Full Repairing and Insuring Leases
What is a Full Repairing and Insuring Lease?
A Fully Repairing and Insuring (“FRI”) lease places the onus of any and all repairs to the exterior, interior and to the structure of the property on to the Tenant of the property on the commencement of the lease. The Landlord will provide such leases with clauses containing a provision for the repairs of the property, however such clauses may be to the detriment of the Tenant, especially where the commercial property is already quite dated and/or in a state of disrepair. It is important to remember that the issue with the exterior, interior or the structure of the property does not necessarily have to be caused by something that the Tenant has done for the Tenant to be liable under a FRI lease.
Another facet of a FRI lease is that they will commonly impose upon the tenant a clause requiring the tenant to return the commercial premises in the same state as it was provided to them when their tenancy commenced.
As a Tenant what can you do?
In circumstances where the Landlord of a property is seeking to impose a FRI lease on to the Tenant, the Tenant should aim to seek professional legal advice from his or her solicitor as soon as possible before signing any lease.
Where the condition of the property is questionable or if there are any doubts as to the condition of the property before completing on the lease, it is advisable for the tenant to seek out an independent surveyor who can provide a surveyor’s report. A surveyor’s report will check the premises for any defects and can be utilised as an important bargaining tool in possible rent negotiations or to attain other benefits such as shorter break clauses or fewer rent reviews.
The surveyors report may also be used to cover the tenants back to prove the state the premises was received in. In some circumstances the Tenant’s solicitor will be able to incorporate the surveyors report as a part of the lease to assist the Tenant and a surveyor’s report will almost certainly provide an indication to the Tenant as to whether the premises is fit for purpose and whether it is worth proceeding with the tenancy in any case.
Issues facing Tenants
As a commercial tenant bound by a FRI lease, there are a number of unforeseen circumstances and clauses that could cause potential issues during your tenancy.
One such clause may be an obligation placed upon the tenant to reinstate the property in to the condition that it was in when the tenant’s lease commenced. This may be an issue for varying reasons, one of which may be due to the amount of work that the tenant has put in to the premises during the lifetime of the lease.
Schedule of Dilapidations
Another issue could be that the tenant is bound by obligations in relation to dilapidations. Dilapidations refer to the disrepair of the premises and the onus placed on the tenant to repair, or pay for the correction for the repairing of any faults or works required to repair the premises. At the end of commercial tenancy it is not uncommon for the landlord to have produced a schedule of dilapidations by a surveyor, often payable by the outgoing Tenant, which then lists works to be carried out to repair the premises and payable by the Tenant. It is not uncommon for the schedule of dilapidations to show repairs in the tens of thousands of pounds. It is imperative that you have a legal representative to assist you with dealing and negotiating with the Landlord to prevent such a circumstance taking place.
A good commercial lawyer will ensure that the tenant is protect under the lease before any of the above can become an issue and to ensure that the tenant is fully aware of his or her obligations under the lease so that the tenant is able to stay on top of any possible defects that need remedying to the commercial property.
Where we come in
At Fitz Solicitors we are experienced in dealing with commercial properties and commercial tenants who want to take premises which is subject to a FRI lease. We can explain the details of the lease in a manner which suits our clients and which can assist in our clients’ receiving any unexpected surprises once their lease comes to an end.
If you are faced with any of the issues discussed above, then please do not hesitate in contacting our solicitors at Fitz Solicitors, who will be happy to discuss any issues you may have in relation to FRI leases, or any commercial property query, on 01753 592 000 for a no obligation consultation.