[Title 32 CFR 644.136]
[Code of Federal Regulations (annual edition) - July 1, 2004 Edition]
[Title 32 - NATIONAL DEFENSE]
[Subtitle A - Department of Defense (Continued)]
[Chapter V - DEPARTMENT OF THE ARMY (CONTINUED)]
[Subchapter J - REAL PROPERTY]
[Part 644 - REAL ESTATE HANDBOOK]
[Subpart C - Acquisition]
[Sec. 644.136 - Leasing guidelines.]
[From the U.S. Government Printing Office]


3242004-07-012002-07-01true644.136Sec. 644.136NATIONAL DEFENSEDepartment of Defense (Continued)DEPARTMENT OF THE ARMY (CONTINUED)REAL PROPERTYREAL ESTATE HANDBOOKAcquisition
Sec. 644.136  Leasing guidelines.

    Division and District Engineers, and the Chiefs of the Real Estate 
Divisions, are authorized to execute leases, or renewals of leases, 
negotiated in accordance with the procedures expressed herein, upon 
receipt of a proper request from an authorized command, service, or 
agency, subject to any required approvals or clearances. When there is 
no Real Estate Division, as such, but the Division or District Engineer 
has responsibility for leasing activities, he may delegate this 
authority to the officer or civilian in charge or real estate 
activities.
    (a) Leasing Requests. Requests for space or land will be received by 
the Chief of Engineers, or the appropriate Division or District 
Engineer. Requests will include the data outlined in AR 405-10 (para 2-
2c). Division and District Engineers will coordinate space or land 
requirements with appropriate commanders to assure responsive lease 
processing. If required, a Lease Planning Report, or narrative report 
covering essential information, will be furnished the using service for 
review and recommendations. Funding requirements, usually in the form of 
fund citations, will have been met by the using service prior to lease 
execution. If approvals by higher authority are required, the Division 
or District Engineer will initiate appropriate action to obtain the 
necessary clearances.
    (1) Army Commands. Upon receipt of a request from an Army Command, 
negotiations for obtaining acceptable leases will be carried to 
completion in accordance with present procedures for military leases.
    (2) Air Force. Upon receipt of a lease request approved by 
Headquarters, U.S. Air Force, or an Air Force major command, the 
appropriate Division or District Engineer will negotiate and lease the 
required property. The provisions of AFR 87-1 prescribe the Department 
of the Air Force policies and procedures that are to be followed.
    (3) National Guard. All requests for the leasing of facilities for 
National Guard purposes will emanate from the Chief, National Guard 
Bureau. Army National Guard leasing requirements will be transmitted 
through DAEN-REZ-R to DAEN-REA-L. Air National Guard requirements will 
be transmitted to DAEN-REA-L through Headquarters, U.S. Air Force.
    (i) Upon receipt of authority from the Chief of Engineers, 
negotiations will be conducted for obtaining an acceptable lease, in 
accordance with the approved lease request. The appropriate United 
States Property and Fiscal Officer generally makes separate service 
contracts for utilities, except sewage disposal, and services, and is 
responsible for the maintenance of all buildings used exclusively by the 
Air National Guard. Representatives of the Corps of Engineers do not 
participate in obtaining contracts for utilities and services. In cases 
where such a contract is impracticable, the lease may include any and 
all utilities and services as part of the rental consideration, with the 
cost of the various services and utilities to be itemized. The ``use 
clause'' in the lease will provide for occupancy of the premises for 
``Government purposes''. The wording, ``For use by the Air National 
Guard and/or United States Air Force, and, in time of war or national 
emergency, by other units of the Armed Forces of the United States or 
for any other use by the Federal Goverment,'' will be acceptable if it 
is not possible to insert the for ``Government purposes'' provision.
    (ii) Leases made by representatives of a State with private parties 
for use of premises by the National Guard of the State involved, under 
which State funds are used for rental payments, are

