The Tenant as the Principal? – The Legal Nature of Build-to-Suit Structures
Build-to-suit (often referred to simply as BTS) industrial developments are playing an increasingly prominent role in the Hungarian economic and legal landscape. The essence of these structures is that the real estate developer carries out the investment specifically on the basis of the tenant’s – typically a manufacturing or logistics company’s – technical, technological and operational requirements, and the tenant then uses the property under a long-term lease agreement. The peculiarity of this model is that the development phase and the utilisation phase, together with all of their legal dilemmas, are closely and strongly intertwined. As a result, the parties are not only entering into a relationship regarding the use of real estate, but also into a relationship involving the allocation of risks and liabilities. All this requires a complex contractual structure, precise legal planning and a coordinated regulation of the construction, financing and leasing relationships.