January 23, 2019
By: LaVonne Torrence Berner
A heating and air conditioning (HVAC) system breakdown or other equipment malfunction can mean days of downtime and lost revenue, especially for retailers and restaurants. The breakdown can be even more devastating for business if the tenant is responsible for the repair and has not set aside reserves. Because commercial leases often place all maintenance and repair obligations on the tenant, commercial tenants find themselves in this exact situation far more often than one may think.
Landlord commercial lease forms commonly hold the tenant responsible for repairs and replacements that can cost tens of thousands of dollars. The tenant can be responsible even if a breakdown occurs simply because the equipment is old and at the end of its life. For instance, a Landlord’s lease form may hold the tenant contractually obligated to replace an HVAC unit that dies in the first year of the lease term.
Other possible budget busting repairs and replacements include sprinkler/fire system upgrades and repairs and water heater and cracked pipe replacements. When these systems malfunction, tenants may also face the expense of damage to furniture, equipment, work product, and inventory, making the breakdown even more catastrophic.
So, what are some of the ways a tenant can mitigate maintenance and repair costs? BEFORE signing the lease,
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