A commercial lease may require that the tenant keeps the property in good repair or in good repair and condition – but what do these terms mean?
A requirement to keep the property in good repair will include an obligation to put the property into good repair if it is in disrepair at the start of the lease. If the property is in good repair at the start of the lease, then for the repair obligations to kick in, the property must fall into disrepair.
A requirement to keep the property in good repair and condition is more onerous than good repair alone and may require works to be carried out where the property has not fallen into disrepair.
If a tenant entering a lease is concerned about the state of the property or its repair obligations then it is recommended that a photographic schedule of condition is carried out and referred to in the lease, meaning the tenant would have no obligation to put the property into a better state of repair than that evidenced by the schedule of condition.
It will always be a question of fact in each case as to what work is required to keep the property in good repair or good repair and condition. A landlord may wish to add terms such as “good and substantial repair” or “good and tenantable repair” which may be considered more onerous but would be a question of fact in each case.
In some cases it can be unclear as to whether any proposed works would be classed as an improvement rather than a repair, and issues may arise where the tenant wishes for the landlord to contribute towards an improvement, or the landlord may request a higher standard of work to be carried out. If this resulted in an improvement then they may wish to contribute towards the cost of the work. In such cases it would be necessary to review what the result of the work would mean for the property, i.e. would it increase the value of the asset or the letting value?
A factor that would also come into consideration would be if the property forms the whole of the building, and therefore the tenant is responsible for the whole of the building, or if the property is part of a larger building, in which case the tenant would be responsible for the parts that they occupy and the landlord would have obligations for the retained parts and the structure of the building. It is important to make sure that there is no overlap when drafting the lease where it comes to the definition of the property and the retained property, to prevent any future disputes as to repairing obligations.
If you need any help with your commercial lease or another commercial property matter, please get in touch by calling 0161 330 6821 or email bromleys@bromleys.co.uk and we would be happy to advise you.