Duty to Repair in Commercial Leases

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 Why Is a "Duty to Repair" Provision so Important in Commercial Leases?

If there are substantial flaws in your company’s or store’s premises, it might have serious ramifications for your organization. In the worst-case scenario, you will be obliged to close the premises and suspend operations while these flaws are repaired.

A duty to repair, in general, refers to a life tenant’s obligation to keep the property in a reasonable state of repair. The rule does not apply to normal wear and tear. If the individual personally inhabits the land, this duty is limited to the property’s reasonable rental value. Otherwise, it is limited to the amount of money the property generates.

A tenant with a fixed term has a comparable obligation. In this scenario, it is not limited to income or fair rental value. As a lessee, the tenant’s duty for the term of years is normally governed by state statute. According to such statutes, residential lessees are often not required to repair.

This duty also applies to landlords, who must ensure that the facilities are “habitable.” Landlords must make repairs and maintain this habitable condition, and the laws vary significantly according to jurisdiction.

What is a Commercial Lease?

A commercial lease is a contract used when a business rents premises from a landlord. A commercial lease, like all leases, grants a commercial tenant the right to occupy the space and conduct business activities for a set time in exchange for monthly rent payments to the landlord. The lease also informs both parties about their legal rights and responsibilities.

When a commercial tenant rents business property, such as office space, a restaurant, or a retail store in a mall, they will enter into a commercial lease with the landlord. Depending on the commercial lease the parties sign, it will specify who is responsible for making repairs, who is responsible for paying real estate taxes on the facility, and so on.

A commercial lease’s terms and conditions are governed by a subset of real estate law known as “commercial lease law.”

Commercial lease law governs both parties’ rights and duties and what must be contained in the final commercial lease agreement. Because commercial lease law is a rather sophisticated area of law, you should consult a local real estate lawyer before signing any commercial leases.

Do Standard Commercial Leases Give a Tenant Much Protection?

Standard commercial leases typically provide little protection to the tenant when a fault in the premises affects the continuation of the operation.

A landlord is often responsible for repairing structural and key component portions of the leased premises and any capital expenditure replacements, such as the roof, parking lot, and foundation. The tenant is still responsible for routine maintenance and repairs to things within the leased premises over which the tenant has control.

However, in many commercial leases, the landlord may try to shift repair and replacement responsibility to the tenant for equipment that only serves the leased premises. Heating, ventilation, and air conditioning (HVAC) systems are popular examples and can be expensive.

A fair rule of thumb is that the longer the lease period and the fewer tenants in a property, the more likely a tenant will take on more maintenance and repair tasks. To minimize uncertainty, landlords and tenants should clearly assign these responsibilities. To avoid misunderstandings between the parties, terms such as “operational expenses” should be explicitly specified.

The landlord’s repair and maintenance obligations under the commercial lease make them responsible for any problems in the building’s structure (roof and external walls), as well as power, water, and any other utilities.

If one of these items breaks, the renter must notify the landlord, who will have a certain period (typically approximately a month) to reply.

Does a Standard Commercial Lease Ensure That Your Business Won’t Be Harmed by Unresolved Repair?

The difficulty with this type of provision is that it does not provide much assurance that the fault or repair would not negatively impact the tenant’s business. While the landlord must react to the tenant’s notification of a defect within a month, they are not required to rectify the fault fully.

What Sorts of Provisions Are In Most Leases Regarding a Landlord’s Liability for Failing to Fix Broken Items?

Common lease conditions provide that the landlord cannot be held accountable for any negative effects on the tenant’s business due to the flaws. The tenant may even be required to continue paying rent despite the issue (even if it destroys the building).

