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Whether you are a commercial landlord or tenant, being a party to a lease agreement can be challenging at times. Commercial leases can be particularly difficult when you face a lease dispute. Lease disputes can occur for a variety of reasons. Some examples include where you, as a tenant, may fall into rent arrears. Equally, a lease dispute may arise when necessary repairs and maintenance need to be performed on the property. Disagreements over repairs and maintenance obligations are among the leading causes of lease disputes. This article will discuss the repairs and maintenance responsibilities of tenants and landlords and how to resolve a lease dispute about these responsibilities.
Repairs and Maintenance Responsibilities
Lease disputes about repairs and maintenance in a commercial lease are common. To avoid such a lease dispute, you must know each party’s responsibilities in the lease. Knowing your and your landlord’s responsibilities will help you avoid misunderstandings and potentially a lease dispute.
Commercial Tenant Responsibilities
A commercial tenant will usually be responsible for non-structural repairs in a standard lease agreement. Non-structural repairs include repairs to the commercial property’s air conditioning and plumbing. Also, as the tenant, you are responsible for the general maintenance of the premises.
However, your lease agreement will detail your repair and maintenance responsibilities. As such, you must refer to this document to avoid a lease dispute. Notably, where your lease is silent on an issue of repair and maintenance, the onus falls on you, the tenant, to carry it out.
Sometimes tenants can have wide responsibilities for repairs when they have to both perform the repairs and pay for insurance costs. This is a full repairing and insuring lease (FRI). This tends to be expected nowadays for commercial leases. If a tenant does not have an FRI lease, the lease should either state that they either have to:
- maintain the property in ‘good (and substantial) repair and condition’; or
- maintain the property as it was when both parties entered the lease.
The latter may be evidenced by a schedule of conditions that will contain details of the state of the property at the start of the lease.
Commercial Landlord Responsibilities
Commercial landlords, similar to tenants in a commercial lease, have repair and maintenance responsibilities. You, as the commercial landlord, are normally responsible for structural repairs to the commercial property, such as
- exterior walls;
- foundations;
- floor structure; and
- the roof.
You will also be responsible for repairing and maintaining communal areas in the building if your commercial premises have these. As such, you should clearly understand your repair and maintenance obligations under the lease. If you clearly understand your responsibilities, this will likely avoid a lease dispute over repairs and maintenance.
This cheat sheet outlines what you should be aware of in your lease agreement.
Resolving Disputes
Where a dispute about repairs and maintenance in a commercial lease does occur, it is essential to resolve it quickly. If you and your landlord resolve the dispute early, it will unlikely affect the lease’s operation. The best way to resolve a repair and maintenance dispute is to consult the lease agreement. Upon consulting the lease agreement, you should communicate early with the other party to try and resolve the issue. However, where this does not work, your commercial lease should detail how you resolve a dispute about repair obligations.
Your lease agreement should detail how to resolve lease disputes concerning repair and maintenance obligations. Otherwise, section seven of the Code for Leasing Business Premises in England and Wales 2007 (The Code) will resolve the dispute. The Code states that if a commercial lease is silent on resolving a repairs and maintenance dispute, the tenant must return the premises in the same condition as it was at the commencement of the lease.
Dilapidations
A commercial property will become dilapidated if regular repairs and maintenance are not performed. As the commercial tenant, you must carry out the necessary repairs and maintenance during your occupancy. Likewise, at the end of the lease, you also need to carry out any repairs and maintenance works that need to be done. You must return the property to the landlord in the original condition in which you first occupied it.
As stated, good communication between you and your landlord is pivotal. With good communication, you likely will resolve any dispute concerning dilapidations in terms of maintenance and repair to the property. Before any such communication, you should though consult the schedule of conditions in your commercial lease agreement.
Unfortunately, going to court is sometimes the only option to resolve a repair and maintenance lease dispute which concerns dilapidations. If so, a commercial landlord should follow the ‘Dilapidations Protocol’ before making a claim. This encourages Alternative Dispute Resolution (ADR) as a method to resolve the lease dispute.
The situation is slightly different if you are a party to a commercial lease agreement in Scotland. There is no similar code as there is for England and Wales, so you have to follow your lease. You would be well advised to negotiate a clause in your lease that requires you both to engage in arbitration before any litigation.
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Key Takeaways
Commercial lease disputes about repair and maintenance obligations in a commercial lease are unfortunately common for landlords and tenants. These are often due to confusion about each other’s responsibilities. As such, you should clarify these at the beginning of the commercial lease. Should a lease dispute arise over repair and maintenance responsibilities, you should do two things. Firstly, you should consult your lease agreement to confirm your responsibilities. Secondly, you should communicate with the other party to the lease. However, where this does not work, ADR or even court litigation may be necessary.
If you need help to understand your repair and maintenance responsibilities in a commercial lease, contact our experienced leasing lawyers 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.
Frequently Asked Questions
A lease dispute is where the parties to a commercial lease agreement disagree on an issue in the lease, such as where a commercial tenant has rent arrears.
A common lease dispute in the UK concerns commercial lease repairs and maintenance.
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