Cavell Leitch is often asked by both our landlord and tenant clients to help make up one's mind the extent to which a tenant is required to maintain and repair their premises under a commercial lease.

In this commodity we prepare out a few common scenarios:

Scenario one: The premises' roof has sprung a leak and needs repair.

  • Who pays for the repair?
  • What if the roof was damaged in a storm?
  • What happens if the Tenant's stock is damaged?

The starting point will always exist to refer to the lease document. A typical Auckland District Law Society (ADLS) lease will crave the Landlord to keep the premises water-tight. The Landlord may exist able to recover some of the repair costs from a Tenant, but it is of import to notation that outgoing particular vii of an ADLS lease only allows a Landlord to recover costs for 'modest repairs' to a roof.

Repairs which are more than small-scale, or are caused by a structural defect in the building, volition exist payable by the Landlord. Exactly what constitutes a 'minor repair' equally opposed to a 'more than small-scale repair' will depend on the circumstances.

The state of affairs may be unlike again withal if the roof was damaged in a natural event (eastward.g. a storm) for which the Landlord is insured. In this instance the Landlord will exist required to make a merits with its insurer, and the Landlord may be able to pass on the cost of the excess associated with this insurance claim to its Tenant (usually up to a cap of $2,000 per claim).

A Landlord would usually not be required to reimburse a Tenant for the cost of any damage to any of the Tenant's stock or equipment that is damaged past the leak. An exception does apply even so if the Landlord had been notified of the leak, but had failed to repair the roof inside a reasonable fourth dimension. It is therefore of import that whatsoever weathertightness repairs are carried out asap.

Scenario ii: A Tenant takes over a bounds which is in poor condition – tin the Landlord force the Tenant to pay for the toll of upgrading the premises?

The short answer is no, the long answer is maybe!

The short answer is no – section 233 of the Belongings Law Act 2007 states that, unless the context suggests otherwise, a covenant under a charter to keep the premises in good condition does not require a Tenant to put the bounds into a adept condition if information technology was not and then when the lease commenced. The recent decision Brian Greenish Properties (1971) Limited v Bindon Holdings Limited held this to be the example, even when a charter otherwise stated that the implied terms of the Property Police force Human action did not utilize to the lease.

The long answer is maybe - The default position under most new ADLS leases is that a Landlord must acquit the toll of whatsoever upgrades which are required to exist made to the bounds due to legislation e.g. earthquake strengthening. All the same, this volition again turn on the diction of the specific lease certificate:

  • Previous versions of the ADLS lease did allow a Landlord to pass on a percentage of this statute-mandated upgrading costs to a Tenant – this practice was known as Improvements Rent.
  • A Landlord tin can as well require a Tenant to pay for any upgrading costs which are required due to the Tenant'southward desire to alter their permitted use of the premises (e.chiliad. boosted fire protection systems).
  • A Landlord can crave a Tenant to repaint and redecorate parts of the interior of the premises when they reasonably require repainting or redecorating.

A Landlord may be permitted to ask a Tenant to vacate the premises then that upgrading works can be carried out (provided rent and outgoings are fairly abated). A Landlord may fifty-fifty have the ability to abolish a lease if the required upgrade costs are excessive.

Scenario iii: The Landlord provides air-conditioning in the bounds. The air-conditioning unit has still broken downwards – who pays for its repair? And what if it can't be repaired?

Once again nosotros must kickoff by reviewing the lease certificate. A typical lease will let a Landlord to enter into a service and maintenance contract for any of the Landlord's fixtures and fittings that are provided for the tenant'south utilize (such as air conditioning in this example). The servicing fee will then be payable by the Tenant as an outgoing under the charter.

If the air-conditioning unit tin can exist repaired, then the Landlord will exist able to pass the reasonable repair costs onto the Tenant, and the Tenant will be required to pay these costs within a reasonable time of receiving them.

However, the situation would usually exist different if the air-conditioning unit of measurement cannot be repaired. The unit may instead have reached the end of its useful life (it happens to all of u.s.a.!) or perhaps it has suffered a critical failure. In this example, in the absence of a specific clause in the lease maxim otherwise, the cost of replacement would fall on the Landlord as the Landlord is obligated to maintain building services.

The content of this commodity is intended to provide a general guide to the subject matter. Specialist advice should exist sought nearly your specific circumstances.