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not the responsibility of the Division or District Engineer.
    (4) Department of Energy/Nuclear Regulatory Commission. Space is 
acquired by these agencies direct from GSA in the designated urban 
centers pursuant to Reorganization Plan No. 18. In instances where 
general purpose space is not obtained through GSA and instances 
involving the leasing of special-purpose space, managers of field 
offices of subject agencies are authorized to initiate requests to 
Division or District Engineers for the leasing of properties where the 
net per annum rental does not exceed $50,000. Leasing of properties 
where the net rental per annum exceeds $50,000 requires the prior 
approval of the appropriate agency head, i.e., the Secretary of Energy, 
the Chairman of the Nuclear Regulatory Commission, or their designees.
    (5) Metropolitan Washington, DC. All requests for leased space in 
the National Capital Region will be processed in accordance with DOD 
Instruction 5305.5.
    (b) Requirements Survey. The availability, use, and adaptability of 
property owned by the Government, whether under control of the GSA or 
other agencies, shall be thoroughly explored before additional space is 
leased, or existing leases are renewed, or construction commenced. 
Particular attention is to be given to the availability of space, or 
land, at military reservations, camps, posts, or stations.
    (1) A statement covering the non-availability of Government-owned 
space, or if such is available and not suitable, reasons why it is not 
suitable, for occupancy by the requesting using service, should be made 
for each lease executed by the Corps of Engineers, excluding family 
housing leases.
    (2) Suitable privately-owned space shall be acquired only when 
satisfactory Government-owned space is not available. Rental charges 
will be consistent with prevailing rates in the community for comparable 
facilities.
    (3) The quality of office space for Government occupancy shall be 
appropriate for the efficient and economical performance of required 
operations, affording employees safe, healthful and convenient 
facilities.
    (4) Full consideration shall be given to the efficient performance 
of the mission and programs of the using service.
    (c) Government-Owned and General Services Administration Furnished 
Space. If Government-owned space is available, the Division or District 
Engineer will inform the using agency, and details of occupancy will be 
developed. If it is necessary for GSA to lease space, the Division or 
District Engineer will make a careful review to determine if there are 
any statutory or regulatory limitations involved. If so, appropriate 
action will be taken to satisfy the limitations. During the processing 
of all GSA space assignments and leases, the Division or District 
Engineer is the only official contact representative with GSA. This 
procedure is to be emphasized at all time with the using service.
    (1) The Division of District Engineer will submit a Standard Form 
81, Request for Space, to the appropriate GSA Regional Office for space 
assignment in urban centers under the jurisdiction of GSA. The 
requirement to this form applies to lease renewals or lease supplements, 
and for space assignments in Federal office buildings. Excluded from 
this procedure is a proposed space assignment in the National Capitol 
Region.
    (2) Except for the acquisition of general-purpose space of 2,500 
square feet or less, outside the designated urban centers, and special-
purpose space of 2,500 square feet or less, irrespective of the 
location, the need for any type of building space will be made kown to 
the appropriate GSA Regional Office by filing Standard Form 81, Request 
for Space.
    (3) The designated urban centers are listed in Figure 5-11 in ER 
405-1-12.
    (d) Advertising. As a general rule, procurement of space will be by 
formal advertising. However, in leasing certain types of premises where 
only one location will serve the Government's purpose, such as municipal 
airports, recruiting stations, and similar facilities, negotiations 
without advertising are permissible. In instances where building space 
is needed and the requirement cannot be met through the use of existing 
buildings, there must be

[[Page 207]]

