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In brief – Industrial leases need to be drafted
carefully
A landlord may be liable for excessive costs for repairs which
may be required as a result of the tenant's conduct. When a
landlord and tenant enter into a lease for premises, the landlord
may believe that the lease provides that the tenant is liable for
all repairs.
However, depending on the way that the lease was drafted, this
may not be the case. This may apply particularly to specific repair
and maintenance obligations in the lease.
What are the usual repair and maintenance obligations?
Most leases provide for specific obligations on the tenant to
repair and maintain the premises, including any damage that the
tenant causes to the premises except to the extent of "fair
wear and tear". This also includes repair and maintenance of
the landlord's fixtures, fittings, plant and equipment supplied
in the premises.
The tenant is not liable to repair or maintain any structural
elements of the premises as they are the landlord's
responsibility, unless the damage has been caused by the
tenant's negligence or use of the premises.
Landlord sues tenant for damage to hardstand and common
property
In
Konstantopoulos v R & M Beechey Carriers Pty Ltd [2011]
NSWCA 388, there was a licence provision in the lease which
allowed the tenant exclusive use of a concrete hardstand
surrounding the premises. There was also a non-exclusive use
entitlement by the tenant to use the driveway which was common
area.
The landlord sued the tenant for a substantial amount for
repairs to the hardstand and common property, claiming that the
damage to these areas resulted from the tenant's use of a heavy
forklift to transport, load and unload heavy containers.
Lease permits use of forklift to load and unload shipping
containers
Prior to entering into a lease, the parties must give thought to
the repair obligations and also to the permitted use of the
premises. In this case, there was a clause which provided that the
landlord acknowledged the tenant's permitted use of loading and
unloading of shipping containers by the use of a forklift and that
the landlord would accept any damage which required repair to the
concrete hardstand that fell within the reasonable fair wear and
tear category.
There was another provision in the lease that the tenant would
maintain and repair the hardstand area, having regard to the state
of repair at the commencement date of the lease.
The landlord was adamant that the repair was not a fair wear and
tear exception and that the hardstand area had been damaged by the
tenant.
The court took the stance that as the use of the forklift was
permissible under the lease, the landlord's claim for damages
for repair and maintenance to the hardstand area could not
succeed.
Leases should specify the type and weight limit of heavy
equipment
Where the permitted use may be for the purposes of a warehouse,
is an industrial use or the landlord is aware that heavy equipment
will be brought onto the premises, then a landlord must consider
what equipment will be brought onto the premises by the tenant.
The landlord must ensure that specific drafting is included in
the lease setting out the weight limit of equipment that can be
brought onto the premises and who will be liable if there is
damage.
This will avoid a landlord being liable for repair and
maintenance resulting from equipment on the premises which has
caused damage that is not fair wear and tear, but where it is a
reasonable incidence of the permitted use.
Communication and documentation can help avoid disputes
A tenant must communicate with the landlord and specify what
items will be brought onto the premises. The tenant also needs to
let the landlord know if this changes during the term of the
lease.
It is also prudent for the parties to carry out a condition
report of the premises prior to the tenant's occupation of the
premises.
Ultimately, however, there is a fine line between damage caused
to the premises by a tenant on the one hand and the premises
requiring repair and maintenance due to fair wear and tear on the
other.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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