The commercial lease should specify the commercial lease landlord’s responsibilities in the landlord-tenant relationship. The agreements should be carefully defined so that both the renter and the landlord are aware of their respective rights and duties. The business lease, for example, should specify which party is liable for:

  • Ensuring that the facility complies with all state and local building codes
  • Meeting minimum energy efficiency requirements
  • Repairing the building’s structure
  • Taking care of any potential asbestos outbreaks
  • Covering the expense of business property insurance maintenance

In general, the landlord is responsible for maintaining the outside of a building in a commercial lease. This covers the upkeep of the roof and outside walls. It also frequently entails responsibilities for snow and debris clearance from the building’s pathways.

However, a business lease will shift these responsibilities to the renter in some situations.

A landlord may even delegate responsibility for complying with the Americans with Disabilities Act under a commercial contract. Bringing the structure into compliance could cost thousands of dollars.

Again, in general, a landlord is usually responsible for maintaining the structural integrity of a structure. This would make the landlord responsible for the building’s foundation, walls, and roof.

Furthermore, as part of the commercial lease, landlords are frequently responsible for maintaining critical building systems such as the heating, electrical, and ventilation systems.

Landlords frequently desire to keep control over major repairs to a property. Failure to perform such repairs can expose you to liability and be financially costly if not addressed appropriately.

However, it is permissible for a landlord to allow a tenant to remedy structural faults with the property.

What is a Lawsuit for “Failure to Repair”?

Failure to repair cases concern situations where a landlord has failed to repair or fix unsafe conditions, causing injury to another person. These types of litigation sometimes involve premises liability issues, in which the owner of land or property fails to remedy problems with the property.

Failure to repair, on the other hand, can relate to a variety of scenarios, including:

  • Landlords who owe it to their tenants to perform repairs
  • Business owners are responsible for ensuring their customers’ safety in their facilities.
  • Rental service providers (car rentals, go-kart venues, commercial vehicles, etc.)

Failure to fix hazardous circumstances or broken goods can lead to a range of injuries, including:

  • Injuries caused by a slip and fall
  • Injuries caused by burns, fires, explosions, and so on.
  • Injuries caused by falling objects
  • Chemical or hazardous exposure-related injuries
  • Vehicle collisions and accidents

Failure to address potentially hazardous circumstances might also result in property damage (for example, if an object falls on someone’s personal belongings).

Who is Liable for a Failure to Repair Injury?

Depending on the circumstances, various parties may be held accountable for a failure to repair injury. In most circumstances, the person in charge of the premises or object in question is the property owner, a manager, or another such person.

Liability is frequently predicated on a legal notion of negligence. To establish liability, it is usually essential to demonstrate the following:

  • The person was aware of, or should have been aware of, the necessity for repairs (i.e., they had a duty to correct the problem);
  • The individual either neglected to make the necessary repairs or poorly performed them.
  • The failure to fix was directly responsible for the other party’s harm or injuries.
  • The injuries are verifiable and quantifiable, resulting in calculable damages.

What Kind of “Duty to Repair” Terms Should I Aim For as a Tenant in a Commercial Lease?

It is critical to ensure that your business can continue to run if something goes wrong with the premises where you operate and that you are compensated at the absolute least if it cannot.

The following is a quick checklist of things to do to keep your business functioning well.

  1. To ensure that any problem in the premises is corrected as soon as possible, include a clause in the lease stating that the tenant may have the repair done herself and then be compensated by the landlord either directly or through a proportionate deduction in the rent payment.
  2. Negotiate with your landlord to include a term in the commercial lease stating that he is liable for any loss your company suffers as a result of a problem in the premises. This will ensure that your landlord is driven to remedy any problems with the building that you have mentioned as quickly as possible.
  3. Negotiate a provision that allows for a rent decrease for the duration of the defect. This will increase the landlord’s desire to repair any fault, no matter how little, as soon as possible.

Who Can I Get to Help Me Negotiate Terms in a Commercial Lease?

You should probably consult a real estate attorney familiar with commercial leases.

Your attorney will be able to explain in layman’s terms what each phrase in the contract means, as well as ensure that your interests as a tenant are adequately represented in the lease agreement.

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