One of the most important provisions in a lease is the tenant’s obligation to repair the premises.
As a tenant, to understand your repairing obligation under the lease, there are 2 key points you need to understand fully:
- The extent of the premises being demised to you; and
- The extent of the repairing obligation.
What are your premises?
The scope of the tenant’s repairing obligation will depend on the physical extent of the premises being demised in the lease. Where a whole building is demised, the tenant’s repairing obligation will extend to the whole building.
Difficulties may arise where the premises are part of a larger property (such as a first-floor office in an office building). In such cases, each tenant will usually be responsible for repairing the internal shell of the premises and the landlord will maintain the exterior, structure and common parts of the building (and recover the cost of doing so through the service charge).
When drafting a lease of part (such as a first-floor office in an office building), care must be taken to ensure that there are no gaps or overlaps in the parties’ responsibility for repair. For example, who is responsible for the ceiling finishes? Are the windows included in the demise? It is therefore imperative that a detailed definition of the premises is included in the lease so that the tenant is aware of the extent of the premises that need to be maintained/repaired by it.
What is your repairing obligation?
Generally, there are two main elements of a repair obligation in a commercial lease:
- The obligation to repair the premises during the term of the lease; and
- The obligation to return the premises back to the landlord at the end of term in good repair.
A tenant will usually covenant to keep the premises “in good repair”. Please note however that a covenant “to keep the property in repair” includes an obligation to put the property into repair if it is in disrepair at the start of the lease
From a tenant’s point of view, repair should therefore be construed as narrowly as possible – limited to the renewal or replacement of defective parts only rather than a full repairing obligation. However, a landlord would prefer the tenant to be wholly responsible for all costs of repair and maintenance which would enhance the capital value of the demised premises, a requirement that most tenants would consider onerous . For this reason and to avoid any disputes in relation to repair during the contractual term, the respective obligations of the tenant and landlord must be clearly stated in the lease. For example, tenant’s repair obligation should not include “rebuild” which implies a greater burden on the tenant; certain words should also be avoided so that the standard of repair is not enhanced.
However, not all properties are in a good state of repair prior to leases being granted. If this is the case, a tenant may wish to negotiate a limited repairing liability under the lease; one way to do this is to agree a photographic schedule of condition with the landlord, the purpose of which is to record the current condition of the premises. That schedule can then be annexed to the lease with an appropriate lease provision obliging the tenant to keep the premises in good condition but in no better condition than as recorded in the schedule of condition.
