Commercial Lease Drafting — Repairs v. Replacements

If you are the landlord of commercial space, be extremely cautious when drafting your lease provisions with respect to repair and replacement of portions of the leased premises. Commercial tenants should also review their leases carefully to determine what they are responsible for. In order to avoid any potential disputes later, it is better to be clear upfront and delineate responsibilities in detail in a manner that is consistent with what both parties have bargained for.

Case in point: In Quincy Mall, Inc. v. Kerasotes Showplace Theatres, LLC, 903 N.E.2d 887 (Ill. App. Ct. 4th Dist., February 27, 2009), the commercial lease between the mall and the tenant, a theater, included a “general repair” clause with respect to the roof. Under the terms of that clause, the tenant was responsible for repairs to the roof. Eventually, the roof required replacement. When the mall failed to replace it in a timely manner, the theater informed the mall it would replace the roof and deduct the cost of the roof from its rent.

The court supported the tenant’s position, because the lease did not contain a clear provision about roof replacement, only about roof repair. The lease stated only that the tenant was responsible for repairing the roof, not replacing it. Therefore the burden of replacing the roof remained with the landlord.

Bottom line — When reviewing your commercial lease, make sure you understand exactly what your responsibilities are! When something breaks, you should know who needs to fix it.