Anstey Horne

Commercial Lease Repair Obligations

Lease Repair

Whose responsibility is it under a lease to deal with repairs? As commercial building surveyors, we are frequently shown issues of repair and maintenance by occupiers (such as buckets to catch drips from leaky roofs!). Occupiers generally tend not to know, but this is not necessarily their fault. In this article we set out how this normally works.

Occupiers may be large nationwide companies or small businesses. It is unlikely that anyone working in the subject premises agreed the lease and can recall exactly what was signed up to. The normal first response when a warehouse roof leaks, for example, is to call the landlord; but really it should be to check what was signed up to as the repairing covenants in the lease agreement.

Lease Repair Responsibility

The lease is the document which sets out all of the rights and responsibilities of both the landlord and the tenant. In terms of repairs, it will state which party must repair the ‘demised premises’ (also defined in the lease), and covers whether it is the whole building or just internal elements.

A lease can require the tenant to put and keep the premises in repair. They are then obliged to bring the property into a fit state of repair, even if it is in disrepair at lease commencement, taking into account its age, character and location. The latter point is backed up by caselaw. Essentially this means that an old, tired warehouse on an estate of similar units does not have be put into excessively good condition. The lease will also cover a tenant’s responsibility to redecorate and what to do in terms of any alterations. Tenants must generally repair, maintain and redecorate their demised premises during their lease term and also hand them back at the end in the requisite state.

Lease Repair Clauses

Broadly speaking, tenants usually have full repairing responsibilities (externally and internally) for the likes of industrial warehouses, retail warehouses and detached office buildings. These are known as Full Repairing and Insuring (FRI) leases. This is where they are the only occupier of the building and can of course include high street retail premises. Whereas tenants could expect to have internal-only repairing responsibilities for single floors of offices, office suites, or retails units in shopping centres. In the case of the latter where tenants have responsibility for internal repairs, the maintenance of external and common parts will be managed by the landlord and costs recovered from the tenants via a service charge. This arrangement is often known as ‘effective FRI’. However, each case can be different, so the lease is the best place to find the answer.

Lease wordings all vary on the actual extent of the repairing and redecorating clauses and these must be checked closely. Repair clauses will normally require tenants to repair, replace or renew elements which are beyond economic repair. This can extend to mechanical services as well as the building fabric and finishes. As for redecoration, tenants may be surprised to know that they have committed to redecorating all internal elements every few years. This is typically every 5 years internally and every 3 years externally. This can be a costly exercise, especially externally where specialist access provisions may be required.

Repair and Schedules of Condition

Some leases’ repairing clauses are limited by an appended Schedules of Condition (SoC). See our previously article on Schedules of Condition for more information. These set a benchmark repair standard for a demised premises to be handed back in. However, it is important to note that they will not expressly exclude responsibility for a building element. If, for example, a tenant has an FRI lease on a warehouse with a SoC in place covering such elements as the roof and showing it to be in poor condition, they will still be responsible for it during the lease term. It may help to exclude or at least limit liability for it at lease end when assessing dilapidations, but it does not mean that the landlord will send their roofer out to fix leaks during the term.

Lease Repair Conclusion

Leases are detailed legal documents containing torrents of jargon, seemingly designed to confuse. There is even a lack of punctuation, which only makes it more difficult to decipher actual meanings. Our dilapidations team are able to quickly find the relevant clauses and offer advice on repairing responsibilities. These most often arise towards the expiry dates, as dilapidations. Indeed, in the final months of the term, tenants can expect to receive a dilapidations schedule (and claim) from landlords for works they often do not realise they should have been doing! We will discuss dilapidations further in future articles.

We assist commercial landlords and tenants on all aspects of lease obligations, repair and dilapidations. We provide specialist surveys, new lease schedules of condition and general dilapidations advice.

For any help or advice on repair obligations, Dilapidations issues; or to commission a schedule of condition for a new lease call us on 020 4534 3132 or contact one of the team :

Theo Channer

Theo Channer

BSc (Hons) MRICS

Director

Dilapidations

Alexa Cotterell

Alexa Cotterell

BSc MRICS

Senior Director

Building Consultancy

Aaron Treliving

Aaron Treliving

BSc (Hons) MRICS

Senior Director

Building Consultancy