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ACP SGS 8

Terms

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Why do we need to include repairing obligations in the lease?
Very limited implied obligations so express obligations are necessary
If a property is in bad condition, what might a tenant wish to do?
1. Not be required to put the property in a better condition;

2. Will only want to maintain; and

3. Make reference to a schedule of condition that documents the state of the property when the tenant took possession.



Jervis v Harris clause
The landlord gives notice to tenant regarding a lack of repair.

Landlord gives tenant time to fix the property. If the tenant fails to make the repairs, the landlord can enter, make the repairs and recover the costs of doing so as a debt.

Known as a self help remedy.



Landlord's power, if the tenant fails to make repairs in connection with which it has been notified, the landlord can enter, make the repairs itself and recover the costs of doing so as a debt.

Known as a self help remedy.

Jervis v Harris clause
What is an FRI lease?
Full repairing and insurance lease. Tenant pays for repairs and insurance.
What risks are becoming increasingly hard to insure against?
Terrorism and flooding
What is often not included in the definition of insured risks?
Loss of rent
What will a tenant try to carve out from its repairing obligations? What will the tenant then try to do?
Anything covered by an insured risk.

Will also want the landlord to covenant to use the insurance money to repair the damage and to pay any shortfall.

How might a landlord try to charge a tenant for damage caused by an insured risk?
Through the Service Charge. Tenant will want to exclude anything to do with costs relating to damage caused by insured risks.
In the context of damage caused to the property, what is a tenant going to want to see included in the lease?
A rent suspension clause.
Where damage is not insured, what should you consider?
Who is going to pay for damage caused by an uninsured risk?

This will depend on the bargaining power of the parties. Unless the tenant is in a very strong bargaining position, the tenant is most likely to have to pay.

If a landlord refuses or cannot insure against certain risks, what can a tenant do?
The risks should be documented as uninsured risks, and responsibility for damage by uninsured risks will need to be allocated to either the Landlord or Tenant.

Only tenants in a strong bargaining position will be able to resist liability for damage caused by uninsured risks.

What should you note in relation to a Tenant's obligation "To 'keep' the Property in ..."
Case law tells us that 'keep' means to put and keep. This means if the property is in a state of disrepair, the tenant will be required to repair and then keep the property in a good state of repair:

Note: not an issue if new building.

What will a tenant not wish to be included as part of the costs of the Service Charge?
1. Heating/lighting of unlet units;
2. Contributions to reserve funds;
3. Management fees that exceed 20% of the total costs of all other services.

Who should a certificate related to the service charge accounts be signed by?
An independent party, e.g. the Landlord's auditors.
What will a landlord want in relation to the service charge?
Landlord will want the service charge to be consistent across all tenants in the centre.

Deck Info

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