The repairing covenant or ‘repairing duty’ transfers to the tenant the legal obligation to repair part or all of a building which is not his. Whether the lease is long or short, that is its purpose. So it is no good the tenant whining that it is not his building, or that he is only there for a short time. As we shall see, the true cost of the lease is the repairing covenant, and it is of course a potential mantrap.
So, when you consider your repairing covenant look for two things:
- SCOPE: what is its geographical extent – where does it stop?
- QUALITY OF FINISH: to what standard must the tenant carry out ‘repairs’ - make do and mend or completely replace?
Scope
In the definitions section of the lease you should find the following terms: ‘The Building’, ‘The Property’, ‘The Demise’ and ‘The Common Parts’.
The Building usually (but not always) is the physical bricks and mortar the landlord owns or himself leases.
The Demise is that part let to the tenant, often described as ‘the Property’.
The Property (whether or not the Demise) will be that part of the Building over which the tenant may have repairing obligations.
The Common Parts are those parts falling outside ‘the Demise’, but over which the tenant is given certain rights – eg the staircase. His repairing obligations may also extend to the Common Parts.
So, ask your solicitor to specify how far the covenant extends. Check that the part for which the tenant is liable to repair is known and limited. It ought to be (but may not be) the part let to the tenant.
If you are uncertain, in your pre-signing correspondence ensure that ‘the term Property shall mean only that part of the Building that is let to the tenant.’ Ideally, ask for the lease to be amended to state this. If the landlord will not agree, then, at least, you have been alerted to the problem.
Quality of Finish
If a repairing covenant uses language such as ‘keep in good repair’ or ‘put in good repair’ or ‘maintain’ then (unless there is something in the lease which contradicts this) a court will interpret these words as a duty is to keep those parts in good, safe, and tenantable condition.
What that means is that if something within ‘the Property’ or ‘the Demise’ is not in good repair then the tenant is under an obligation to return it to good repair even if this means an improvement on what was there.
And do not think that the Schedule of Condition (SOC) provides a safety net. The SOC simply shows visibly the state of decoration to which the premises should be returned. It is irrelevant to the question of whether the tenant should or should not replace the wiring.
Example: Ted takes a 10 year lease of the middle floor of a Victorian building as his offices. The lease places a duty on the tenant to ‘keep the property in good repair’. Two years before the end of the lease Ted’s electrician says the wiring is not safe, condemns it and says his floor should be completely rewired. Ted complains to his landlord Lewis who says helpfully, ‘Yes. Well, there it is.’ Ted’s solicitor, Sid, advises him that since the electrical circuit is not outside ‘the property’, and since there is no other clause transferring liability for electrical works to the landlord, Ted is liable to carry out the work. Not unreasonably Ted thinks: ‘Why didn’t you point this out?’
Tip
Prior to signing, whether by side letter or amendment, seek the following: A-O-C-S-I
- ALWAYS reject a full-repairing covenant.
- Offer at most only an internal-repairing covenant.
- Clarify its scope – restrict it to the part that is let.
- Specify what will fall outside its scope: roof, plumbing and electrical wiring.
- Impose a quality clause. Eg: ‘Save for redecoration, it shall be a sufficient discharge of the repairing covenant for the tenant to return the premises in the condition in which they were let’.
Service Charges: A Repairing Covenant by the Back Door
It is not much good for Ted to have the repairing covenant qualified as above, only to find the landlord is able to make the tenant pay for the same works under the Service Charge clause.
So make sure that whatever qualification you impose on the repairing covenant applies also to the Service Charge clause.
EG: “Save for repeated services supplied to the tenant (such as cleaning, security services, fire alarms etc) nothing in the Service Charge clause shall permit the landlord to recover an item of repair which he would not be entitled to recover under the repairing covenant.”
And make sure any side letter is expressed so as to qualify the lease. Eg: “Where there is a contradiction between this side letter and a term of the lease then the term shall be interpreted in conformity with the meaning given in the side letter.”
