Repairs

General

Repairing responsibilities are critical under a lease.  Generally, the longer the lease, the more likely the tenant will have greater repair responsibilities. A longer lease gives the tenant a longer term stake in the property. He may enjoy statutory rights of renewal, which may endure indefinitely. From the landlord’s perspective, the lease is in the  nature of an investment by the landlord. It is therefore usually appropriate that a long term tenant carries the repairing responsibility.

In shorter term leases, the repairing responsibility of the tenant may be less. The responsibility for repairs may be apportioned between landlord and tenant.  A shorter term lease make the tenant responsible for internal non-structural parts, and the landlord responsible for the structure. Alternatively the tenant’s repairing responsibility may be specified, without placing any responsibility on the landlord in respect of other aspects.

In the case of a multi-unit building,  the inside only of the unit, is typically leased to the tenants. The repairing obligation will usually be limited to this area, so that the tenant’s responsibility is inherently limited. The landlord or management company will be  responsible for the repairs of the common parts, which will usually include the structural parts of the building, as well as the internal and external common parts. In this case, the cost of repairs is collected through the service charge.

In longer term leases i.e. those which the landlord / tenant would have rights to renewal (formerly those over five years) the market expectation was that the tenant would have full repairing responsibility.   Such leases are commonly referred to as full repairing and insuring lease.

Default Repairing Obligations

The common law default position provides, in effect, that the landlord has no repairing obligation, in the absence of an express agreement.  The tenant must keep the premises wind and watertight in the absence of express agreement.  The fact that the landlord or tenant in fact repairs, does not create an obligation, where one does not otherwise exist.  However it may prove that this is a term of the agreement.  Actual repair may imply that this is a repair term of the express or implied agreement.

In some cases of leases of buildings, Landlord and tenant legislation provides that a  tenant may call on the landlord to repair. If he refuses to  repair,  when bound to do, the tenant may execute the repairs and  set off the expenditure against later rent until recouped.  The Landlord is bound to accept the reduced rent is in satisfaction of rent.

In the case of a verbal tenancy, the tenant’s implied obligations are minimal.  With a written agreement, the contents of the lease will  determine tenant’s obligations.  If there is no express agreement on repair, then it is implied that the tenant is to keep the premises in good and substantial repair and give it up in good and substantial repair on termination of the lease.  However this term can be changed by implication.

There are special provisions in relating to the repairs of dwelling houses.  There are detailed provisions in respect of residential properties setting out minimum standards.  These are not considered further here.

Full Repairing and Insuring Lease

In the case of a full repairing and insuring lease, the landlord is in the nature of investor and the tenant is fully responsible for the building. This type of lease carries significant risks for a tenant.  Over and above rent, the tenant may incur significant financial cost  in putting and keeping the property in repair.

In the case of a new building with a full repairing and insuring responsibility, the tenant should ensure that is not responsible for the defects in the original building.  If it does carry this responsibility, it should at the very least, have direct rights, usually in the form of so-called collateral warranties, from the builder contractors and designers, so that if it is obliged to repair faults in the building, that it will at lease have the possibility of recourse against the builder.

A developer may complete a building and sell it to a landlord who leases it to tenants, on the basis of full repairing responsibility.  In this case, there would be no direct right of recourse against the landlord who has developed the property, so that the tenant carries the risk of faults in the building.

In the case of a new leases of an older building, the tenant’s repairing obligations, should be very carefully considered.  An older building may carry considerable risk of liability to spend monies on repairs. It may be possible for the tenant to negotiate that the repair clause is limited so as to exclude existing defects.  Commonly, a schedule of condition is prepared, which is attached  or referred to in the lease which identifies existing defects or wants of repair for the purpose of excluding repairing obligations in relation to them.

Terms of the Repair Clause

The wording of the repair clause itself is critical. It will determine the extent of responsibility.  A clause may oblige the tenant to “put” and keep the premises in repair.  This implies a positive obligation to put the premises into repair and is more onerous than a clause which provides that the premises will be maintained and kept in repair.

Where an assignment of an existing lease is taken, it will not usually be possible to modify the repairing clause because the lease will be already in existence. The tenant takes the property in its actual state and condition and takes the repair obligation as it is, unless it can be renegotiated.  This would not generally be possible unless the landlord had some specific incentive. Exceptionally, a landlord may agree to change a clause in an existing lease, if it is obtaining some material benefit or a stronger tenant.

The wording of the repairing obligation is interpreted in the light of the circumstances of the building, its age, locality, construction, wear and tear.  The interpretation of a repairing clause is a matter for a Court in the event of a dispute.

Where a property is old at the commencement of the lease, the state of repair will be interpreted in this light.  The extent of the property included in the letting or lease will be important in relation to the repair obligation.  Where the interior, non-structural parts only are included, the repairing clause will take effect with reference to those parts only.

A distinction is sometimes made in relation to repair of the interior and repair of the exterior of a building.  This is a crude distinction.  It is better to distinguish between the structural parts and the non-structural parts of a building.  Where there are multiple units in a building over different floors or at the same level, the structural parts are generally excluded from all leases and are maintained by the landlord or management company.

In taking a lease of a multi unit building, the tenant should be satisfied that the  management company or landlord is responsible for repairing the common parts of the building and has the capacity to fulfil this obligation. There should be a legal mechanism to compel the performance of the obligation.

