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Repair Obligations and Full Repairing & Insuring Leases

Before you agree to a ‘full repairing and insuring lease’ do you actually know what this means? Have you considered the options for limiting your repair liabilities under a lease?

Before you agree to a ‘full repairing and insuring lease’ do you actually know what this means? Have you considered the options for limiting your repair liabilities under a lease?

Ideally once a landlord has leased a property to a tenant the landlord would like nothing more to do with the property except collecting the rent.  For this reason, whenever the property is a stand-alone building with no shared facilities, the landlord will want to lease it on what is known as a full repairing and insuring (FRI) basis.

What is a full repairing and insuring lease and should I accept it?

A lease granted on an FRI basis means that all repairing and insuring obligations are imposed on the tenant, relieving the landlord from all liability for the cost of insurance and repairs. In other words, the tenant has to keep the property in repair, pay for those repairs, keep the property insured and pay for that insurance.

Whether or not a full repairing and insuring lease is appropriate from the tenant’s point of view will depend on many factors including the length of the lease, the type and age of the property and the negotiating positions of the tenant and the landlord. It may be that, due to the market, you have no option but to accept an FRI  lease.

For more information on repair obligations and full repairing & insuring leases

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email geoffrey.cotterill@everymanlegal.com

If the owner of the property will not grant you a lease without full repair obligations consider some of these options in order to limit your repair liability under the lease:

1. Commission a building survey to check the current state of repair of the building.

2. If problems are identified ask the landlord to rectify these before you take a lease of the property.

3. If this is not reasonable or practical, or if the landlord says no, then specifically exclude the defects from your repairing liability under the lease.

4. Limit your repairing obligations with a Schedule of Condition. This is a photographic and descriptive record of the state of the premises at the start of the lease so that you do not have to return the property in any better condition than it was originally.

5. Exclude liability for inherent defects and fair wear and tear.

What will my obligations be if the building or estate is shared with other tenants?

In cases where the landlord has no alternative but to get involved with the management of the property because the property has shared facilities (e.g. because it is a flat in a building, or a unit on an estate) the landlord will seek to recover all its costs of managing those common areas by granting the lease on a virtual FRI basis – this means that the lease will contain some sort of service charge to cover those costs that are not the tenant’s direct responsibility.

What other obligations under the lease are important for me to consider and why?

A tenant’s obligations under a lease can cover a wide variety of subjects.  In addition to repair, they can deal with the use to which the premises can be put and whether the lease or the occupation of the property can be transferred to someone else.  Whatever the obligation, what they all have in common is that they have to be strictly complied with.  For example, to keep the property “in repair” means essentially to put it into perfect order and keep it that way.  If the lease says the tenant may not transfer the lease or sub-let it, then in the absence of a specific clause allowing early termination, there will be no way to end the lease before the end of the lease term.  If the lease is for 25 years, this can be a problem.  At its most extreme, these rules of strict construction means that if the lease says you must notify the landlord of something on a green-coloured piece of paper and you do so on a yellow-coloured piece of paper, then the courts will hold that you have failed to comply with your duties under the lease.

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What if I fail to comply with my obligations under the lease?

Failure to comply with the obligations under a lease can have serious consequences for a tenant.  The tenant can be sued for the cost of the landlord doing itself what the tenant should have done in the first place and any damages that results from the failure.  At its worst the landlord can take the lease back and rent the property to someone else.  Although there are legal protections for a tenant, they are often at the court’s discretion – which the court will not exercise in favour of a tenant that is just breaching its obligations without concern.

So – the key is getting the terms of the lease right during negotiation!

In order not to fall foul of your obligations under a lease ensure that when negotiating the lease you are aware of what you are committing yourself to do and do not accept an obligation that you cannot or do not want to comply with.  Tenants should also be aware of unusual obligations that are onerous in effect.  A Court will not refuse to enforce an obligation just because it is unfair!

For more information on repair obligations and full repairing & insuring leases

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email geoffrey.cotterill@everymanlegal.com