Landlord / Tenant Duties Regarding Repairs & Casualties

During the term of a lease, many things can happen to the rental accommodation, ranging from plumbing issues, such as, minor water leakage to major fire damage.

The Standard REBNY commercial office lease addresses the duties and obligations associated with the above happenings, with events requiring relatively minor repairs being dealt with in Article 4, the ‘repair’ clause; while major casualties are addressed in Article 9, the ‘destruction’ clause.

For the most part, these clauses have been interpreted more to the benefit of landlords, although occasionally the latter have been left exposed to possible liability. For example, a tenant should be conscious of the fact that:

1. When ‘repairs’ have to be carried out, the tenant may have to endure considerable business interference, as well as, could specifically be denied any rent abatement; and
2. In cases of ‘casualty’, the tenant may find the landlord has chosen to terminate the his / her lease that may be of immense value to him / her.

Repairs:

Article 4 provides, in brief, that:

• A landlord shall and is responsible for maintaining the exterior of the rental premises;
• On the other hand, the tenant shall and is responsible for maintaining the leased premises; and
• If, the landlord carries out repairs to the rented premises, the tenant is not eligible for abatement in rental charges.

The no-rent-abatement clause of Article 4 specifically cross-references the destruction clause of Article 9, under which a tenant may be eligible for abatement in rent. In practice, it is difficult to define the boundary between Article 4 and Article 9. Thus, in one litigation case, the Court held that Article 4 did not apply, as severe water damage to the premises had made the premises uninhabitable, therefore, the tenant was entitled to rent abatement, even while, the landlord was required to repair the water leaks at his / her expense.

Casualty

In the event, rental premises are damaged and uninhabitable due to fire, flood or other accidental destruction, is the landlord entitled to terminate the lease? Is he / she obligated to rebuild the building? The answer to these questions depends on the severity of destruction.

Under the standard Article 9(a): If demised premises are partially damaged or rendered partially uninhabitable, a landlord is obligated to make all necessary repairs at his / her expense, and rent, until such repairs are substantially completed, shall be allocated from the day of the casualty, according to the usable premises.

A landlord’s contract to restore leased property, if it should become uninhabitable applies to damage from accidental causes, but not to the effect of ordinary wear and tear or due to the neglect or fault of the tenant.

According to Article 9(b), for demised premises completely damaged or rendered absolutely unusable, the tenant will have to pay rent up to the time of the casualty, and thereafter, cease until the date when the premises have been repaired and restored by landlord. However, the landlord retains the right to choose not to restore the premises, if the building has been seriously damaged; preferring instead to demolish or rebuild it, the lease thereby can be terminated. In order, to terminate the lease, written notice must be given to the tenant, provided it is provided within 90-days of the casualty, and specifies the end date of the lease.

Accordingly, from a tenant’s perspective, he / she stand to lose a valuable leasehold interest, if the landlord opts for termination of the lease. However, the law says if the landlord complies with the notice provision, then Article 9(d) is enforceable, despite being unfair to the tenant.

But, unless a landlord provides timely written notice terminating the lease, he is obligated carry out all necessary repairs and restorations to the premises, and on his / her part the tenant is compelled to cooperate with the landlord’s restorations by removing all salvageable and movable possessions from the premises. The tenant’s liability to pay rent recommences five days after receiving a written notice from the landlord stating the premises are ready for occupation.

To avoid any litigative issues that may arise from such situations, landlords must carefully select and screen prospective tenants. For help in suitable tenant selection, visit www.e-renter.com for tenant screening and background check services, the best and only way to prevent expensive litigation, penalty charges or property damage.