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Repairing and maintenance of leasehold property

Repairing and maintenance of leasehold propertyIt is in the best interest of both parties to ensure that the leased property is kept in a good state. The landlord would find it difficult to reassign the property, and the tenant would find it difficult to use the premises if the property is kept in a dilapidated state. Repairing obligations would differ and would depend on whether the tenant has leased the entire property or in part.

Who does what?

When the property is let as a whole, the tenant is usually responsible for the repairs. But when it is let in parts, repairing obligations are usually divided between landlord and tenant. While the tenant is made responsible for the non-structural parts, the landlord is made responsible for the structural parts and the common parts.

These obligations are not implied; hence it is common for the lease to make sure that every part of the building is covered under repairing obligation, and to clearly specify the person who shall be responsible for each and every part. There should not be any grey areas where responsibility is not clearly mentioned, or no black holes where no one has a responsibility, or no overlaps where two people are made responsible. This would undoubtedly lead to squabbles about the work to be done.

Obligations by third parties

Sometimes, the obligation to repair is placed on a management company. This is common for flat management schemes, where a professionally managed company takes charge of leasing the flats. Under some circumstances, the obligation to repair lies on other tenants. If such a third party is involved, the tenant should check if there are provisions from the landlord to enforce this obligation or whether the provisions of the Contracts (Right of Third Parties) Act of 1999 are complied with.

Who pays?

The landlord would naturally want to pass on all repairing costs to the tenant. This can be problem when the property is let in part and the responsibility is split between the two. Under such circumstances, it is common for the lease to include provisions that allow the costs to be passed on to the tenant through a service charge.

The extent of the obligation

Any party can be expected to carry out their obligations only to the extent mentioned in the lease. Therefore, it is important that the lease clearly explains the terms expressly and includes all the operative words related to repair. For instance, the provisions to repair should include all activities such as repair, maintain, cleanse, decorate etc. A covenant to repair would not include a provision to decorate the house. If the landlord undertakes decoration, the tenant is not obliged to pay because the clause only specifies that the tenant has to pay only for repairs and not decoration.

Does repairing include replacement and/or improvement? There have been different opinions regarding this. For instance, replacement of defective window frames can be considered repair, but what if the replaced window is an improved one? Although this is a repair it is also an improvement, hence the tenant is not obliged to pay for these costs.

And if the covenant includes improvement, would the tenant agree to this and to what extent would they agree? Can the landlord/management company make extensive changes and expect the tenant to pay, just because he has agreed to pay service charges? And that too for a service that he does not need!

In such instances, it is common to include the clause ‘to improve and renew to the extent such renewals or improvements are necessary or desirable to keep the Building in good and substantial repair…”

And if the repair is regarding an inherent defect in the design or construction of the building, this shall be included in the repairing covenant. When the building is being insured, the tenant should make sure that he is not responsible for repairs covered in the list of insured risks.

Breaches of repairing obligations

When the landlord has entered into a repairing covenant, he is not said to be in breach of it unless he has information about the lack of repair (irrespective of the source of the information). Even though, he may enter the premises to determine the state of repair, he is not obliged to do so. Thus, it makes sense for the tenant to inform the landlord as soon as the property is in need of repair.

A conveyancing solicitor acting for the tenant should educate his client about this duties. Failing to inform the landlord would be considered breach of covenant and even make him liable for compensation to be paid to the landlord. But if the part of the property that is under the control of the landlord needs repair, it is not up to the tenant to inform him.

Usually, the landlord reserves the right to enter the premises and inspect it for repairs that have not been done by the tenant, and then charge the client for costs incurred on the same. Such a right is called self-help.

Occupier’s liability

The Occupier’s Liability Act of 1957 states that if the landlord is in charge of the common parts, he is obliged to take care of visitors to the premises. The tenant should carefully check if there exists such provision that may indemnify the landlord against claims made by the tenant’s visitors.

Photo courtesy: chicagogeek

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