Who is responsible for repairs needed on a commercial rental?

In residential real estate law, issues regarding repairs and maintenance to the property are relatively simple and straightforward. For the vast majority of cases, the landlord is responsible for all major maintenance and repairs. Typically, there is a requirement that the tenant inform the landlord of necessary work in a timely manner.

Tenants may have to pay for maintenance or repairs if they are responsible for any of the damage. However, barring damage that results from negligence regarding reporting on the behalf of the tenant or abuse of the premises by a tenant, the landlord will be the one paying for issues that arise.

Commercial tenants do not have the same straightforward right. Instead, many commercial leases assign some responsibility for maintenance and repairs to the tenant. Depending on the nature of the facility, the landlord may have very little or no requirement to make repairs or changes to the property.

Commercial leases outline maintenance responsibilities

One of the significant differences between a commercial real estate lease and a residential lease is that a commercial lease will outline the exact maintenance responsibilities of the tenant. In some cases, when there is shared property or space, such as a parking lot used by multiple tenants, the landlord has maintenance responsibilities for the shared area.

Other times, tenants may have a shared responsibility for those costs. Common area maintenance fees, call CAM fees, paid monthly may offset the cost of those repairs and maintenance. Ideally, you reviewed these obligations before signing your lease and know what rights you have.

If your landlord does not collect those fees but your lease assigns responsibilities for maintenance to the tenants, you may have to pay directly for services rendered or even pay a one-time fee directly to your landlord as they arrange for repairs.

Commercial tenants usually can't hold rent in escrow

One of the rights that residential tenants have to protect themselves from negligent landlords is the ability to rent in escrow. If a landlord fails to perform necessary maintenance or repairs on a property, the tenant can inform the landlord in writing of the need for repairs and deposit rent into a special account, instead of paying it directly to the landlord.

In most cases, this option is not available to commercial tenants. Instead, their only option for recourse may be to bring a breach-of-contract lawsuit against their landlord, provided the lease does not have an arbitration clause. That can mean substantial delays in having repairs made, which can cost your business a lot of revenue. The potential for loss makes it important that you act as soon as possible when your commercial landlord violates your lease.

Reviewing your contract with an experienced New York commercial real estate attorney is a good first step toward determining how to compel your landlord to make necessary repairs to a property you currently rent for your business.