Knowing who is responsible for repairing which part of a commercial property is important.
Not only will the landlord want to protect their investment and the value of the property, but the tenant will also need to know what their obligations are.
In his latest article, Commercial Property Solicitor Richard Ramshaw outlines ‘who is responsible for what’ in a commercial lease.
Who is responsible for repairs in a commercial lease?
Most commercial property leases are fully repairing and insuring (FRI) leases.
An FRI lease is where the tenant is responsible for the repair, maintenance and insurance of the property.
FRI leases can be used for leases of whole (for example, one unit on an industrial estate) and leases of part (for example, a ground floor shop with residential flats above).
Find out more about leases and how they work here.
What is a tenant responsible for in a lease of whole?
With a lease of whole, the tenant would be responsible for all costs in relation to the property, which includes the exterior roof, structure and also the interior of the property.
What is a tenant responsible for in a lease of part?
With a lease of part, it’s important for the definition of ‘property’ to be properly defined.
For example, they will often refer to including one half horizontally if the property being leased is situated on the ground floor. This is because the tenant of the first floor will be responsible for the remaining half which will form part of their flooring.
Does a commercial landlord have to have insurance?
Yes, in both a lease of whole and of part the landlord will insure the property and recover the sums back from the tenant.
The landlord will want to make sure the property is insured at the correct level and covers all ‘insured risks’ required for that particular property.
Who should pay building insurance on a commercial property?
Despite the landlord being responsible for the arrangement of building insurance, the tenant will usually pay for it.
This is because the tenant will have the benefit of the insurance.
In the full article, Richard looks at the repair responsibilities of both landlords and tenants and answers some more FAQs. Click here to read it.