“Repair” does not generally require upgrading.  However, upgrading and improvement may be an inevitable consequence of necessary repairs.  Repairs are generally thought of as restoration by renewal or replacement of elements of the building, rather than  reconstruction. Reconstruction would not generally be required, unless the property is in such a poor state that repair necessarily involves reconstruction.

Sometimes, repairing obligations exclude fair wear and tear.  This is intended to  remove the repairing obligation in so far as it arises from the reasonable use and enjoyment of the premises.

Other Tenant Obligations

In addition to the obligation to repair the building, most repairing clauses will oblige the tenant to repair plant machinery and equipment.  There may be an obligation to replace equipment when plant machinery and equipment are worn out.

Most commercial leases will require that the premises be maintained in a clean and tidy condition.  Windows may need to be cleaned at certain periods. It is commonly provided that tenants must redecorate the premises either inside or outside or both, at certain intervals.

It is commonly provided that the premises must be redecorated at or before the end of the lease irrespective of how the lease terminates.  This can prove an onerous and expensive cost for a tenant at the end of a lease period and cause an unexpected expense.

Landlord Remedies

In longer term leases, the landlord is usually given a right to enter to inspect the state of repair and condition of the property.  It is often provided that the landlord may serve a notice specifying the wants of repair.  This is sometimes called a schedule of dilapidation. The landlord cannot specify repairs in the schedule of delapidations which are beyond the scope of the repair clause.

If works are required to be undertaken under the repair clause and specified in the landlord’s notice, are not commenced and executed within the specified  time limited, it is usually provided that the landlord can enter the premises, do the repairs and recover the cost as rent. Disputes may arise in relation to the scope of the notice.

Failure to repair in breach of the repair clause constitutes a breach of the lease.  The landlord may seek to forfeit the lease for non-performance. A landlord may, in theory, seek a court order of specific performance to compel the tenant to comply with its repairing obligation.  The courts are sometimes unwilling of Courts to grant such  Orders.

The landlord may be entitled to compensation for failure to repair. This is in effect, a claim for breach of contract. There is a limitation on the extent to which a landlord can recover damages for breach of a repairing covenant set out in the Landlord and Tenant Act.  It applies to a lease of a tenement (i.e. principally a building to which land, if any,  is ancillary. In this case, damages cannot exceed the amount by which the landlord’s interest in the property is diminished by the breach.

Unless there is a want of repair, which is wholly or substantially due to wilful damage or waste, no damages are recoverable for a breach if it is shown that

• having regard to the ageing condition of the building, its repair in accordance with the covenant is physically impossible or
• having regard to its age, condition, character or situation, its repair would involve disproportionate expense, relative to the value of the building or
• having regard to its character or situation, it could not when so repaired be profitably used, unless it was reconstructed, rebuilt or structurally altered to a substantial extent.

Tenant Remedies

In some cases, the lease may place the obligation to repair on the tenant. It may or may not, depending on its terms require the tenant to contribute to that costs of repair. Where the tenant is to contribute, its rights will usually be subject to making or tendering the relevant contribution.

The general common law  principle is that a tenant cannot set off a claim against a landlord for failure to repair against the rents.  There is a exception under the Landlord and Tenant Act. This step should not be taken without careful advice and after giving proper warnings and notifications to the landlord.

Where a landlord refuses or fails to execute repairs to a tenement which he is bound by covenant or otherwise by law to execute and has been called upon by the tenant to execute, and the tenant executes the repairs at his own expense, the tenant may set off the expenditure against any subsequent gale or gales of rent until it is recouped.

Where a set-off is made under this section against the whole or part of a gale of rent, the landlord entitled to receive the rent shall on receiving evidence of the expenditure of the amount so set off, be bound to give the like receipt for the gale of rent as he would be bound to give if the gale or part of the gale had been paid in money.

A tenant may be entitled to obtain a Court Order requiring that the landlord repair. The Court has a measure of discretion.  In some cases, failure to repair may involve a repudiation by the landlord of the lease, contract entitling the tenant to terminate.  Careful advice would need to be taken, before such a course is taken.

Legislation entitles the tenant to surrender his lease, if the building is rendered inhabitable or unusable, destroyed or rendered uninhabitable.  This may be excluded and usually is in most modern leases.  A tenant could in principle set off rent against a claim for non-repair.  This would be a very risky course and may require a counterclaim in proceedings for breach of landlord’s obligations .

Statutory Obligations

Leases will typically oblige the tenant to comply with statutory notices relating to the state of repair and condition of the property. There may be an obligation on the tenant,  to join with the landlord in making representations to the statutory authority, in relation to such notices.

Notices by statutory authorities could lead to substantial liabilities for expenses.  The notices may derive from general legislation relating to the state of repair and condition of the property or may relate to specific issues arising from the business of the tenant of the use to which the property is put.

There is a wide range of legislation under which requirements can be made to upgrade or incur expenditure on property.  Sanitary services legislation empowers local authorities to make requirements to give basic public health issues, such as want of sanitation, water etc.

Fire safety services legislation entitles the fire authorities (generally the councils) to make requirements to upgrade fire safety.  Such requirements may be costly and expensive in the case of older buildings.  For example,  fire escapes, etc. may be required.  Although older buildings are exempted from more modern building regulations,  fire authorities retain discretion to serve notices in the case of premises where they believe it appropriate.

Health safety and welfare at work legislation provides specific standards for buildings and workplaces.  The Health and Safety Authority has powers to require the workplaces to comply with minimum health safety welfare standards.  Similarly disabilities legislation can require adjustments to buildings which do not incur specific costs.  Similarly, there are obligations under environmental and other legislation.