When a tenant takes a lease of a commercial property, the lease will usually state that the tenant is responsible for the repair and maintenance of the premises. However, the tenant is not necessarily responsible for all repairs.
If there is no written lease, the default position is that the landlord is responsible for all repairs except those caused by the tenant. The parties to a lease can change the default position and they usually do: the landlord will usually insist on the tenant agreeing to maintain and repair the property. But a simple agreement for the tenant to accept responsibility does not necessarily change the default position entirely. The landlord might still be liable for what are known as “extraordinary repairs”.
Tenant responsibility for common and expected repairs
The reason for this is that the Scottish courts have long recognised that when a tenant agrees, in simple terms, to maintain and repair a property, what it has in mind is the sort of repairs that are common and expected, such as re-painting flaked paint, fixing loose roof slates and guttering, ensuring drains are clear, etc.
A tenant under a simple agreement is deemed not to accept responsibility for repairs that are out of the ordinary or are required because of unexpected events. There is no exhaustive list of these sorts of repairs but some examples would be where a gale blows the roof off a property, or subsidence causes a wall to collapse, or simply that the building has reached the end of its useful life. These are known as extraordinary repairs.
When considering repairs liabilities, there are two main questions:
- Does the lease transfer responsibility for extraordinary repairs from the landlord to the tenant?
- Is the repair in question an ordinary repair or an extraordinary repair?
Answering these questions is often straightforward, if the lease and the nature and cause of the repairs are sufficiently clear. However, where these matters are not clear and especially where the cost of the repairs is very great, disputes often arise.
Transferring extraordinary repairs liability to tenants
Determining whether the lease transfers responsibility for extraordinary repairs to a tenant requires that the lease is read closely. The courts have, in deciding previous cases, provided guidance on how leases should be interpreted, and in particular what forms of words will be required to transfer responsibility. One such case is Co-operative Insurance Society Limited v Fife Council (CIS v Fife).
The court in that case reiterated the reasoning behind the distinction between ordinary and extraordinary repairs and used that to interpret the lease in dispute.
The clause in question obliged the tenant to “repair, maintain, and renew” the premises. The landlord argued that the obligation to “renew” meant the tenant had to replace certain parts of the building that had reached the end of their useful lives. The tenant argued that the word “renew” in the repairing obligation was not in itself sufficient to create an obligation for them do that because it did not state clearly that the tenant was liable in the particular circumstances.
The court held that for the landlord to transfer liability for extraordinary repairs to the tenant requires very clear wording. The wording has to address the various facets of what constitutes an extraordinary repair and clearly state what the parties have agreed.
This means that if a repairs obligation or dilapidations clause states clearly, in appropriate terms, that the tenant is liable for all repairs no matter what they are or how the need for them arose, it is likely to be effective in transferring liability for all repairs, including extraordinary repairs, onto the tenant. In that situation, it would not be necessary to make enquiries into whether the repairs were extraordinary repairs or not.
On the other hand, if the clause does not include words about the cause or nature of the damage that needs repairing, then it may not be effective. The interpretation of the lease would then depend upon the particular words used and the context of the claim. It would also then be necessary to look at whether the repairs in question are extraordinary or not.
What is an extraordinary repair?
The court noted that there is no precise method of determining what is an extraordinary repair and what is not, but there are three main factors to be taken into account:
The origin of the damage. If, for example, the damage was caused by an event that was unexpected or beyond the control of either party, that would tend to indicate that the repair is an extraordinary repair for which the tenant should not be liable. Damage arising solely from wear and tear or the parts reaching the end of their lifespan (and not to the tenant’s neglect) would likewise tend to be extraordinary repairs.
The extent of the damage and the probable cost of repairs are also factor. The more serious and expensive the repairs, the more likely they are to be extraordinary.
The nature of the damage. For example, complete replacement of parts of the core structure of the building is likely to be deemed extraordinary repairs.
It is important to note that any given lease might wholly include or wholly exclude extraordinary repairs, but it might also include some extraordinary repairs and not others. This depends on the exact wording of the lease and, of course, the repairs in question.
Parties involved in a dispute about commercial property repairs should seek advice as soon as any dispute arises, and preferably before any substantial claim is received or to be presented.