Repair and Maintenance Clauses in Commercial Leases

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Commercial leases are complex documents that are used by landlords and tenants to safeguard their interests. They contain a variety of provisions that outline the rights and responsibilities of the parties — and must be carefully negotiated. One of the most important clauses to consider including in a commercial lease concerns the repair and maintenance obligations of both parties. It’s crucial to determine from the outset who will be required to upkeep the property in order to avoid the potential for future disputes regarding these matters.

What is a Repair and Maintenance Clause in a Commercial Lease Agreement?

Business owners often lease property to carry out their business activities and operations. For these companies, the commercial space they rent is usually their greatest operational cost — and it can significantly impact the success of their business. Unfortunately, it’s not uncommon for disputes to arise among landlords and tenants concerning property maintenance, upkeep, and responsibility for repairs. This is why having a well-drafted repair and maintenance clause in the lease agreement is imperative.

Commercial leasing is very different from residential landlord-tenant matters. Commercial landlords are generally not required to make repairs to a commercial property that they are renting to another, unless this has been specified in the agreement made between the parties. While repairs and maintenance costs can quickly add up and reduce a company’s profits, commercial tenants must skillfully negotiate repair and maintenance provisions before signing a lease. Similarly, commercial landlords should ensure the clause adequately protects them and their bottom line from damage that could arise as a result of a tenant’s negligence or carelessness.

What Are the Parties’ Responsibilities in a Repair and Maintenance Clause?

A repair and maintenance clause should be clear regarding the obligations and responsibilities of both parties when it comes to the rented space. However, it’s important to note that “repairs” and “maintenance” are not the same thing. While a lease might require the tenant to maintain a certain element of the property in good condition, the landlord might assume the responsibility of making certain repairs in the event something breaks.

Typically, in a commercial lease, a landlord would be responsible for larger repairs and those that involve utilities or the structural integrity of the building. For instance, they are usually responsible for making repairs to the outside of the building, such as the roof, the foundation, or the exterior walls. The landlord might also be responsible for the electrical system, as well as the heating and ventilation system.

A commercial tenant is generally responsible for ordinary repairs and routine maintenance of the inside of the property. For example, they are usually the party responsible for fixing things that break down due to frequent use. Other repair and maintenance obligations that commonly fall on the tenant can include things like replacing light bulbs or wall coverings. A tenant is also typically responsible for repairing and maintaining things on the premises that they control, such as equipment necessary to carry out their operations.

Negotiating Repair and Maintenance Issues in a Commercial Lease

Every commercial landlord-tenant relationship is different and no two lease agreements are the same. A repair and maintenance clause in a commercial lease should never be boilerplate. These types of provisions should be carefully negotiated between the parties to meet their needs — and their responsibilities should be clearly defined to avoid miscommunication.

For a tenant, it’s essential to ensure their business can keep running in the event something goes wrong with the property. Landlords must be mindful to avoid agreeing to terms that could lead to costly expenses or expose them to potential liability. Specifically, a commercial lease should specify which parties are responsible for the following:

  • Ensuring the facility is compliant with all applicable laws and building codes
  • Structural elements of the building
  • Appliances
  • Repairs to flooring, carpeting, and lighting
  • Wall coverings
  • Bathroom and kitchen fixtures
  • Landscaping
  • Power
  • Water
  • Asbestos outbreaks
  • Pest control
  • Covering business property insurance expenses

The repair and maintenance clause in a commercial lease should be clear regarding what a tenant is and is not required to do as far as upkeeping the building. In addition, it should cover the type of notice the tenant must provide to the landlord regarding repair and maintenance matters — and any consequences of either party failing to satisfy their obligations.

Remedies for a landlord’s failure to make timely repairs may include compensation for the tenant’s business losses in connection with the condition requiring repair. The parties might also agree that the tenant’s rent be reduced until the repair is completed. Importantly, tenants cannot assume that they can make repairs and deduct the costs from their rent payments unless this remedy is provided for in the lease agreement. In the event a commercial tenant simply stops making rent payments, a landlord may exercise their eviction rights.

Contact an Experienced California Commercial Real Estate Attorney

Negotiating a repair and maintenance clause in a commercial lease agreement can be complicated. It’s best to have a knowledgeable commercial real estate attorney to assist you with negotiations and help ensure a fair outcome is achieved. The experienced commercial real estate attorneys at White and Bright, LLP provide reliable representation to commercial tenants and landlords for a wide variety of real estate matters, including lease negotiations. We welcome you to contact or call us at (760) 747-3200 to learn more about the legal services we provide.

Categories: Real Estate