Implied Warranty Of Suitability In Commercial Leases

What Is The Implied Warranty Of Suitability?

Residential leases come with an implied warranty of habitability requiring landlords to furnish livable quarters.  However, this implied warranty has not widely been extended to leases of commercial property.  Courts consider commercial tenants to be in a better bargaining position than residential tenants and can negotiate better leases.  Additionally, courts worry that if implied warranties are extended to commercial leases, landlords will raise rents and tenants will pass those costs onto their customers.  

Despite this, other courts have found that modern business leases, particularly those for commercial office space, resemble their residential counterparts.  For this reason, some courts say that an implied warranty of fitness or suitability for purpose is implied in commercial leases.

What Is Required Of The Warranty Of Suitability?

Since the law of implied warranties in commercial leases is still developing, the law is uncertain.  Some examples of defects that courts have found sufficient to violate the warranty of suitability include:

• latent physical or structural defects in demised premises
• persistent leakage of water through the roof, ceiling, or walls
• serious defects in the sewer or drainage
• inadequate or defective air conditioning, electric, or other building service

Examples of defects that were not sufficient to find a breach of the warranty include:

• leaky bathrooms
• lack of humidity control in a steam heated building

Can The Implied Warranty Of Suitability Be Waived?

The implied warranty of habitability in residential leases generally cannot be waived.  However, the implied warranty of suitability may be contractually waived in commercial leases.  Therefore, it is important to read your lease.  Words like "as is" may be sufficient to waive the implied warranty of suitability.

Should I Consult An Attorney Regarding My Commercial Lease?

Landlord-tenant law is complicated and varies from state to state.  An experienced real property attorney can help you understand your state’s implied warranty of suitability laws.  A real property lawyer can represent you whether you want to sue your landlord for repairs or you are a landlord who has been sued for repairs.