Duty to Repair in Commercial Leases

Filed under: Real Estate Law

The success of a business often depends heavily upon its location. Proximity to a customer base, ease of access to the building, and even traffic patterns can make or break a business. Therefore, it’s not hard to imagine the negative impact that structural defects or damage to the building itself could cause. Business could even come to a complete halt if the premises must be closed for repairs, costing the company thousands of dollars or more.

Protection for tenants. Many commercial leases provide very limited protection for tenants. If a defect is discovered, the tenant is required to report the damage to the landlord. The property manager must then respond to the request for repairs within a reasonable period of time. Many commercial leases give the landlord up to 30 days to respond to the request, but some leases do not actually specify whether the damage must be completely repaired, and in what time frame.

The tenant may be required to keep paying rent, and the lease may not specify whether the landlord is responsible for damages to the business as a result of structural defects.

Duty to repair. Business owners are encouraged to consult with a real estate attorney experienced in commercial leases before signing or re-negotiating a lease contract. Certain “duty to repair” clauses should be included in the contract, in order to protect the business from adverse impacts due to structural problems in the building. A commercial tenant may wish to ask for provisions such as:

• the right to pay a professional to repair damages or defects, and be compensated by the landlord
• liability for loss of business, due to defects in the premises. This can help to ensure that the landlord is motivated to promptly fix problems.
• a provision which states rent will be reduced for any period of time during which a defect remains, called a rent abatement provision.

These, and other helpful provisions, are often not found in a standard commercial lease, and the first two will likely be met with great resistance by most landlords . When tenants consult with an experienced real estate attorney, however, they can negotiate a lease which best protects their interests.

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