Anti-terrorism Clause in Commercial Leases

  Question:  Our company is interested in leasing some office space.  In reviewing the proposed lease sent to us by the broker, we noticed that there is an “OFAC” provision.  The landlord’s broker said that this provision is just an anti-terrorism provision that is standard in most office leases and is required by federal law.

  Answer:  Pursuant to Executive Order 13224, all United States companies are prohibited from doing business with any person that 1) has committed a terrorist act; 2) possesses a risk of committing or supporting terrorist acts; or 3) is identified on a list generated by the Office of Foreign Assets Control (“OFAC”).  Both the tenant and the landlord have the obligation to conduct due diligence on the background of each other to ensure OFAC compliance.  Both the tenant and the landlord should require in an office lease a representative and warranty by each other of OFAC compliance.

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