When it comes to commercial property, ensuring the building stays in a good state of repair is important for both landlords and tenants. The building represents a significant investment for the landlord and therefore keeping it in a good state of repair preserves the value of the building. In terms of the tenant, they have generally entered a lease because they want to run a business from that building therefore ensuring it stays in a good state of repair is also important to them.
An FRI lease
A full repairing and insuring lease usually sets out the obligations in terms of who is expected to do what in the commercial property and what elements are insured. Initiating this kind of lease, however, does not mean that once insured, the landlord can forget about the property as there will be maintenance obligations. Everything that is agreed upon will be set out in the lease, so both parties need to be clear about what is in place before entering into this agreement.
Ensuring commercial properties
An insurance policy and a commercial property are taken out by the landlord and cover the whole building. The cost of the premium is generally recovered from the tenant. With any insurance, it is important to ensure there are no gaps in cover quite often risks you may expect to be covered such as flooding are excluded. If there are gaps in cover the lease generally will show an agreement to share the cost of an uninsured loss. Where a tenant becomes exposed is when something isn’t documented in the lease. In that instance, by default, the tenant becomes responsible for repairing the damage or dilapidations that occur outside of something listed on the lease.
It is critical therefore that a tenant understands that risk is not covered in the insurance and will fall to them. Equally, there will be a requirement from the tenant to keep the property in good and substantial repair. This may mean if the property is not in a good state of repair at the start of the lease, there is an expectation that the tenant will bring it up to a certain standard and maintain it. Disputes will often arise over where the works are considered a repair. Before tenants find themselves in a difficult legal situation, they often cover themselves by carrying out surveys that produce a schedule of conditions that documents the state of repair of the premises before they began their tenancy. The schedule of conditions is then built into the lease to cover their obligations.
Who is responsible for commercial property repairs
It is evident therefore that both the commercial property landlord and the tenant have responsibility for repairs to commercial buildings. What is critical at the outset of entering into a lease is that both parties understand which elements they are responsible for. The tenant also needs to take caution in that the absence of documented responsibility can often mean by default that the repairs fall to them. The property represents a significant investment for both parties and ensuring it stays in a good state of repair is in the interests of both.
External maintenance and carrying out dilapidation services for commercial properties in the Hampshire area is something we have years of experience in, get in touch today.