advertising to solicit bids for the furnishing of the space. In every 
instance, it is essential that efforts be made to seek competition. For 
each lease, a statement will be prepared concerning competition in the 
solicitation for space or land and Standard Form 1036, Statement and 
Certificate of Award, will be used. Where specific space or land is 
needed, and competition is therefore not involved, the facts and 
circumstances will be fully explained and such explanation will be made 
a part of the lease file for future reference.
    (e) Appraisals. Appraisals are required as a basis for making rental 
determinations in all leases except those for a nominal consideration. 
At the discretion of the Division and District Engineers, and the Chiefs 
of the Real Estate Divisions, formal or detailed appraisals can be 
dispensed with for leases wherein the annual rent does not exceed 
$5,000. Where the rental of a building or part of a building, or family 
housing unit, exceeds $3,600 per annum, excluding services and 
utilities, it may be necessary to estimate the fee value of the property 
contemplated for leasing to determine whether or not the rental rate is 
in excess of 15 percent of the fee value of the property. For family 
housing leases, the opinion of fee value will be in short summary form 
and will be supported by general evidence of comparable values of the 
unit to be leased. If the proposed annual rental, excluding services and 
utilities, of a family housing unit exceeds 15 percent of the estimated 
fee value, the unit will not be leased.
    (f) Determination of Valid Interest. Persons executing leases for 
and on behalf of the United States of America will satisfy themselves, 
before executing leases, that the prospective lessors have an interest 
in the real estate which will assure the validity of the lease. Where 
leased lands are used as a site for contruction, the land records of the 
county will be examined by a staff attorney familiar with land title 
records, who will execute a certificate that he has examined the said 
records and that title is vested in the lessor, subject to the 
infirmities, liens and encumbrances noted in the certificate. In lieu of 
such examination, a certificate from the Register of Deeds, County 
Recorder or other qualified officer is acceptable. If considered 
advisable in unusual cases, title evidence may be obtained from 
commercial sources.
    (g) Outstanding Rights and Damages. (1) Where the land is subject to 
outstanding oil, gas, mineral, or similar interests, the Division or 
District Engineer will determine, from the appropriate command, in 
advance of the consummation of the lease, whether the continued exercise 
of the mineral or outstanding rights will interfere with the 
contemplated use of the premises.
    (2) Where buildings, structures, or growing crops are located on 
land to be leased, a determination will be made by the Division or 
District Engineer, in coordination with the appropriate command, as to 
whether they will interfere with the use of the premises.
    (3) Where the lessor will not be permitted to harvest crops or 
remove improvements and timber which will be destroyed by the 
Government, the appraised value thereof will be determined, and such 
amount will be included in the rental for the initial term of the lease, 
together with an express provision relieving the Government of 
restoration.
    (4) Leases of land for bombing, artillery, rifle ranges, and other 
extraordinary usage will specify that the leased premises are to be used 
for such purpose, and an effort will be made to include in the lease a 
provision waiving restoration and claims for damages, particularly where 
the premises are wastelands or unproductive.
    (5) Where the lessor will not consent to a waiver of restoration, 
the estimated value of such damage, if it can be determined in advance, 
will be included in the rental for the initial term of the lease, and 
the lease will contain an express provision relieving the Government 
from responsibility for restoration.
    (6) If restoration is not waived, and the damages cannot be 
determined in advance, a provision may be included in the lease to the 
effect that the rental payments do not include compensation for damages 
arising from the use of the premises for the purpose leased and that, 
upon termination of the

[[Page 208]]

