Keeping our clients informed is important to us so we regularly publish our thoughts on topics that will be of interest to anyone involved with commercial property. We call them ‘insights’ and we hope you find them of interest.
Of all the equipment generally classed as “Landlord’s plant”, these seem to cause the most problems. Generally, the issues revolve around responsibility for maintenance and replacement costs.
So here is what we know:
-our Leases provide that the air conditioner is the property of the Landlord (unless stated otherwise);
-the Landlord can choose to be responsible for servicing and maintaining the air conditioner and pass the costs on to the Tenant (except for capital costs);
-the Landlord can choose to pass the responsibility for arranging servicing and maintenance on to the Tenant.
Most of the problems seem to arise when air conditioners have not been serviced or maintained regularly or have just got so old that they have stopped working.
Generally, the reason that they have not been serviced or maintained properly is that the Landlord has left it up to the Tenant who has not done it, for whatever reason.
One solution is that, as a Landlord, you take responsibility for arranging the maintenance with a reputable company and then pass the cost on to the Tenant. Don’t just leave it up to the Tenant and hope they do it.
What if it just dies completely?
If it was working when the Tenant moved in, then they are entitled to expect that the Premises will continue to be supplied with a working air conditioner. In this case the Landlord has no option but to replace it and the Landlord cannot pass the cost on to the Tenant (the Retail and Commercial Leases Act specifically stops you passing on “capital” costs).
Don’t know what a “capital cost” is? You need to talk to your accountant.
Obviously, if the Landlord and the Tenant have agreed on something different to the above, we can put it in the Lease as a special condition. However, we cannot override the Act even if both parties agree.
As always if you have any questions, please let me know.
RECEIVE INSIGHTS TO YOUR INBOX
- Changes to the Retail and Commercial Leases Act - July 2020
- Code of Conduct "Leasing Principles"
- Why would you give a tenant a Right of Renewal?
- Air Conditioners
- CPI% v 3% fixed increases
- Monthly Tenancies - BEWARE
- Default Interest on late Rent payments
- Registration - How we approach it
- A Business name as Lessee?
- What if a tenant stops paying rent?