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Repair covenants in commercial leases and how to enforce them

Breach by Tenant of Repair Covenants in Commercial Lease

Repair covenants

Most leases require the tenant to keep the premises in a specified state of repair. This may involve “putting and keeping” the premises in repair or a lesser obligation may be imposed, e.g. to keep the premises in no worse state of repair than they were in at the start of the lease, as evidenced by a schedule of condition.

Some leases will require tenants to carry out an agreement list of works at the outset. The tenant may be paying a reduced rent because it is undertaking these works. The landlord will have a keen interest in making sure that such works are completed in full, on time and to a satisfactory standard.

Whatever the nature of the tenant’s repairing obligations, the landlord should ensure that the relevant covenants are complied with as deterioration of the premises will reduce the value of the landlord’s investment.

Active management by the landlord

Landlords or their agents should make sure that the property is inspected at regular intervals to identify any items needing repair. Initially, any issues can be raised informally with the tenant. The tenant may indicate that the matter is in hand, in which case the landlord can diarise to check on progress at a suitable later date.

If the tenant shows no signs of attending to the required repairs, the landlord may need to deal with the matter more formally in one of the ways set out below.

Raising concerns by letter

If the tenant is in breach of its repairing covenants, a letter can be sent reminding the tenant of its obligations. This can be followed up with a more strongly worded letter if necessary. The landlord should keep a copy of any such correspondence on the tenant’s file.

Legal action

If a state of disrepair persists despite the landlord’s efforts to resolve the problem informally, the landlord may need to consider taking legal action. Specialist legal advice should be taken. The following options may be available to the landlord:

• Serving a schedule of dilapidations requiring the tenant to undertake the work or to compensate the landlord for the cost of the work.

• “Self help”. The lease may allow the landlord to carry out the work itself and to recover its costs from the tenant.

• Forfeiture of the lease.

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