When occupying or managing commercial property, one aspect that often arises is how to handle a tenant’s repairing obligations. This can be a complex matter, especially when negotiating a new lease or dealing with issues that arise during the course of a tenancy. In this article, we explore what it means for a tenant to undertake repairing obligations in a commercial lease and how landlords and tenants can protect their interests.

What Are Tenant’s Repairing Obligations?

Repairing obligations refer to the duties imposed on the tenant under the terms of the lease to maintain, repair, and, in some cases, replace parts of the leased premises. These obligations are typically set out in the lease agreement and can range from minor repairs to full restoration of the property. The scope of these obligations depends on the terms negotiated between the landlord and the tenant at the outset of the lease.

Repairing obligations are often linked to the nature and condition of the property at the start of the tenancy, and they can vary greatly depending on the type of property, its age, and the length of the lease.

Common Types of Repairing Obligations

Full Repairing and Insuring (FRI) Lease: This is a common arrangement in commercial property where the tenant is responsible for both repairing the property and insuring it. The tenant must maintain the property in a good state of repair, regardless of its condition at the start of the lease.

Internal Repairs Only: In some cases, the tenant’s repairing obligations are limited to the interior of the premises. The landlord retains responsibility for external repairs, such as the roof and structure.

Schedule of Condition: To limit liability, tenants may negotiate a schedule of condition at the start of the lease. This records the state of the property at the outset, ensuring the tenant is only responsible for keeping the premises in the condition it was in when the lease began.

Dilapidations and End of Lease Repairs

One of the most contentious issues that can arise in commercial leases is dilapidations, which refer to the tenant’s responsibility to repair or restore the property at the end of the lease term. If the tenant fails to comply with their repairing obligations, the landlord may issue a dilapidations claim, requiring the tenant to either carry out the repairs or compensate the landlord financially.

It is important for tenants to be aware of these obligations from the start of the lease and to budget for any repairs that may be necessary. Many disputes can be avoided by maintaining the property throughout the lease term, rather than waiting until the lease is coming to an end.

Protecting Yourself as a Tenant

Tenants should ensure they fully understand their repairing obligations before entering into a lease. Seeking legal advice is crucial, as the obligations can be wide-ranging and financially significant. Key steps for tenants include:

Negotiating a Schedule of Condition: If the property is not in pristine condition at the start of the lease, tenants should push for a schedule of condition. This will limit their repairing obligations to the condition of the property as recorded at the start of the lease.

Understanding the Costs: Tenants should factor in the cost of repairs into their overall business plan. A full repairing obligation can be expensive, particularly for older properties or properties with existing issues.

Regular Maintenance: Carrying out regular maintenance and repairs during the lease can reduce the financial burden at the end of the lease term. This also helps avoid disputes with the landlord regarding dilapidations.

Landlord’s Perspective

For landlords, ensuring the tenant is clear on their repairing obligations is essential. Landlords can protect their interests by:

Insisting on a Full Repairing Lease: This places the onus on the tenant to maintain the property throughout the lease term.

Conducting Regular Inspections: Periodic inspections during the lease term can ensure the tenant is complying with their obligations and prevent more significant issues from arising later.

Handling Dilapidations Sensitively: At the end of the lease, landlords should handle dilapidations claims with care, ensuring the claim is reasonable and supported by evidence. Negotiating an amicable settlement can be more cost-effective than pursuing a legal dispute.

Conclusion

Understanding and managing a tenant’s repairing obligations in a commercial lease is key to avoiding disputes and maintaining a good landlord-tenant relationship. Both parties should seek professional legal advice to ensure that the lease reflects their expectations and protects their interests. By taking a proactive approach, tenants an

The current design and management regulations are set out in the Constructions (Design and Management) Regulations 2015 (“CDM 2015”). These regulations have an impact on pretty much everyone involved in construction, development and redevelopment work in Great Britain. Even small and domestic projects are covered. The regulations place various duties and obligations on different parties within the construction project. An outline of the main features are as follows:

What does it mean to assign a lease? 

Assignment is the term used to describe the process where a tenant under a lease transfers the lease to someone else (called the “assignee”). When the assignment has taken place, the original tenant ceases to be a tenant under the lease and the assignee becomes the tenant. If you think of the lease as being something that is owned by a tenant, then the lease is effectively sold to a new tenant.

The new tenant then takes over all the rights, obligations and liabilities under the lease and is accountable to the landlord.

Can all leases be assigned?

The question of whether a lease can be assigned and on what conditions will be contained within the lease. In other words, the lease itself will say whether the lease is assignable and if it is, then what conditions must be met as part of the process. Some leases prohibit assignment altogether, others allow an assignment but only on strict conditions.

In most cases, one of the conditions is that the landlord has to give legally binding written consent to an assignment. Usually, the landlord will also want to have vetted the new tenant/assignee in advance and approve them as a condition of the assignment.

The difference between traditional and modern property auctions

What are called “modern auctions” or “conditional auctions” are becoming more popular. What is the difference between modern auctions and traditional auctions?

The traditional (unconditional) auctions

Traditional auctions are exactly what most people think of when they talk about auctions. The property auction is held in the traditional sense with an auctioneer in a room with parties bidding on lots. The hammer falls when a successful bidder is the last one bidding. At that point the bidder pays their 10% deposit and the property then completes on pre-determined terms, normally within 28 days.

There are two basic structures for transferring a business.  An asset sale is where the buyer purchases a collection of assets and legal rights (and sometimes liabilities) relating to the business.  An example of this might be a grocery shop business where the buyer purchases the business premises, fixtures, fittings and equipment used by the business, stock and takes on the employees.  Most transfers of small businesses are asset sales.