Commercial Leasing – Who Maintains and Repairs the Premises?
McLaughlin & Associates Lawyers Associate Dominic Doan discusses the Commercial Leasing Repair and Maintenance Clauses.
Before signing a commercial lease, it is important to establish who is responsible for the maintenance and repair to the premises. The specific obligations regarding maintenance and repair are stipulated in the lease schedule and should be reviewed and drafted by an experienced commercial lawyer.
Commercial leases are not all standard and may not specify the maintenance and repair obligations in adequate detail. For that reason, having an experienced commercial lawyer review the lease before you sign will ensure the maintenance and repair obligations are clearly defined to avoid issues down the track.
What is a repair and maintenance clause?
A maintenance and repair clause will stipulate the obligations on both Tenant and Landlord with respect to maintenance and repair of a commercial premise.
The repair and maintenance clause should cover things such as:
- Who is responsible for the maintenance of appurtenances to the premises;
- Who is responsible for maintenance of the equipment in the premises (if any);
- Who is responsible for cleaning;
- Who is responsible for repairing and replacing fixtures and fittings; and
- Who is to repair the premises if damage occurs.
What to look out for as a Tenant
As a tenant, it is important to understand what you are responsible to maintain as it may be a very costly exercise to maintain the premises you are planning to lease especially if it is an older building or heritage listed.
For instance, if you are leasing an older building, repairs may be more frequent than you anticipated and could disturb the day-to-day running of your business. Even though a landlord will usually pay for repairs of a capital nature, it will almost always affect the running of your business.
Similarly, the appurtenances to a premises may be old and need ongoing maintenance, you should seek to have the Landlord provide a report that all the appurtenances to the premises are in good working order or better, replaced/fixed before entering into the lease.
What to look out for as a Landlord
As a landlord, if you do not have a comprehensive repair and maintenance clause, you could find yourself out of pocket and left with a damaged or rundown premises with no legal recourse to compel the tenant to repair or compensate you for their lack of maintenance to the premises, especially so if you do not have a “make good” clause in your lease.
What are the next steps?
If you are a Landlord, you should seek to have an experienced commercial lawyer draft the lease with a maintenance and repair clause specific to your premises and your needs. There is no one clause fits all unfortunately.
For a tenant, before signing a commercial lease, you should engage an experienced commercial lawyer to review your lease and advise.
Our commercial lawyers can assist both landlords and tenants with commercial leases including retail leases. We can be contacted on 07 3808 7777 or firstname.lastname@example.org.