Repair and insurance provisions in commercial property leases

Fenella Eddell is a solicitor at Barker Gotelee


A recent case highlights the importance of carefully drafted repair and insurance provisions in commercial property leases.

In Stratton & Khan-Sherwani v Patel & MP Building Ltd, the landlord employed builders to construct flats above the restaurant leased by the tenant. As a result of the builders’ negligence, a fire damaged the restaurant.  The key point at stake was who was responsible for repairing the damage to the restaurant (as opposed to the building as a whole), when both the landlord and the tenant had insurance in place.

The High Court held that the landlord’s general obligation to repair the building in the lease did not include those parts of the building that the tenant was required to repair (the restaurant).

There was in this instance, however, a separate obligation for the landlord to make good any damage resulting from any redevelopment, under which the landlord was found liable to repair the restaurant.

This case therefore highlights, for both landlords and tenants, the key interrelation between repair and insurance provisions in commercial property leases.  It also emphasises the fundamental importance of ensuring that it is completely clear which party is responsible for repairing which parts of a building in the event of damage occurring so that, if the worst happens, you do not have to waste time and resources arguing over responsibility.

Fenella Eddell is a property solicitor at Barker Gotelee, solicitors in Suffolk

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