Last week I talked about the need for commercial tenants and landlords to build partnerships for mutual benefit.

This week I want to look at how commercial tenants can exercise their rights to ensure the landlord delivers what he or she is required to.

One of our greatest challenges is that the landlord and the tenant’s interests may not be exactly the same. For instance, it makes sense that a landlord is not keen on spending money on a property if he is not going to get an immediate return on the expenditure.

But for tenants, shorter term maintenance and repairs are of the utmost importance and a landlord’s interest in growing his financial asset is not their priority.

As I said last week, the standards you expect as a tenant and as a landlord need to be agreed carefully in a Service Level Agreement.

But what do you do when landlords do not keep their end of the bargain?

A well put together lease agreement will spell out a range of penalties that will apply to a landlord if they are dragging their feet when it comes to carrying out repairs and maintenance. And this can be regarding a range of issues from leaks and air conditioning through to the standard of decoration and fittings in the common areas of a building, lifts, foyers, stairwells, toilets and anything to do with the building’s structure and systems.

The penalties spelt out can start to ramp up beginning with withholding rent, or setting up an abatement, through to a tenant carrying out the required work themselves and deducting it from the rent, and then as a last resort either terminating the lease or taking the matter to court.

Naturally, no one wants these sorts of matters to escalate but they easily can so it is critical that tenants are aware of their rights and the penalties that can apply in their lease.

It is important to let your landlord know clearly when repairs or maintenance are urgent and to spell out your expectations about having the work carried out. There are times when these matters can be critical to the ongoing operation of a business, such as health and safety matters, or as with a case I dealt with recently, standards that impact food hygiene and regulation.

When work needs to be done on a property, the onus is going to fall on the tenant to be proactive, to inform the landlord of what is needed and essentially “keep on their case” and if need be, enact the penalty clauses of their lease.

Making sure leases are specific and acted upon will be of great interest to both tenants and landlords alike in these challenging economic times.

This entry was posted on Tuesday 7th October 2008 and is filed under Property Leasing. Both comments and pings are currently closed.