A full repairing and insuring (FRI) lease is a commercial lease that imposes full repairing and insuring obligations on the tenant, relieving the landlord from all liability for the cost of insurance and repairs. This ensures that the landlord’s investment is heavily protected from costs associated with the property’s upkeep and repair. As a tenant you should be aware of what the landlord can do if you fail to repair the property under an FRI lease.
So what is a “Repairs notice”?
A ‘Repairs Notice’ is a swift and effective tool for alerting the tenant of its contractual duties to repair and maintain the property it rents. The Notice will normally require that a tenant completes works necessary within one to two months.
The formalities of a Notice :
- An inspection before the Notice is served (this is necessary and very detailed);
- Formal service, in the manner specified within the lease;
- A detailed schedule of the defects and requirements needed to put them right;
- A reasonable deadline for the completion of the work; and
- A warning that the landlord can and may enter the property to carry out the works if the tenant fails to do so at the tenant’s cost.
Should the tenant ignore the Notice then the landlord will have a legitimate right to enter the property if the repairs highlighted in the Notice have not been completed in full when the deadline provided elapses. The repairs required must relate to the fabric and structure of the property and/or be a disrepair which adversely affects the value of the landlord’s interest.
So how should the landlord proceed?
The landlord or his contractors may enter the property and commence work as soon as the deadline given has expired. The landlord must pay any contractors out of its own pocket and then recover costs from the tenant as a debt.
Landlords should take care how it prescribes the method of repair. Too much detail could invalidate the notice if the method of repair is not appropriate or goes further than the covenant requires. Additionally the landlord should make reasonable attempts to ensure that this is the best method of repair, this is because it may need to carry out the work if the tenant defaults on the Notice. If the landlord uses a different method of repair the costs it incurs may not be recoverable. Generally speaking the landlord is free to choose which method it wishes.
The landlord may only undertake the work detailed in the Notice. If any new defect is noticed the landlord must issue an additional repairs notice and if the landlord makes good the newly noticed defect it will be doing so at its own irrecoverable cost. However, there is an exception to this rule because a landlord may undertake repairs if they are more extensive than originally thought and detailed within the Notice.
A landlord and tenant should be aware of the fact that:
- Landlords must complete the works within a reasonable time.
- The costs and standard of the work must be reasonable.
- A tenant may refuse entry to the landlord.
The landlord has the right to enter the property and remedy the disrepair. Additionally the landlord is able to control the situation by choosing the standard of repair, what materials and contractor is to be used and by ensuring work is carried out to its surveyor’s satisfaction. If the tenant does not complete the work by the deadline provided, the landlord will need to arrange all the practical aspects of the works required. The landlord must carry out the works then recover the costs which could be delayed should the tenant dispute the nature of the works required. The landlord could be liable for damages if it does not follow the procedure correctly or if it exceeds its right of entry.
A tenant should inspect and assess the potential repair costs before signing a lease. A prospective tenant should insist on the lease having a term which unambiguously states that as a tenant it will not be liable for any defects or repairs required on the commencement date of the lease. Additionally a prospective tenant should insist on a schedule of condition to support the requested lease term. This action will protect the tenant from having to leave the property in better condition than it was at the start of the lease.
If a tenant refuses to grant the landlord access to the property, the landlord will require an injunction from the court to prevent the tenant from denying it access. The court will take into account the nature and seriousness of the defect(s), the landlord’s reasons for wanting to undertake the work, the tenant’s reason for refusing access, the likely effects on the tenant of carrying out the work, the likely consequences of not carrying out the work and the anticipated damage to the landlord’s interest.
For more information, contact Anna Duffy, head of property.