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Landlords of commercial premises can find themselves faced with the situation where, despite obligations under the lease, a tenant fails to comply with repair liabilities. What action is open to a landlord in such cases?
The first issue for the landlord to consider is whether he intends to take action against the tenant whilst the lease is still current or after it has expired. Whilst he has a number of options open to him during the term of the lease, he has only one option available to him after it has expired – damages (or compensation). The following courses of action are some of the options for the landlord to consider.
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Damages
Damages can be pursued both during the term of the lease and within a reasonable time after the end of the lease. Certain statutory limitations apply so that, for example, the landlord can only recover the amount by which the value of his interest in the premises is reduced by reason of the tenant’s breach of covenant. Further, if the claim is made by the landlord at the end of the lease, no damages will be payable if the premises are to be demolished or structurally altered so as to make the required repairs worthless. Landlords should consider applying the Property Litigation Association’s Protocol for dealing with such end of lease damages claims.
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Forfeiture
Amongst the other options for a landlord to consider is the ancient remedy of forfeiture. Most commercial leases contain a forfeiture clause, and the presence of such a clause enables the landlord (in certain circumstances) to bring the lease to an end and take possession of the premises. Forfeiture has often proved to be a controversial remedy for a landlord due to its draconian nature, and it is presently the subject of proposed reforms.
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Order of specific performance
A third option for a landlord is to look for an order of specific performance from the court. In such a case, the court would order the tenant to keep the property in the state of repair as is required by the relevant lease covenants. This remedy is, to a certain extent, untested at present in relation to breach of a repairing covenant. A 1998 case has suggested that there is a possibility of specific performance being available to the landlord in such a situation, but no successful claim has yet been brought.
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Self-help
The final option for a landlord is what is known as “self-help”. This remedy relies on a provision in the lease which provides the landlord with the right (in certain circumstances) to enter the premises, carry out repair works, and recover the costs of doing so from the tenant. The statutory restrictions which apply to damages do not apply in this type of situation. It is important for the landlord, when exercising self-help, to stick closely to the terms of the relevant clause, and it should also be noted that it is open to the tenant to argue that the costs incurred by the landlord are excessive.
This is a brief overview of the types of action open to a landlord, and full consideration, in consultation with your solicitor, should be given to the facts of each case prior to making any decision.
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