Common repairs and maintenance disputes in commercial leases.
One of the most common questions we deal with in commercial property management is who pays for the repair: the landlord or the tenant? Unfortunately, the answer isn’t always straightforward and will often come down to what the lease says and what has actually caused the issue.
Air conditioning and landlord fixtures
Under most commercial leases, tenants are responsible for regularly servicing and maintaining the landlord’s fixtures and fittings within their tenancy, including things like air conditioning and plumbing fixtures.
Where it becomes less clear is when something needs a major repair or replacement. If equipment simply reaches the end of its useful life, the cost may fall to the landlord. However, if the failure has been caused by a lack of regular servicing or maintenance, the tenant may be responsible.
Plumbing
Tenants are generally responsible for maintaining the plumbing within their tenancy, but when there is a larger issue or blockage, it is important to establish the cause.
If a blockage has been caused by the tenant’s use of the premises, the cost will generally sit with them. If it relates to ageing or damaged pipes, tree roots or main building infrastructure, it may be the landlord’s responsibility.
Essential Safety Measures
Essential Safety Measures (ESMs) can be more complicated, as responsibility for compliance and responsibility for the cost are two different things.
Ultimately, it is the landlord’s responsibility to ensure the building remains compliant and the ESMs are properly maintained. This remains the case even if a tenant has undertaken a substantial fitout or made changes which impact the Occupancy Permit or ESM requirements.
However, depending on the lease and applicable legislation, the costs associated with servicing and maintaining the ESMs may still be recoverable from the tenant.
Preventative maintenance
Regular servicing and preventative maintenance can help avoid both disputes and larger repair bills. For tenants, keeping records of servicing also provides evidence that they have met their maintenance obligations if a major item does eventually fail.
So, who pays?
Before deciding who is responsible for a repair, we generally look at three things: what has happened, what caused it and what does the lease say? Every lease is different and obligations can also be affected by legislation such as the Retail Leases Act.
Getting the right information at the beginning, including a contractor’s report where necessary, can save a lot of back and forth over who is responsible for the invoice at the end.
Reach out for a private discussion about how we can help maximise your property’s potential.
