Repairs and maintenance
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When it comes to repairs and maintenance on retail premises, there can sometimes be confusion about who is responsible for what. Both parties need to know their legal obligations and what they need to do when maintenance is required.
Repairs and maintenance are a landlord’s responsibility under section 52 of the Retail Leases Act 2003 (the Act). You need to be aware that if your retail lease includes provisions for repairs or maintenance, the Act will always override them.
The landlord is required to maintain the following items in the same condition as when the lease was entered into:
- The structure of the premises (i.e. the walls and the roof)
- The fixtures in the premises (i.e. items belonging to the landlord, such as built-in shelving)
- The plant and equipment at the premises (e.g. the air conditioning system)
- The appliances, fittings and fixtures provided by the landlord under the lease and relating to services such as gas, electricity and water (i.e. powerboards, water pipes and the hot water system)
The landlord is not responsible for maintaining those items if:
- the need for the repair arises out of the tenant’s misuse of that item
- the tenant is entitled or required by the lease to remove the item at the end of the lease.
Compensation for loss or damage
The landlord has various obligations under section 54 of the Act.
These include being liable to pay the tenant reasonable compensation for loss or damage to the premises (e.g. water damage caused by a leaking roof) if the landlord (or person acting on behalf of the landlord) doesn’t rectify the defect as soon as practicable.
The exception is where the defect is because of a condition that the tenant would reasonably have been aware of when entering into or renewing the lease, or accepting a lease assignment.
Damage to the premises
Under section 57 of the Act, if the premises is damaged and the tenant didn’t cause the damage (e.g. damage caused by fire or storms), then they’re not liable to pay rent or outgoings for the period of time that they can’t use the premises.
The amount the tenant isn’t liable to pay is in proportion to the extent to which they can’t use the premises.
If the landlord notifies the tenant that they reasonably consider it to be impracticable or undesirable to repair the damage to the premises, the landlord or tenant can terminate the lease, provided they give at least seven days’ notice in writing to the other party.
If the landlord doesn’t repair the damage within a reasonable period of time after the tenant asks the landlord in writing to do so, the tenant can terminate the lease, provided they give at least seven days’ notice in writing to the landlord.
The tenant is responsible for keeping the premises clean and in good order, subject to ‘fair wear and tear’ over the term of the lease.
Loss or damage to the premises
After there has been loss or damage to the premises, the tenant must notify the landlord in writing as soon as practicable. For information on the tenant’s rights to compensation, see our guidance on the landlord’s responsibilities.
The situation: A tenant had leased premises for several years. They used the space to produce cakes and bakery products. The premises included a cool room that was critical to the operation of the business.
The compressor to the cool room stopped working. A technician told the tenant that the compressor was beyond repair and would cost $7000 to replace. The tenant agreed, and a new compressor was installed.
The tenant sought full reimbursement from the landlord. The landlord refused, arguing it was the tenant’s responsibility to maintain and repair the compressor.
The process: The dispute progresses to mediation with the VSBC. At first, both parties refused to negotiate. The tenant wanted to be repaid in full. Meanwhile, the landlord argued that the compressor had not been kept in good repair.
It emerged during mediation that the compressor was more than 20 years old and at the end of its functioning life. The landlord offered to pay the tenant $5000.
The tenant was willing to accept $6000 to end the matter. But neither party would negotiate further.
The resolution: The mediator proposed an option whereby the landlord offered the tenant a rent-free period, with a value of $6,000, by way of reimbursement. Both parties agreed.
Leasing rights and responsibilities
For more information, see our hub of guidance on leasing rights and responsibilities.
For help in getting started, you can speak with a member of our team by calling 13 8722 or emailing us.