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Industrial tenants – tips to help your FM recover repair costs from the Landlord

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Communication with landlords is the key when making sure your facility managers are equipped to recover costs from the landlord for repairs which are not the tenant’s obligation under the lease.

Generally speaking, and each industrial lease is different, the tenant is responsible for preventative maintenance and general repairs and the landlord is responsible for repairs of a capital nature, where a part has reached the end of its effective life or replacement/repair is due to fair wear and tear.

In many cases, the facility manager is under enormous pressure just to get the repairs completed so business operations aren’t affected and too often we find the tenant is left picking up the bill for repairs, where under the lease, it should be the landlord’s obligation to rectify.

Often this arises where there hasn’t been the correct communication channels in place with the landlord and works that are deemed critical to operations have been carried out urgently and then not communicated to the landlord. We advise our clients to always have the FM send an email (best in writing, so there is a trail) to the landlord notifying them of the critical repair, what has been completed and to put them on notice that you will be seeking reimbursement. It makes it a lot easier to recover than if the works are undertaken, yet the landlord is not advised for some time that there was even an issue.

It is also important to make sure the landlord understands your particular business’s pressure points. You may have a highly unionized site, therefore a hot water boiler unit and staff not being able to make a cup of tea on their lunch break, could cause your business as much grief as a number of docks being out of action, which might be considered a more traditional concept of a critical repair.

Often we find landlords are more understanding when they are aware of what your business deems critical and how any delays with these repairs can affect your business.

In addition, it is always advisable to get the landlord to take ownership of these critical repairs as soon as possible. For instance, if there is a burst water main, the tenant might engage the initial plumber to inspect and stop the leak urgently, but if the damage is much more extensive, such as a cavity under the slab requiring further works, as a tenant you want the landlord responsible for rectifying the damage and owning the repair. That way, if the repair works are completed, yet the issue isn’t resolved, it’s all on the Landlord to rectify. If the tenant has engaged the contractor, it can then get messy around who takes ownership from there on. Also, it frees up the time of your FM to get on with the rest of their job.