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.

Air conditioners

Summer is on the way and that means hot days when the tenant will turn on the air conditioner, possibly for the first time in many months. What if it doesn’t work?

Of all the equipment generally classed as “Landlord’s plant”, air conditioners seem to cause the most problems. Generally, the issues revolve around responsibility for maintenance and replacement costs.

What if it has just died completely through no fault of the tenants?

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).

If you don’t know what a “capital cost” is you probably need to talk to your accountant, but they are generally thought of as fixed, one-time expenses incurred when purchasing plant and equipment.

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.

Regards

Steve Evans

 

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