lease, the damages, mutually determined, will be paid by supplemental 
agreement to the lease. In event the amount of the loss or damage cannot 
be mutually determined, the lessor may file a claim for the alleged loss 
or damage in accordance with subpart H.
    (h) Services and Utilities. Services, such as janitorial, heat, air 
conditioning, light and water, should be included in leases for building 
space wherever possible. Whether services are paid for as part of the 
rent or by a service contract, the time period for furnishing heat, air 
conditioning and light, i.e., usual business hours, 24-hour basis, 
Saturdays and Sundays, should be clearly stated.
    (i) Other Contracts. The negotiation and execution of contracts not 
involving an interest in real estate are the responsibility of the 
services concerned.
    (j) Condition Surveys. (1) Whenever possession of any premises is 
acquired by lease or other agreement, or by condemnation for a term of 
years, the Division or District Engineer will cause a survey and 
inspection of the condition of the real and personal property to be made 
as of the time the Government takes possession.
    (2) The survey and inspection required above will be made jointly 
with the lessor or his duly authorized representative. The report will 
be signed by both parties.
    (3) The initial survey report must be made with great care since it 
is the basis for future restoration claims by a lessor. The use of 
photographs is encouraged. Full explanatory data covering condition of 
the premises will be added to the report if, in the opinion of the 
Chief, Real Estate Division, a useful purpose will be served thereby. 
The survey report of real property, and the inventory and condition 
report of personal property, will be made with care, as the condition 
reflected as of the date of initial occupancy will be compared with the 
condition shown by the terminal reports made upon vacation of premises.
    (4) A survey is not required of unimproved land where an appraisal 
has been made and the condition of the land is set forth by the 
appraiser and made a part of the record.
    (5) A survey will be made wherever property of another Federal 
agency is used, with the exception of post offices and Federal 
buildings. In the event privately-owned buildings, crops, or other 
property, are on the Federal property, a report will be made outlining 
the terms and conditions under which they were placed thereon, and the 
value thereof will be appraised as of the date of possession.
    (6) Normally, ENG Forms 3143 and 3143A, Joint Survey and Inspection 
of Condition of Government Leased Property, are adequate for the joint 
survey and inspection. In certain cases, narrative reports may, at the 
discretion of the Division or District Engineer, be considered 
preferable; however, local forms will not be developed for this purpose.
    (k) Possession. Possession of real property will not be taken until 
required approvals and clearances are obtained and a lease is executed. 
When requested by an appropriate command, rights-of-entry for 
exploration and survey, or construction, will be obtained in accordance 
with instructions in Secs. 644.155 through 644.157.
    (l) Condemnation of Leaseholds. Where the required leasehold 
interest cannot be acquired by a negotiated lease, the recommendation of 
the Division or District Engineer for the institution of condemnation 
proceedings will be submitted to HQDA (DAEN-REA-C) WASH DC 20314, in 
accordance with Sec. 644.121, setting forth the negotiations that have 
been conducted with the property owner(s) and all other factors 
supporting the recommendation.
    (m) Decease of Lessor. (1) Any claim on account of death of a lessor 
(except uncurrent depository check claims) may be settled without 
submission to the Chief of Engineers where no doubt exists as to the 
amount and validity of the claim or as to whom payment may be made under 
the laws of the domicile of the decedent.
    (2) Any claim for rent or services due a deceased lessor which is 
considered doubtful will be forwarded to HQDA (DAEN-REM) WASH DC 20314 
in accordance with subpart H.

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    (n) Recording Leases. If the property is located in a State 
requiring the recording of leases, all statutory requirements will be 
met. Leases, and supplemental agreements prior to termination, involving 
property upon which substantial Government improvements are to be 
constructed, will be recorded in all cases.
    (o) Change in Ownership. (1) When the title to premises leased to 
the Government is transferred, the contracting officer shall satisfy 
himself that the new owner has a valid interest in the premises covered 
by the lease, and thereafter enter into a supplemental agreement between 
the old and new owners and the Government, for distribution in the same 
manner as the original lease.
    (2) Upon being notified or otherwise determining that a foreclosure 
proceeding has been filed against the leased premises, or that the 
enforcement of a deed of trust or mortgage is imminent, the Division or 
District Engineer will take such action as is appropriate under State 
laws for protection of the United States. This would consist of filing 
by the United States Attorney with the court, or with the trustee, 
receiver, or commissioner, as the case might be under local law, of a 
notice of the Government's lease on the property, with request that the 
foreclosure proceedings be made subject thereto. If the proceeding is 
made subject to the lease, an abstract of such proceeding will be made, 
certified by a staff attorney, and distributed in the same manner as the 
original lease. If considered advisable, a supplemental agreement to the 
old lease will be made with the new owner; or a superseding lease may be 
executed and distributed. If the proceeding results in vesting title in 
a new owner, free and clear of the Government's lease, attempt will be 
made to negotiate a new lease; if this fails, condemnation action will 
be taken sufficiently early to protect the interests of the United 
States. Negotiation and condemnation in this latter type of situation 
must be based on a current appraisal.
    (p) Supplemental Agreements. Modification of existing leases will be 
in the form of supplemental agreements and will be prepared, executed, 
and distributed in the manner prescribed for the original lease. Where a 
supplemental agreement provides for an increase in space at an increased 
rental, the supplemental agreement should contain appropriate recitals 
of this fact, and provide that the Government, thereafter, may, upon 30 
days notice, partially reduce, or discontinue, the use of the space 
covered by either the supplemental agreement, the basic lease, or both. 
Supplemental agreements enlarging or reducing space will show the total 
area and rental comprising the basic lease and preceding supplemental 
agreements.
    (q) Annual Review of Leases. Annual review of leasing requirements 
and space assignments from GSA are to be initiated by the Division or 
District Engineer not later than one year before the end of the lease 
term for each lease.
    (1) Special attention will be given by Division and District 
Engineers to leases which expire by their own terms and continued 
occupancy is required at annual rentals of $50,000 or more. These leases 
require approval by the Department of Defense and reporting to the Armed 
Services Committees of the Congress by the Chief of Engineers. An 
Acquisition Report together with full justification, as set forth in 
Sec. 644.135(a), in support of each lease (or project covered by more 
than one lease) must be furnished. For leases in which it is not clear 
whether Title 10 reporting is required, DAEN-REA-L will be informed of 
the facts for decision. Attention will be given also to existing leases 
having annual rentals between $30,000 and $50,000. It is probable that 
current appraisals will indicate annual rental rates in excess of 
$50,000 and, therefore, require a title 10 report.
    (2) If the using command anticipates that there will be further need 
for the leased property, and the total estimated rentals to be paid by 
the Government, excluding utilities and services, for the additional 
period, plus the cost of restoration, will exceed, 50 percent of the 
estimated current market value of the property, DAEN-REA-L will be 
informed of all details in order that the review required by paragraph 
1-8, AR 405-10, may be made. Only estimated future rent payment is to be

