Tenants of commercial property often have in their leases an obligation to keep their premises in “good and substantial repair”. Often this means that they must not only keep the property in such repair, but, if it is not in good and substantial repair, that they are responsible for putting it into such a condition. This can be very costly. It is therefore vital, when taking on a commercial lease, that a tenant checks out the condition of the property and, if it is not in good repair, negotiates limitations on its repairing obligations or a suitable rent allowance to reflect the costs it will incur in putting the premises in repair. It is sometimes possible to limit the repairing obligations so that specified defects at the property are excluded.
At the end of the term of the lease, the tenant needs to be aware of its potential liability for repairs and decoration. The precise terms of the lease should be checked in good time before the expiry date of the lease. There are often very detailed requirements relating to the exact works which must be carried out prior to expiry.
It is wise to make contact with the landlord to discuss and agree the repairs and works of redecoration which are appropriate. Otherwise, the landlord may well serve a detailed schedule of required works (known as a “schedule of dilapidations”) after the lease has come to an end, when the tenant has left the premises and it is too late for it to carry out the works. This can lead to an acrimonious battle between landlord and tenant as to the damages payable to the landlord as a result of the tenant’s failure to keep the property in good and substantial repair. Communication is key if this is to be avoided.