When can a Landlord make structural repairs or improvements to a tenanted building?

When can a Landlord make structural repairs or improvements to a tenanted building?

This article addresses the provisions of the Auckland District Law Society (ADLS) Deed of Lease (5th edition, 2008 (2)), which is the most common commercial lease. The current form and version makes no express provision for a landlord to enter into tenanted premises and undertake structural improvements. Given the renewed pressure upon local authorities and building owners to bring earthquake prone buildings up to strength, this omission has caused some problems. So when can a landlord make structural repairs to a tenanted building?

Relevant Clauses

14.1 IF default shall be made by the Tenant in the due and punctual compliance with any repair notice given by the Landlord pursuant to this lease, or if any repairs for which the Tenant is responsible require to be undertaken as a matter of urgency… the Landlord may by the Landlord’s employees and contractors with all necessary equipment at all reasonable times enter upon the premises to execute such works…

15.1 THE Tenant shall permit the Landlord and the Landlord’s employees and contractors at all reasonable times to enter to premises to carry out repairs to the premises or adjacent premises and to install inspect renew or replace any services where the same are not the responsibility of the Tenant all such repairs inspections and work to be carried out with the least possible inconvenience to the Tenant.

Prima facie, these clauses authorise a Landlord to enter a tenant’s premises and undertake structural repairs. However:

  • The ADLS Deed of Lease specifically excludes structural repairs from the list of outgoings for which the tenant is responsible. Neither is a tenant responsible for structural improvements under any other clause of the standard form lease.
  • “Repairs” are different from “structural repairs”. This means that clauses such as 15.1 outlined above do not require tenants to permit Landlords to enter the premises to carry out structural repairs.

Neither of clauses 14.1 or 15.1 explicitly authorises a landlord to make structural repairs or improvements to a tenanted building just because they would like to do so.

Quiet Enjoyment

The key clause in answering the question posed in the title to this article is:

32.1 THE Tenant paying the rent and performing and observing all the covenants and agreements herein expressed and implied shall quietly hold and enjoy the premises throughout the term without any interruption by the Landlord or any person claiming under the Landlord.

This covenant of “quiet enjoyment” prevents a landlord from interrupting a tenant’s use of premises. Physical and substantial interference with a tenant’s possession is not acceptable.

Case law makes clear that quiet enjoyment prevents a landlord from placing scaffolding adjacent to premises, making excessive noise, and causing subsidence through underground work, for example. Quiet enjoyment could therefore clearly also prevent the undertaking of structural repairs or improvements to a tenanted building.

Conclusion

Given that:

  • The ADLS Deed of Lease does not specifically authorise a landlord to undertake structural improvements on a tenanted building, and
  • Tenants are entitled to quiet enjoyment,

tenants should be in a strong position to bargain with a landlord in respect of timeframes and methods of structural repairs, and any possible rent abatement. Despite this, however, tenants should seek legal advice and remain cooperative with landlords. The issue may otherwise end in litigation – and a landlord is likely to seek recovery of legal costs.

Landlords and tenants often must also consider the obligations placed upon them by the Health and Safety in Employment Act 1992. See “Earthquake Prone Buildings: Health and Safety Obligations of Landlord and Tenant” for more information.

Disclaimer:
This article relates to a clause in the fifth edition ADLS lease. Your lease may be different. In any event, advice specific to your lease must always be obtained. Articles on this website provide a general review of the law and should not be relied upon when dealing with specific issues. Please contact us for advice specific to your circumstances.