Why are repair clauses important?
There are many issues and disputes that may arise between a landlord and tenant over the term of a lease.
Like all of the other clauses drafted within a lease agreement, it is important to avoid ambiguity as far as possible. However, avoiding ambiguity when drafting the repair clause is fundamental as the landlord will usually always push for a high standard of repairs, and the potential cost of the repairs at the end of the term could be significant.
Even in instances where a landlord and tenant have a pre-existing relationship, it is important to have a well drafted repair clause to protect you should anything go wrong. People underestimate how common disputes between landlords and tenants who are also family members and friends are, especially when large sums of money are involved.
A well-drafted repair clause is particularly necessary for longer-term leases, where there is a greater opportunity for the relationship to break down and a longer period of time for the property to fall into disrepair.
Clarity within the repair clause will afford you the proper legal protection in the event of future disputes, and having a full understanding of the tenant repair obligations will be crucial in reducing the possibility of large, unexpected repair bills.
Avoiding large dilapidations bills at the end of the lease
A dilapidations schedule is given to the tenant at the end of a lease once the landlord has inspected the property.
The dilapidations schedule lists items of disrepair and quantifies the anticipated costs that the landlord may incur due to the tenant’s breach of their repair covenant(s). The surveyor’s costs in preparing the schedule would usually also be passed on to the tenant.
The wording of the repair clause is critical, as it can directly determine what can and cannot be included in the dilapidations schedule. Being aware of your tenant repair obligations at the outset will help you to manage expectations throughout the term and possibly mitigate the costs of repairs before the end of the lease.
It is usual for a landlord to request a full repairing lease, however, depending on negotiations and the bargaining power of the parties, the tenant may be able to reduce the scope of their repair obligations.
One way to reduce the scope of repair obligations would be to exclude certain parts of the property from the repair clause e.g. excluding the roof or another specific part of the property of concern.
Another practical solution would be to include a Schedule of Condition (SoC) within the lease. A SoC works to protect the tenant by limiting the level of repairs that will be required. The SoC will evidence the condition of the property at the beginning of the tenancy, and the tenant will not be obliged to return the property to the landlord in a better state of repair than it was found.
Ideally, the SoC will contain both written and photographic evidence as to the property’s state of repair at the beginning of the tenancy. Preparing a SoC can be costly at the outset, but it can certainly assist in preventing huge dilapidations bills.
If the landlord does not allow the inclusion of a SoC within the lease, it may be advisable to take your own photographs at the start of the term, so they may be produced to the surveyor at the end of the tenancy for dilapidations negotiations.
What to look out for in the repair clause
Full repairing lease
A full repairing lease means that the tenant will have full responsibility for all repairs and the costs associated with them. Most landlords will push for a full repairing lease so that the tenant is responsible for all repairs.
Common wording found in most repair clauses include:
“keep in repair”
Case law tells us that a tenant covenant to “keep (the property) in repair” can include an obligation to put the property into an appropriate standard of repair.
A repair clause like this could mean that the tenant would be liable to put the property into repair, even if it was in considerable disrepair at the beginning of the lease.
In other words, the tenant could be liable for the cost of all repairs to the property, even repairs that were required before they became the tenant.
This was laid out nicely in Payne v Haine, where it was said that a tenant cannot comply with their obligation to “keep” the property in repair, unless they first put the property into repair.
“good” or “substantial” repair
Certain repair clauses may require the tenant to keep the property in “good repair”, “substantial repair”, or “good and tenantable repair”.
The extensive wording in these obligations sounds onerous at first, however, case law suggests that these additional words do not impose any additional repair obligations upon a tenant.
Although adding the above words to the repair clause will not generally confer any further obligations upon a tenant, a repair covenant to “keep in (good) repair and condition” may be more onerous and undesirable for a tenant.
If the repair clause refers to the “condition” of the property, the tenant may be liable to carry out works even where there is no disrepair.
Practical tips for avoiding disputes over repairs
- Check the definition given to the “property” within the lease as this will detail the extent of the property to which the repair clause relates.
- Ensure you have a full understanding of the repair obligations contained within the lease at the outset.
- Agree which repairs the landlord and tenant will each be responsible for in the Heads of Terms.
- Inspect the property prior to lease commencement to assess future repair liability.
- Arrange a survey to ascertain the state of the property and any potential repair costs before entering into a lease.
- Have an independent surveyor prepare a SoC evidencing the state of repair before the tenancy.
- Have your solicitors negotiate the repair clause so that the tenant will not be liable for any damage caused by uninsured risks. If the lease is silent on uninsured risks, any damage caused by an uninsured risk would usually fall within the tenant’s repair obligations.
Please note that this blog is not intended as an alternative to professional legal advice. The repair clause will differ in each lease agreement dependent on whether it is a lease of whole or part, the building, the location and many other factors.
It is always advisable to have a legal professional review the terms of your lease before entering into any agreements.
If you have any questions regarding repair clauses or require advice on any commercial property issues, please contact our Commercial Property department at Rothera Bray on 03456 465 465 or by email to enquiries@rotherabray.co.uk
Disclaimer: This blog is for information only and does not constitute legal advice. If you need legal advice please contact us on 03456 465 465 or email enquiries@rotherabray.co.uk to get tailored advice specific to your circumstances from our qualified lawyers
