If you deal with property management, you’re probably familiar with the tension that can arise between landlords and tenants when it comes to repairing and maintaining a property. The problem occurs when neither party is willing to pay for the repairs, especially when they refuse to take responsibility for the cause of the issue. This situation often leads to an impasse, with the landlord and tenant refusing to budge.
Both parties have obligations and rights outlined in the lease, so it’s essential to understand what these are and how they relate to property repairs. Here’s what you need to know about paying for repairs under a commercial lease:
All About Commercial Leases
A commercial lease is a lease over an industrial, retail, or commercial property. It is an agreement between the landlord or lessor and the tenant or lessee. Commercial leases often have longer terms than residential leases, where obligations of each party are set out in detail. The contract helps determine who is responsible for a particular aspect, such as paying for repairs. For this reason, both parties must review the agreement carefully and agree on each provision to prevent conflict from arising.
What Does the Law Say?
Australia doesn’t have specific laws concerning the party responsible for paying for repairs under a commercial lease. The commercial lease agreement is sufficient for detailing these obligations, as it must have provisions that state who is responsible for paying for certain types of repairs and maintenance of the premises.
The Types of Repairs
Commercial lease agreements often differentiate between general and structural repairs. The tenant usually handles general repairs, which qualifies as work that involves more than reasonable wear and tear. For instance, if the tenant wants to hang paintings inside the property, they must pay for repairs if they put holes in the walls. Generally speaking, tenants are in charge of repairing the property’s fixtures, walls, and floors. If something requires urgent repair, they are obligated to inform the landlord right away to address it.
Meanwhile, structural repairs are related to the building itself, such as its foundations and support system. The landlord is typically responsible for maintaining and repairing the building’s structural aspects, like roofing, lifts, and common areas. Regardless, the commercial lease agreement must be specific about what classifies as general repairs and structural repairs. Without a clear definition, problems are more likely to arise. The agreement must also be clear about who is responsible for repairing and maintaining appliances like air conditioning units, heaters, and plumbing.
Who Is Responsible for Paying?
Typically, the tenant is responsible for paying for general maintenance and repairs that exceed wear and tear, and especially if something requires repairs due to their negligence. The landlord is accountable for structural repairs and maintenance. However, this ultimately depends on what is specified in the commercial lease agreement.
To prevent disputes from occurring, you’ll want to conduct a full inspection of the premises before signing the lease agreement and publish a report, which must state the maintenance standards that either party must carry out. It should also detail what classifies as reasonable wear and tear and deterioration. A property management firm can help you document the state of the property before its occupancy.
Figuring out who is responsible for paying certain repairs can be challenging, which is why a comprehensive, detailed commercial lease agreement is essential. Having one in place will eliminate much of the issues that plague landlords and tenants, paving the way for a positive relationship.
Own Better is one of the best property management companies in Sydney and the strategic partner of choice of high net wealth property owners. We are the single point of contact for your property needs, using our decades of experience to provide you with top-quality management of your assets. Contact us today to find out more about what we can do for your property!