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considered and not the rental paid in the past for the property. In 
applying this formula, if the period of future use cannot be ascertained 
but it is likely that a property will be used for a long period of time, 
use a period of five years for calculations.
    (r) Lease Renewals and Extensions. (1) Lease entered into under 
authority of the annual appropriation acts may include a provision for 
automatic renewal after expiration of the initial term subject to the 
availability of appropriated funds. However, if the property is still 
needed after lease expiration, a new lease is required and the old lease 
will not be extended by supplemental agreement for the new term. Where 
the lease requires notice in writing to be given to the lessor to 
exercise the option of renewal, notice will be served by the use of ENG 
Form 221, Notice of Renewal of Contract or Lease, in accordance with the 
terms of the lease. The notice, properly addressed, will be sent by 
certified mail, with return receipt requested. Adequate time, in 
addition to the number of days specified in the lease, will be allowed 
for delivery to, and receipt by, the lessor. The Division or District 
Engineer will maintain adequate records to assure prompt service of 
notice to avoid the lapse of leases.
    (2) No lease will be renewed or kept in existence unless it has been 
administratively determined, through advertising or otherwise, that 
other suitable property at a lower rental is not obtainable. At all 
times, and in particular during the lease renewal review period, the 
Division or District Engineer will take cognizance of the availability 
of property in the area of the using service that is Government-owned, 
or property under GSA control.
    (s) Payment of Rents. (1) One of the most important factors 
involving good relationships between the Government and the lessor is 
the prompt payment of the rent. Under existing regulations, the rent is 
paid by the using commands. The Division or District Engineer makes 
rental payments for leases when the Corps is the using service and for 
recruiting facilities, since the Chief of Engineers is the Department of 
Defense Executive Agent for recruiting facilities acquisition. It is 
therefore appropriate for the Division or District Engineer to inquire 
periodically of the using commands whether delays in processing payments 
are encountered. If payments are not being made within seven working 
days after payment is due, appropriate action will be taken to correct 
the delay; if no action is taken after a reasonable time allowed for 
correction of procedures, DAEN-REA-L will be informed fully of the facts 
and an investigation will be conducted.
    (2) Prior to payment, the Division or District Engineer, or his 
designee, will certify for submission to the Disbursing Officer that the 
leased property was occupied or available for use. The following 
certification, contained on Standard Form 1166, Voucher and Schedule for 
Payments, is used:

    I hereby certify that the leases identified hereon were in effect 
for the month (or other period) indicated, and that the space was 
occupied, or available for use, by the Department of the Army.