It is important to obtain legal advice on your commercial lease to understand your rights and obligations before committing to the lease. In particular, leases have many clauses that relate to repair and maintenance, including who is meant to do what works and at whose expense.

In general, the following applies unless a clause is inserted into the lease to the contrary:

1. there is no obligation for the landlord to provide the premises in proper repair at the start of the lease. Thus, tenants should do a thorough walk-through to ensure the premises are suitable and fit for their purpose.

2. Unless a statute or the lease expressly states the tenant is required to repair and maintain the leased property, there is no implied obligation upon the tenant to do so in common law.

3. If there is no obligation on the tenant to be responsible for the repair, this does not automatically shift onto the landlord.

4. The landlord has no maintenance and repair obligation in relation to the premises over the course of the lease.

Generally, most leases do not contain any obligation on the landlord to repair and maintain the landlord’s plant and equipment, the building or the premises. It is advisable for your lawyer to ensure that certain clauses are inserted to protect your interests.

Most common complaint by tenants

For example, a dispute that often arises is who is responsible when an air conditioning unit fails? If there is no express obligation on the landlord to repair and replace the unit, they are not required to do anything. The tenant is then left with a unit that is not operational and very expensive to repair and replace. If the tenant requires the unit functional for their use of the premises, then it is up to them to pay all costs associated. If this is not budgeted or anticipated, then this can put a large strain on a tenant’s business. A lawyer specialising in commercial leasing should be aware of these issues and ensure relevant clauses are inserted into the lease to avoid this situation from occurring.

In most states, if the lease is classified as a retail lease, then certain clauses that make the tenant pay for capital and structural repairs are void. Additionally, if there is a contribution into a sinking fund by the tenant for this purpose, this type of clause is also void.

Notice

If a clause specifies that the landlord is to effect repairs, it is often construed as dependent on the tenant first giving the landlord notice to repair. Therefore, tenants must ensure the notice requirement in the lease is strictly complied with. For example, the lease could state that notice is only given if it is in writing, signed by the tenant and posted to the address of the landlord noted in the lease.

Remedies

Consideration should be given to the remedies contemplated by the parties. For example, a tenant may terminate or receive decreased rent if the landlord does not perform its obligations under the lease. A clause such as this will incentivize the landlord to comply with the lease. Generally, the tenant’s lawyer would need to request this clause to be inserted as it is not typically offered at first instance by the landlord.

Tenant warnings

Obligations upon tenants in leases are usually extensive and can be onerous. Care must be taken here to identify all hidden costs before signing a lease.

A lawyer specialising in commercial leases will identify your rights and obligations and seek amendments to your benefit to decrease your costs under the lease.