Leases commonly assign maintenance, repair, and replacement liabilities to one party or the other, as they should. Just as commonly, as to items for which the landlord takes responsibility, leases deal with the consequences of a repair or replacement needed because of something the tenant has done wrong. In some cases, the responsibility for doing the work shifts to the tenant; in others, the landlord still has to do the work, but the tenant has to pay for that work.
This is a good place to make a few points about the relatively simple observations made thus far. So, before proceeding further, here are some thoughts. First, a key point that a lease needs to cover are these three responsibilities: maintenance, repair, and replacement. They do not have to be assigned as if they were co-joined obligations. A party can be responsible for doing one, two, or all three. Second, the party that does the work doesn’t have to be the party that pays for the work. Simply stated, “who does the work” and “who pays for the work” are separate concepts and must both be described in the lease. [Here is an old blog posting that expands on that thought: CLICK HERE:] Third, there are some kinds of work, usually major things, that a landlord should always do even if necessitated by misuse of the property by the tenant. By example, when it comes to a roof repair or replacement or a structural repair, the landlord has a greater interest in how the work is done than does a tenant without an investment interest in the property. Of course, there are some exceptions, such as where the tenant is sophisticated, technically competent, and generally reliable. Fourth, a lease should establish what “the tenant did something wrong” means. [Read more…]
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There are lots of comfortable phrases and concepts we all use without ever thinking about what they really mean or how they play out. One example is the well-worn formulation: “ordinary wear and tear excepted.” We see it all the time. Everyone writes it into their leases (and often into property acquisition contracts). To be sure, there are variations. One example is: “wear and tear, damage by fire or damage from any other cause covered by … insurance excepted.” Another is: “fair wear and tear and … excepted.” Regardless of how many words are used with any of these approaches, they all rely on the meaning of “wear and tear.”
There are general categories of “insurance.” One is “life and health.” The one we care about is property and casualty,” the industry shorthand for which is: “P&C.” For those of us in this business, the “P” means commercial property insurance. That makes the relevant insurance “commercial general property” insurance. Let’s use that name.
No lease can be written that will answer every post-damage question that will arise. The “law” (whatever that is) provides some gap fillers, but not many. That’s because much of the case law concerns itself with answering epistemological questions – that is, “analyzing the nature of knowledge and how it relates to truth, belief, and justification.” Courts try to divine: “what would the parties have agreed-upon had they known this post-damage question would arise.”
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