
