Repair and Insurance Flashcards
Who is responsible for repair in a commercial lease?
A commercial tenant will almost always be responsible for the repair of their demise
What is the first step in seeing if a commercial lease tenant is responsible?
Look for definition of premises, demised premises, property in the lease
What would commercial tenant be responsible in commercial lease for a lease of whole and lease of part?
- Lease of whole: interior, exterior, structural
- 5th floor: floor and ceiling, but not structure or exterior
Who is responsible for common parts in a lease of part?
The landlord
How does landlord carry out repairs on common parts? What funds it?
They usually recover costs from tenants via service charges
How is a repair obligation set out in a lease?
As a tenant’s covenant
What is a full repairing obligation?
Tenant must maintain / restore premises – so if poor condition at start, tenant must improve them
What is qualified repairing obligation?
Tenant must maintain premises but not restore beyond original condition
What is a schedule of condition?
Photos to record property’s state at lease start
How would a full repairing obligation (FRI lease) be worded?
“To keep the premises in good repair”
How would a qualified repairing obligation be worded?
“To keep the premises in good repair but not improve them beyond their initial condition.”
What is the general rule on a tenant repairing or replacing an item in disrepair?
Unless lease states otherwise, the tenant can choose to do repair or replace
If a tenant leases a whole building, and the roof is in poor condition, does the tenant need to replace it or repair it?
If it’s repairable, they don’t need to replace it. They can just repair it.
What is the difference between repair and renewal?
If a building is so damaged that it needs rebuilding, this is renewal, not repair.
What are inherent / structural defects?
Hidden defects that only become apparent over time
Are tenants responsible for inherent / structural defects?
They are not under a standard repairing obligation
How should a tenant protect against structural and inherent defects?
Ensure that they are excluded from repairing obligations and service charge liability
Who is typically responsible for insurance of a building in a commercial lease?
The landlord is almost always responsible
Who pays for commercial lease insurance?
Landlord usually recovers it from the tenant
How does a tenant pay for insurance of commercial building if they are leasing in part?
They will pay a proportionate share of the insurance premium
What is insurance rent?
Separate from the normal rent, and is payable monthly to cover the insurance
Are insured risks excluded from tenant’s repairing obligation?
Typically, yes
When will a tenant be liable for insured risks?
If tenant’s negligence means insurance is not paid out
