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Home > News > Commercial property wear and tear – what’s fair?

Commercial property wear and tear – what’s fair?

26 January 2022 | Julian Pyrke

When you agree to the terms of a commercial property lease it’s easy to focus on the immediate details such as how much rent you will pay and where you can park your car (see my previous blog about Heads of Terms), but don’t forget about your responsibilities later when you wish to vacate the property. In this blog article I will consider commercial property wear and tear – what’s fair, and what are you signing up for? 

Repairing obligations 

Our clients frequently have several misconceptions regarding a repairing obligation under the terms of the lease. A full repairing obligation means just that, and it does not mean that the premises are to be kept in the same state as when you took them. If the premises are in a poor state of repair and condition, then you are obliged to ensure that they are in a good state of repair and condition. This can mean that if the roof is in a poor state of repair that you will have to make that good and repair the roof and where necessary replace parts of the roof. The number of disputes and case law generally on repairing obligations is vast and can become a very complicated area in itself.  

 

 As a tenant you do need to consider several aspects to your repairing obligation namely: 

  1. What is the property that is actually being demised to you? Is it an internal repairing only Lease, what does the lease description actually say? 
  2. If it is an internal-only demise then is there a service charge that is payable to the Landlord, if so, how much and when and for what? 
  3. Is it a full repairing Lease of the whole of the property internal and external parts? 
  4. Is the property old and tired and in need of some elements of repair? 
  5. Is the property a new property? 

Schedule of condition 

In the case of an old and run-down property, a tenant will usually seek to negotiate a schedule of condition. Ideally, a professional schedule prepared by a Building Surveyor, which records the state and condition of the property at the time the lease was entered. The repairing obligations are expressly varied so that the tenant is not liable to return the property into any better state of repair and condition than is recorded by that schedule of condition. The schedule of condition must be completed properly and by a professional and by the tenant. Not by your friendly landlord or their surveyor, who might not take the correct photos, since this is a tenant’s get out of jail card should there be any dispute ten years down the line. Paying for a proper schedule now is a price worth paying. 

Internal repairing only lease 

In the case of where the tenant has an internal repairing only lease, careful consideration needs to be made regarding the service charges that are payable to the landlord. Normally, the landlord will ask for the tenant to contribute towards the cost of the building’s repairs. If the building is in a poor state of repair, the tenant may want to ask the landlord to carry out certain repairs, exclude certain items from the service charge provisions, or more commonly, request a service charge cap so that the service charges never exceed a set amount in any given year. 

Newly constructed properties 

In the case of a newly constructed property, consideration must be given to the building itself. Was the building erected and constructed in a good workmanlike manner? Will there be any issues in the future with poor workmanship that the tenant would be responsible for under their repairing obligation? The tenant ordinarily would request to see a building contract that the Landlord entered with the developer and obtain contractual warranties from the various contracting parties.  

Exclusions in repairing obligations 

Often Landlord’s developments do not have these contractual warranties in place. Therefore, the tenant may want to consider having an exclusion in their repairing obligation for any repairs they may suffer due to an inherent or latent defect in the design and construction of the premises. To account for this, careful wording needs to be included in the lease, and again it should be agreed at the outset in the Heads of Terms.  

Contact our specialist commercial property solicitors 

If you’re a business owner considering a new commercial property lease, our specialist commercial property solicitors can help you understand your options and understand your obligations moving forward for your new lease. To discuss your situation please call 0117 906 9400 or email hello@gl.law. Alternatively, please use our contact form.   

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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