To protect itself from the tenant that fails to keep a leased space in good condition and repair, almost every landlord reserves the right to perform repairs that are actually the tenant's responsibility. However, a careful landlord will also include language to protect itself from any liability for failure to exercise this option.
Benefits of self-help right Self-help rights in favor of the landlord are beneficial in a number of ways. First, the landlord maintains a certain degree of control over the condition of the leased space, even though the tenant maintains control of the space pursuant to the lease. Additionally, the landlord can prevent any further damage to the tenant's space, as well as any adjoining tenant spaces, or the center itself, by reserving the right to go into the space and make repairs.
This move can decrease any potential liability and further expense to the landlord. Ultimately, the well-drafted provision will motivate the tenant to perform the repairs in a timely manner, in order to avoid any payment to the landlord for performance of the repairs or any administrative or overhead fee charged to the tenant for the landlord's work.
Potential pitfalls If the self-help right is such a benefit, how then can a landlord be penalized? Various courts have construed a landlord's right to make repairs in a tenant's space a duty to do so. On occasion courts have ruled that damages resulting from the landlord's failure to make repairs makes the landlord liable for injuries and for damage to property of other occupants of the shopping center. In order to protect the landlord, certain language should be added to the self-help clause.
First, the clause should clearly state that the landlord may perform the tenant repairs, but that the landlord is in no way obligated to perform the work. Next, the lease should provide that whether or not the landlord performs the repair obligations of the tenant, the tenant's obligations to indemnify the landlord under the lease generally will not be voided (i.e., costs of the repair and the landlord'scost to defend against any damage claims from the tenant or any third party).
In addition, the lease should also state that the landlord will not be liable in any way for any damages sustained by any party if the landlord decides not to exercise its self-help rights.
Pointers on collection When drafting the self-help clause in the lease, make sure to limit the period of time the landlord must wait before performing repairs. This will benefit the landlord by making the self-help clause a real remedy and will also avoid any additional damage related to the original disrepair.
In addition, a smart landlord will bill the tenant promptly for repair costs incurred by the landlord. The strong self-help provision should specify a period of time within which the tenant must reimburse the landlord - say, five to 30 days after the tenant receives the landlord's invoice. Or the lease can state that payment should be made with the next rental payment due under the lease. The landlord's reimbursable expenses should be added to this provision of the lease and should include damages to third parties affected by the tenant's failure to perform any repairs.
You may also want to add language stating that interest on any late payments accrues from the date of the invoice to the date that the tenant actually reimburses the landlord. This should be enough motivation to encourage any tenant to pay the landlord in a timely manner.
The lease should clearly state that any amounts payable to the landlord will be deemed additional rent payable under the lease. If the landlord holds a security deposit, the lease should provide that the landlord can withdraw from the available balance in the event of tenant nonpayment for repairs. Above all, be sure to include language stating that the right to self-help, and to reimbursement of expenses, does not in any way limit any of the landlord's other remedies under the lease for this breach by the tenant.
The self-help right is a clear advantage to the landlord in any lease. However, in order to ensure that this benefit does not trigger any liability to the landlord, always draft a self-help provision that spells out everyone's acknowledgment that there is no duty of the landlord to act on this right.
