When Are Commercial Tenants Obligated to Make Repairs?

How far does a commercial tenant’s obligation to make repairs go? Commercial leases commonly require a tenant to surrender a property is the same condition as it was when the lease commenced, excepting ordinary wear and tear. When damage to the property occurs, the tenant may believe that it is due to ordinary wear and tear and therefore the landlord’s responsibility to fix. However, the landlord may believe that the tenant has an obligation to make the repairs, as in the case of Dorian v. S.S. Rest. Corp., 2011 Ariz. App. Unpub. LEXIS 673, 2011 WL 1856014 (App. 2011).

In Dorian, the commercial lease contained two important clauses relating to repairs—a maintenance provision and a surrender provision. The maintenance provision required that the tenant maintain the property in good repair and “promptly make such repairs as may be necessary to preserve and protect the premises.” The surrender provision required the tenant to surrender the property in the same condition as it was received “ordinary wear and tear and approved alternations excepted.” The landlord filed suit for an alleged breach of the maintenance provision, claiming that the tenant failed to replace the roof. The trial court granted the tenant’s motion for summary judgment based on the fact that the roof had outlived its useful life, and had experienced deterioration as could be expected during the term of the lease.

The Arizona Court of Appeals noted that in some circumstances, the replacement of the roof might be considered a repair, which would have been the tenant’s responsibility under the maintenance provision. However, the maintenance provision had to be read in conjunction with the surrender provision, and the damage to the roof was due to ordinary wear and tear in this case.

The landlord admitted that the roof had simply outlived its useful life. If there were leaks in the roof, the tenant would have been required to patch them under the the maintenance provision, but the roof was still functioning reasonably well. The deterioration of the roof was a function of time, and the landlord could have foreseen that the roof would experience this amount of deterioration during a ten-year lease. Absent express language supporting a duty to replace the roof, the court would not imply a duty.

A commercial lease must be read as a whole, so even when a maintenance provision seems to clearly spell out the tenant’s obligations to make repairs, other portions of the contract could qualify or modify those obligations. What is considered a “repair” or “replacement” will differ depending on the contract and the circumstances of the situation.

Chernoff Law handles business and real estate litigation matters throughout Arizona, including disputes arising out of commercial leases. Contact us to discuss your case with an experienced real estate attorney.