Obligations around repairs and maintenance
Don’t get caught out when your office needs repairs. Are you aware of the repair and maintenance obligations in your commercial lease? You should be or you could end up seriously out of pocket.
Building maintenance can be an expensive business. It’s not uncommon for prospective tenants to overlook or underestimate the extent of maintenance or repairs required on a building and, depending on the terms and conditions of their lease, tenants can often end up liable for those expenses.
In this series of blogs we are exploring some of the commonly queried situations that can arise during the lease of an office or retail space, and some of the things you should consider before entering a new commercial property lease.
In our last blog we looked at commercial property rent reviews - how often and how much? This issue we’re exploring the expectations and obligations of landlords and tenants around repairs, maintenance and redevelopment of leased commercial property.
When negotiating a new lease
If you are entering into a new lease, the general rule of thumb is: don’t assume, specify. In other words, be specific. You can always add clauses to a lease prior to agreement but once it’s signed and something goes wrong, you can’t postdate a new clause to cover the event.
Another good idea is to include a Premises Condition Report. The commonly used 6th edition of the Auckland District Law Society (ADSL) Deed of Lease has a provision for the inclusion of a Premises Condition Report, which can be attached within Schedule 5 of the Deed.
This report is often prepared by a surveyor, and provides written and photographic evidence of the condition of the premises at the commencement of the lease, as well as a summary of the landlord’s fittings and fixtures. A Premises Condition Report helps to clarify those ‘make good’ clauses that require tenants to reinstate the premises to the condition it was in at the start of the tenancy and helps to avoid any disputes as to tenants’ obligations at the end of a lease.
During your tenancy
If you are unsure who is responsible for a repair or maintenance issue during your tenancy, the first thing to do is to check your lease. All leases are different and even the standard ADSL Deed of Lease can have additional clauses and specifications.
Under the standard lease, tenants are not liable for general wear and tear, or defects in design or construction. In addition, landlords are liable for the costs of compliance with the Building Act 2004 and must keep the building weatherproof.
However, tenants need to be aware that typically a landlord doesn't have to fix anything unless it is specified in the lease. Also, although not liable for wear and tear, tenants are liable for consequential damage of wear and tear.
To the average small business owner, navigating complex lease agreements is challenging to say the least, so we always recommend seeking legal advice. Getting the right advice and including the right clauses could save you thousands in unexpected maintenance bills.
Find out more about Commercial Property and leasing.