Full Repairing and Insuring Leases

Frequently a landlord will offer to a tenant what is termed a full repairing and insuring lease. Such as its name suggests the tenant, with only limited exceptions, is responsible for repairing the premises internally, externally and structurally.

One of the most important clauses in a full repairing and insuring lease is the tenant’s repairing obligation. More often than not a full repairing and insuring lease will place an obligation on a tenant to “keep the premises in a good and substantial tenantable condition and repair”. Wording sometimes varies but the obligation on the tenant is often same.

The tenant will most likely be responsible for maintenance and repair of the premises regardless of the cause necessitating that maintenance and repair. Usually the only exception will be damage caused to the premises by an insured risk i.e. a risk that the landlord has insured against in terms of the buildings insurance policy.

The repairing obligation on the tenant is therefore onerous and what a layman may consider to be good and substantial tenantable condition and repair can differ quite substantially to what a court might consider constitutes that.

If you are a tenant considering leasing premises under a full repairing and insuring lease, and particularly if the building is old, you are likely to be advised to have a building surveyor report on the condition of the property. Properties may appear to be in good condition but can in fact suffer defects which only a surveyor may be able to identify. If the surveyor can point out necessary repairs before a tenant enters into the lease then these repairs can either be carried out by the landlord before the lease commencement date or, alternatively, rent may be reduced or a rent free period granted to enable the tenant to carry out the repairs at their cost.

Another option for the tenant would be to agree with the landlord to annex to the lease what is termed as a schedule of condition – again prepared by a surveyor. That then provides a record of the state of condition of the premises at the beginning of the lease. The landlord may allow provision in the lease that the premises can be returned, at its termination, in no worse state of condition and repair than they were when the lease began. This means that any defects which existed before the tenant takes entry are identified and the landlord will not expect these to be repaired during the term, or at the end of, the lease.

Roof repairs are one particular cause of concern for many tenants. When a surveyor is carrying out a schedule of condition they will most likely report on the state of the roof. If significant repairs are required when the tenant enters into the lease, without these being sorted out beforehand, then the tenant could find themselves landed with a heavy repairs bill.

For more information please email Corra Irwin or telephone 01463 239393.

Disclaimer: The information in this publication is based on our current understanding of the law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.