This isn’t going to be a “head” piece. This is about the nuts and bolts of repair and maintenance obligations in a lease and is intended for those who make the deals and those who craft the documents. It is only a “teaser” to get all of us thinking about whether our lease forms really have it “right.” It isn’t an encyclopedic piece. If things go well, it won’t be very lengthy.
Here’s a very simple, but incredibly helpful concept. When it comes to repair, maintenance, and replacement obligations, ask yourself two questions: “Who does the work” and “Who pays”? The two answers really aren’t related. Here’s an example. After you read it, think about your lease form and ask if “you got it right.” If a tenant’s truck damages the building’s wall by smashing into it, obviously the tenant should pay for the repair. Based on our reading hundreds and hundreds of lease forms. It seems most common that the tenant should do the repairs. But, in the usual case, that doesn’t make sense. After all, it is the landlord’s building and the landlord is the one who should control the timing, quality, and completeness of the repair. So, why do most leases say that the landlord is responsible for repairing exterior walls unless the damages was caused by the tenant’s negligence, etc., in which case the tenant does the repair? To make it clear, Ruminations clearly and strongly asserts that the two questions, “Who does it” and “Who pays” don’t require the same answer. The considerations are very different, even if in many situations the responsibilities parallel each other.
This horse isn’t dead. Sometimes a lease’s text isn’t written in a direct way. Think about the lease that lists specific repair items for which the landlord is responsible, ending with the carve-out, “unless the damage was caused by Tenant.” In a common approach, that same lease goes on to say: “and Tenant shall be responsible for everything that Landlord is not responsible for.” There we go again, the Tenant is going to repair “big things” that belong to the landlord and about which the landlord has much greater concern.
In the ordinary lease situation, a landlord will take responsibility for a building’s structural elements and the business deal will determine if its tenant will pick up any part of the landlord’s cost to meet that responsibility. But, exactly what are the structural elements of a building? We’re sure many readers know the answer. We’re pretty sure our readers are wrong and we’re certain that those who aren’t “wrong” don’t have all have the same answer. Of course the foundation is a structural element as are pile caps. Load bearing walls are as well, and that’s also not very controversial. What about non-load bearing walls that may separate two demised premises. After all, not all block walls hold the building up. What does your lease form say about them? Is the floor slab a structural element or does it just cover the dirt underneath? Truth be told, it isn’t structural unless it actually provides “strength” or support to the building. So, why not tell the parties (and a court if a dispute can’t be resolved) what you mean by structural? Explain the word “structural” by explaining that you mean foundations, pile caps, floor slabs, exterior walls, interior load bearing walls, columns, beams, struts, ties, plates, joists, trusses, and items of similar character. Ask your architect or engineer to help you with the definition and then add what you meant to include “on top of what is technically structural.”
Common walls separating leased premises from the others or from common areas, load bearing or not, are almost always a landlord’s primary responsibility (to do and to pay). Why not say so? Say that floor coverings and painted or otherwise decorated surfaces within leased premises are tenant’s responsibility (to do and to pay).
Roofs should be the landlord’s responsibility to repair even if the tenant causes the damage, but the lease needs to say who pays for ordinary work. As to the trilogy of maintain, repair, and replace, the agreement as to cost recovery for each type of work need not be bound into a package. Most often, the tenant will agree to directly or indirectly pay for roof maintenance and repairs, but the cost for replacements doesn’t always follow. Tenants don’t always pay for roof replacement and when they do, it isn’t always “all in one billing period.” Most readers already know this about roofs, but do you know what is meant by “roof”?
Are you only thinking about the roof covering, its outer skin, often being a membrane? Or, have you considered the decking or sheathing, the flashings or the gravel or the roof deck or the vapor retarder or the underlayment or the insulation or the joists (or are they structural elements)? Insulation, you say? Do roofs really have insulation? Why don’t I see it? That’s because it is sandwiched between the roof’s skin and the (often corrugated) roof deck. Maybe this isn’t important in your lease because the issue never comes up. Until it does.
This posting would be very long if it tried to be a treatise about “what’s in and what’s out.” And, it would be even longer if it crossed over into what should or should not go into Common Area Maintenance (or Operating) Expenses. Ruminations isn’t falling into that trap this week. This time, our simple goal is to get all of us to re-examine our form leases and look at the “fly over” provisions – the ones we think we know “cold,” but really haven’t thought about. This isn’t a checklist, just a tantalizing sampler. If you have anything to add, by way of example or by way of challenge, please go to the top of this posting and add your two cents.