For commercial property leases

Some 'repair and maintenance' obligations are ongoing throughout the entire life of the lease, while other 'reinstatement' obligations only kick in when the lease ends.

Maintenance obligations during the lease

A lease will commonly require a tenant to maintain the premises in the same condition as the premises were in when the lease first commenced (excepting fair wear and tear from reasonable use) and to repair any damage which occurs from the tenant's careless use of the premises.

A tenant may have other obligations under a lease which are only triggered if the landlord has reasonably requested that the tenant carry out work. For example, a lease may state that a landlord can require a tenant to replace floor coverings or repaint the interior of the premises if such redecoration is 'reasonably required'. Some leases may require that the premises is redecorated to a certain standard at regular agreed intervals.

If a tenant hasn’t kept up with their ongoing maintenance and repair obligations, then the landlord can require that these breaches are completed before the tenant is released from liability under the lease.

Reinstatement obligations at the end of a lease

Leases will then usually contain further obligations which only take effect when the lease ends including a requirement to remove any additions, alterations, signage, fixtures, fittings and chattels.

It is important to remember that the lease end reinstatement obligations go beyond just removing the tenant's items and leaving the premises clean and tidy. For example, if the tenant has erected partitioning walls, or installed any racking which has been bolted to existing walls, then the landlord can require that the walls, or the racking, are removed and the surfaces reinstated.

Premises condition reports and fixtures and fittings lists

The requirement for a tenant to yield up the premises in the same condition it was in when the lease first commenced can lead to disagreements, particularly if the lease has run for a long time and there is no clear evidence as to how the premises used to look.

These sorts of arguments can be avoided if the parties sign off on a comprehensive premises condition report and attach it to the lease when it is first signed.

Leases should also contain a detailed list of which fixtures, fittings and chattels belong to the landlord (and must therefore stay when the lease ends), and which belong to the tenant (and may have to be removed when the lease ends).

Reaching a financial settlement in lieu of carrying out the reinstatement work

Sometimes, rather than carrying out the reinstatement work, it may suit the parties’ circumstances better to negotiate a financial settlement. In these cases, a dilapidation report may be needed to determine what payment would be fair.

Seek advice early

If your lease is ending it is important that you seek legal advice on what the reinstatement obligations are as early as possible so that you can plan accordingly.

Alternatively, if you are negotiating a new lease then a lot of the uncertainty around reinstatement obligations can be avoided if the lease is correctly drafted so the parties are clear on how the premises must be left.