Need help understanding clause in commercial property lease agreement...

skillboy88

I am planning on selling a commercial property where the long term tenant is a restaurant. The buyer's mortgage provider has asked for (among other things) the electrical system to be checked to ensure it is safe. 

I am unsure who is responsible for paying for this check (the landlord or the tenant). 

The lease with the tenant states:

Clause 5.4. Fixtures.
To put into and maintain in good and substantial repair and in serviceable condition all plant equipment fittings fixtures wiring installations and apparatus in or upon and forming part of the Premises and in the event of any of the said fixtures and fittings being missing broken damaged or destroyed forthwith to renew and replace them with others of a similar character.

Does this clause mean that the tenant would be responsible for paying for this electrical assessment? Or do I as the landlord have to cover the cost? Or is it unclear?

Any help appreciated!

BarelySentientAI

Unclear.  Depends if you consider the inspection to be part of "maintain".

I would, others might argue the point.

user1977

The answer is very clear to me - the buyer should pay for any such checks if they need them.

The clause you've quoted means the tenant needs to rectify any defects, it doesn't say anything about doing regular checks.

Don't you have a solicitor advising you on the sale?

DullGreyGuy

skillboy88 said:

I am planning on selling a commercial property where the long term tenant is a restaurant. The buyer's mortgage provider has asked for (among other things) the electrical system to be checked to ensure it is safe. 

I am unsure who is responsible for paying for this check (the landlord or the tenant). 

The lease with the tenant states:

Clause 5.4. Fixtures.
To put into and maintain in good and substantial repair and in serviceable condition all plant equipment fittings fixtures wiring installations and apparatus in or upon and forming part of the Premises and in the event of any of the said fixtures and fittings being missing broken damaged or destroyed forthwith to renew and replace them with others of a similar character.

Does this clause mean that the tenant would be responsible for paying for this electrical assessment? Or do I as the landlord have to cover the cost? Or is it unclear?

Any help appreciated!

Nothing in that says about having to pay for things when your landlord wants to cash in.

Either you pay for it or you tell your buyer to pay for it depending on how relations are and how much of an issue it would be if the buyer was to walk away. 

BarelySentientAI

user1977 said:

The answer is very clear to me - the buyer should pay for any such checks if they need them.

DullGreyGuy said:

Nothing in that says about having to pay for things when your landlord wants to cash in.

However, if the tenant was already supposed to have one (as is quite common in commercial tenancies) and doesn't, why is that the landlord's fault?

user1977

BarelySentientAI said:

user1977 said:

The answer is very clear to me - the buyer should pay for any such checks if they need them.

DullGreyGuy said:

Nothing in that says about having to pay for things when your landlord wants to cash in.

However, if the tenant was already supposed to have one (as is quite common in commercial tenancies) and doesn't, why is that the landlord's fault?

It isn't, but we haven't so far seen anything which says it is the tenant's responsibility.

BarelySentientAI

user1977 said:

BarelySentientAI said:

user1977 said:

The answer is very clear to me - the buyer should pay for any such checks if they need them.

DullGreyGuy said:

Nothing in that says about having to pay for things when your landlord wants to cash in.

However, if the tenant was already supposed to have one (as is quite common in commercial tenancies) and doesn't, why is that the landlord's fault?

It isn't, but we haven't so far seen anything which says it is the tenant's responsibility.

It's the interpretation of the "maintain" wording in the quoted clause.  Regular/scheduled inspections are often (correctly in my opinion) categorised as maintenance - otherwise you would have the requirement for the LL to have an EICR done and then pass the results to the tenant to fix, and that's not very common in my experience.

If I was investigating an insurance claim at a property with that clause in the tenancy agreement, I'd be expecting the tenant to be instructing an EICR at the appropriate frequency, not the LL.

As I said though, it's interpretation and there could be arguments to read it differently.

And you're also right - if it's only the buyer wanting this and they won't accept the most recent existing report, then it's the usual buyer/vendor discussion where I agree the buyer should be paying.