Commercial property repair obligations

Tenants are generally responsible for maintaining a rented property and ensuring that it is restored to the state in which it was in at the beginning of the lease. Any repairs which are required are called 'dilapidations' and these should be specified in the lease. In general, any responsibilities which are not specified in the lease will fall to the tenant.

The full scope of tenants' obligations for dilapidations will often depend on the type of property and the length of the lease. Many commercial premises are let on a full repairing and insuring (FRI) basis, which means the tenant takes on both repair and insurance costs.

Landlords are normally responsible for any structural repairs needed to maintain commercial properties. This includes exterior walls, foundations, flooring structure and the roof. Non-structural maintenance issues, such as plumbing and air conditioning normally have to be addressed by the tenant - unless there is a management/maintenance fee paid to the landlord which covers such repairs. Repairs to any communal areas in a leased property will usually be the responsibility of the landlord (or management company/agent if one is appointed by the landlord).

A comprehensive commercial lease is key to preventing the majority of disputes relating to dilapidations. It should clearly set out who is responsible for repairing the various parts of the rented premises: the landlord, tenant or a third party. Any unusual or onerous repair obligations contained in the lease should be clearly pointed out before it is signed.

Make an FRI commercial lease today or Ask a lawyer for help on further drafting or for a different type of commercial lease (eg if different parts of the building are being rented to separate tenants).

England and Wales

The terms of a commercial lease will often clarify disputes relating to repair obligations. In the absence of an effective lease, section 7 of the Code for Leasing Business Premises in England and Wales 2007 states that unless expressly stated in the heads of terms of a lease, tenants should only be obliged to give the premises back at the end of their lease in the same condition as they were in at its grant.

If a dispute cannot be resolved between the landlord and tenant, it may be necessary to consider court action. The Pre-Action Protocol for Claims to Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy (known as the 'Dilapidations Protocol') should be followed before a legal claim is made. Section 8 of the Dilapidations Protocol encourages the use of Alternative Dispute Resolution. For further information, read Alternative Dispute Resolution.

Scotland

In Scotland there is no binding code of conduct and parties should consider using a detailed lease agreement to deal with these issues. Contracts could also include a requirement to seek arbitration rather than litigation but this will be up to the parties to decide.