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When you enter a commercial lease as a tenant, following the obligations in your lease agreement is crucial. A lease is a legally binding contract between you and your landlord, and there may be legal penalties for breaching it. One term in a commercial lease agreement concerns your repair obligations and the requirement to ‘keep the property in repair.’ This article will explore your repair obligations in a commercial lease.
Keeping the Property in Repair
As a tenant, one of your core responsibilities is to keep the property in repair. This means you must not neglect to look after the property or damage it in a way that would decrease its value. For instance, not mopping the floors for several months can cause grime and dirt to build up. Depending on what your lease agreement states, you may need to pay for a professional cleaning service.
If you fail to comply with this obligation, you risk your landlord giving you a schedule of dilapidations at the end of your lease term. This schedule will detail all the repairs you need to carry out and their anticipated costs. If you ignore necessary maintenance during the lease term, you will bear the burden of paying for these at the end of the lease. The price might come as a shock to you, meaning it is important to keep the property in repair.
The Extent of Your Obligations
Most commercial leases tend to be full repairing leases, meaning the tenant is responsible for all repairs to the commercial property. You would need to pay for these repairs directly.
However, you might not lease a whole property but only a section of it. Such a scenario is common when renting a shop within a shopping centre. In this case, the demised premises means the space or shop let to a tenant under a lease agreement. Accordingly, your repair obligations will likely be related to interior and non-structural repairs. Your landlord will be responsible for structural and external repairs but will usually recover the cost of these from you, such as through a service charge.Continue reading this article below the form
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The term ‘keep the property in repair’ will involve repair and maintenance obligations. As a commercial tenant, you bear the responsibility to repair issues that arise during your lease term and potentially even those from before your lease. For example, there may be damage to a door handle, which you are responsible for repairing.
Before you sign a lease agreement, it is crucial to inspect the property and make note of any issues. If there are many and your lease has repair obligations, you may find yourself paying more money than you had originally planned to fix and subsequently lease the property. A good idea would be to negotiate these with your landlord. Either they will repair the damage themselves or accept a reduced rental amount. Ultimately, understanding your repair obligations is crucial to avoid future disputes over which party is responsible for paying.
Quality of Repairs
You want to carefully review your lease agreement in case there is a descriptive word before the term ‘repair.’ This might impact the extent of your obligations. In particular, look out for the phrases:
- good repair;
- good and tenantable repair; or
- substantial repair.
Notably, courts have generally said there is little difference between these three ways of describing repair obligations. Where your landlord says that a repair is your responsibility, it will often depend on the reasonableness of the repair. For example, if your landlord asks you to replace the door when it is simply the artwork that is chipped, their demand is likely unreasonable. Instead, you could give the door a new coat of paint.
Additionally, watch out for the phrase ‘condition’ within your repair obligations. Where your lease requires you to keep the property in good repair and condition, this demands more of you than simply good repair. It may mean you have to make changes to certain areas. As every commercial lease is unique, be sure to clarify what these expectations are before signing the agreement.
This cheat sheet outlines what you should be aware of in your lease agreement.
As a commercial tenant, understanding the full extent of your obligations under a lease agreement is crucial. Where your lease requests that you ‘keep the property in repair,’ it means you must pay to repair and maintain all or certain parts of the property. Understanding what you are responsible for will ensure you comply with your lease obligations.
If you need help reviewing or drafting your lease agreement, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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