Most commercial leases are drafted to benefit landlords, particularly regarding repair, condition and decoration. Often, leases are fully repairing, obliging a tenant to upkeep, repair, and maintain the property without contribution from the landlord.
Generally, a lease may oblige the tenant to put and keep the property in good and tenantable repair and condition. Depending on the state of repair of the property when the lease is granted, this type of covenant may oblige the tenant to bring the premises up to that level of repair, for example if the premises are in a bad state when the lease is granted.
Tenants can use a tool called a Schedule of Condition to assist them in minimising their obligations. This document’s purpose is to limit the extent of the tenant’s repairing obligation by referencing it to the condition of the premises at the date the lease is granted. This negates the tenant’s obligation to put the premises into any better condition than is evidenced by the schedule.
Such a schedule will go on to identify visible defects in the property, and a professionally-prepared schedule will include a written description of the condition, specifically referencing each defect, with supporting photographs, so that these issues can be identified in the future.
It can be tempting for tenants to try to minimise costs by dispensing with the assistance of a qualified building surveyor in preparing their schedule but tenants should keep in mind that, if there is no schedule or the record of condition at the start of the lease is poor, they will have very little protection when a landlord enforces their repairing obligations at a later date.
As well as providing a record, a Schedule of Condition prepared at the outset can help tenants identify any defects in the premises that might impact on their ability to trade from the premises, allowing them to negotiate further with the landlord to cover the cost of any such defect so that there is no potential for it to cause problems for the tenant in the future.
Investment by a tenant at the outset to ensure there is a proper record of the condition of a property, allowing for proper negotiations by the tenant and their solicitor, can pay dividends and avoid future disputes that may impact on trading.
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