Repairs and maintenance clause: who fixes what in a lease

Sample clause

a retail lease in Victoria between Paperbark Investments, a fictional owner of a shop in Mildura, and Greenhouse Grocer, a fruit and vegetable shop with a landlord supplied cool room

11. Repairs and Maintenance 11.1 Paperbark Investments must maintain the structure of the Premises, the Landlord's fixtures, the cool room and air conditioning plant, and the gas, electricity, water and drainage services it provides, in the condition they were in at the Commencement Date, except where the need for repair arises from the Tenant's misuse. 11.2 Greenhouse Grocer must keep the Premises clean and in good order, fair wear and tear excepted, and repair any damage it or its customers cause. 11.3 The Tenant must notify the Landlord in writing as soon as practicable of any damage or defect. 11.4 If an urgent repair that is the Landlord's responsibility substantially affects the Tenant's business and the Landlord does not arrange it despite the Tenant's reasonable efforts, the Tenant may arrange the repair, must give the Landlord written notice of the repair and its cost within 14 days, and is entitled to be reimbursed the reasonable cost. 11.5 The Landlord may not recover the cost of a repair under clause 11.4 as an outgoing.

Sample wording, not legal advice.

Variants

What to negotiate

• Repair or replace

  The expensive argument is whether an old item that fails is repaired, which a tenant may carry, or replaced, which is usually a capital cost for the landlord. A clause that makes replacement of plant at the end of its working life the landlord's responsibility, and routine servicing the tenant's, removes most of that argument.

• The urgent repairs procedure

  Tenants want the right to fix an urgent failure themselves and be reimbursed. Landlords want to be told first and to choose the contractor. A procedure that requires notice by phone and in writing, a short response time and then a right for the tenant to act gives both sides what they need.

The risk of leaving it out

Without a repairs clause the parties fall back on statute and implied terms, which for a Victorian retail lease already put structure and plant on the landlord, but leave the details of reporting, servicing and urgent repairs undefined. In a lease outside the Act the gap is larger, and a major plant failure can become a dispute about who owns the problem.

The Victorian retail lease split

The Retail Leases Act 2003 (Vic) makes the landlord responsible for maintaining the structure of the premises, the fixtures, the plant and equipment, and the landlord's appliances, fittings and fixtures for gas, electricity, water and drainage, in the condition they were in when the lease began. The landlord is not responsible where the repair arises from the tenant's misuse, or for items the tenant may or must remove at the end of the lease. Capital costs of the building and plant cannot be passed to the tenant as outgoings. The Victorian Small Business Commission notes that the Act overrides lease provisions that conflict with these duties.

Who fixes what, item by item

A practical split for a shop gives the landlord the roof, external walls, structural floor, main switchboard, hot water system, landlord supplied air conditioning and cool rooms, and the replacement of any of them. The tenant takes cleaning, light globes, internal painting during the term, its own fit out and equipment, damage caused by its staff or customers, and the removal of rubbish. Items that sit between the two, such as grease traps or shopfront glass, are worth naming in the clause rather than leaving to argument.

Where it sits in a generated document

A generated lease numbers repairs as its own clause, with the landlord's obligations, the tenant's obligations and the urgent repairs procedure as separate sub clauses. The generated draft does not cite sources, so statutory repair duties for the state are confirmed before the lease is signed.

Documents that carry this clause

Commercial lease agreement template with outgoings and fit out termsA retail lease is decided by three numbers and two clauses: the rent, the review, the outgoings, the fit out contribution and the make good. This 12 page Victorian lease sets all five out in the open, including the outgoings the landlord is not allowed to recover at all.Residential lease agreement template for a New South Wales fixed termA residential tenancy is the one agreement where most of the terms are set by statute rather than by the parties, so the useful part of a template is the additional terms and the numbers. This one is a 12 month New South Wales fixed term at $560 a week, with the bond, the entry notice periods and the break fee written out exactly as the Act sets them.Farm lease agreement template with grazing rights and a fencing tableA grazing lease is a bet on country, and the two things that decide whether it was a good one are the stocking rate and who fixes the fence. This three year lease over 240 hectares caps stock in dry sheep equivalents, ties ground cover to a measurement twice a year, and puts every improvement in a table with a name beside it.

Questions people ask