Liability of Building Owner to Fix Building Code Violations in Commercial Leases

Under the terms and conditions of residential leases, the law automatically imposes a duty on a landlord to maintain the premises in a habitable or safe and livable condition. This duty is called implied warranty of habitability. Failure to maintain the premises in accordance with the terms of residential leases carries several consequences. This may entitle the tenant to break the lease and move out, the tenant may withhold all or part of the rent, or the tenant may obtain reimbursement from the landlord for any repairs that he or she pays for out-of-pocket.

When it comes to whether implied warranty of habitability applies to commercial leases, this duty differs from state-to-state. In jurisdictions that do not extend the warranty to commercial settings, various reasons have been established. It has been successfully argued that housing codes do not apply to commercial leases and commercial tenants have more bargaining power than residential tenants do. Additionally, the expectations of commercial tenants differ greatly from those of residential tenants. Yet in other states, the warranty has been extended to include commercial leases. This has been accomplished either through a more liberal interpretation of common law by the courts as to the applicability of the warranty or through specific state statute. However, when the warranty is implied in commercial leases, just what remedies are available to a tenant for such a breach are determined on a case-by-case basis.

Generally, in a commercial lease a landlord has fewer responsibilities and the tenant has more. Typically, unless stated otherwise in the lease itself, a landlord is only responsible for repairs to the roof, exterior walls, and utilities. All other repairs are the responsibility of the tenant. However, in an attempt to extend more rights to commercial tenants, some courts may enforce “implied warranty of fitness for intended use” in commercial leases. The courts reason that services such as air-conditioning, working elevators, and cleaning might be essential to a business’s operation. This means, it is reasonable for a commercial leaseholder to expect these services as part of the lease agreement.

Case Studies: Liability of Building Owner to Fix Building Code Violations in Commercial Leases

Case Study 1: The Leaky Roof

John, the owner of a small retail store, notices water leaking through the roof of his leased space during heavy rainstorms. Concerned about potential damage to his inventory and the safety of his customers, John informs the building owner, Sarah. However, Sarah argues that roof repairs are the tenant’s responsibility according to their lease agreement.

Case Study 2: Malfunctioning Elevators

Mark operates a business on the upper floors of a commercial building, relying heavily on the elevators to transport customers and merchandise. Lately, the elevators have been malfunctioning frequently, causing disruptions and inconveniences for Mark’s business. Mark approaches the building owner, Sarah, seeking assistance with the elevator repairs.

Case Study 3: Inadequate HVAC System

Sarah, a restaurant owner, leases a commercial space that includes an HVAC system to maintain a comfortable dining environment for her customers. However, Sarah discovers that the HVAC system consistently fails to provide adequate heating or cooling, leading to discomfort for both patrons and employees. Sarah contacts the building owner, John, requesting repairs or improvements to the HVAC system.