Repair Covenants In Commercial Leases

Author:Ms Linda Conway
Profession:Dillon Eustace
 
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  1. Introduction

    In recent years the commercial lease has assumed significant

    proportions, with more emphasis than ever being place on the

    commercial concerns affecting both landlords and tenants. One

    of the most critical concerns for both parties is their repair

    obligations in respect of the property. This update is a brief

    consideration of the salient issues.

  2. Repair Obligations

    Broadly speaking, a tenant will be leasing either an entire

    building or part of a building in a multi-let situation. In

    respect of the former, the lease should be drafted so as to

    include a full repairing covenant on behalf of the tenant. In

    respect of the latter, the tenant's repairing obligations

    should be limited to the interior of the premises being leased,

    while the landlord remains responsible for the structure of the

    whole building and for all areas not being leased. In this

    situation the lease should provide for the landlord to be fully

    reimbursed by all tenants for the cost incurred in maintaining

    the building. This may be facilitated through a service charge

    provision included in the lease or by covenant on the part of

    the tenant to pay the landlord an apportioned amount of the

    cost of any works done.

    Both of the above scenarios require particular attention to

    be paid to the definition of the 'demised premises'. In

    the case of a lease of part of a building the definition of the

    'retained parts' should be considered in tandem with

    the 'demised premises' to ensure that there are no

    omissions in what either party is required to repair. A failure

    accurately to define the relevant areas and obligations of the

    parties could result in the landlord being unable to recoup

    monies spent on repairs and maintenance. It is normal for the

    landlord to be responsible for:

    roof and foundations;

    load-bearing walls and columns;

    external walls (excluding the glass in exterior

    windows);

    floors;

    ceilings; and

    all other structural parts (excluding the finishes

    applied to internal walls, ceilings and floors.

  3. Definition of 'Repair'

    The extent of the works which must be carried out in order

    to conform with the obligations to repair is unclear. Some

    authorities suggest that, regardless of the terms used, there

    is no requirement to give back to the landlord a different

    premises from that which the tenant received when it entered

    into the lease. In other words, repairs are necessary only to

    restore the premises to its condition when the tenant took

    occupation. However, other...

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