Tenant Obligations - Playing by the rules

Most tenants are aware of the main obligations under a commercial lease – prompt payment of rent, insurance and service charge, and keeping the property in good repair. Negotiation of lease terms tends to focus on these areas and whether the landlord can agree any restrictions on the tenant’s liability (e.g. a cap on service charge, schedule of condition to limit the repairing obligation).

However, there is an often-overlooked clause which is hardly ever negotiated but appears in all commercial leases and can have far-reaching consequences for the tenant: the tenant is responsible for complying with all Acts of Parliament, Statutory Instruments, regulations and bye-laws affecting the premises.

At first glance, this may seem innocuous and common says sense the tenant shouldn’t do anything illegal. However, there are a number of statutory rules and regulations which impose positive duties on occupiers to ensure the safety of a property and the people working in it.

In our new series of real estate blogs, we’ll be looking at some of the statutory duties which can apply to commercial tenants, and some of the practical implications.

ASBESTOS

Anyone who is responsible for maintenance of commercial property (the ‘dutyholder’) has a duty to ‘manage’ asbestos.

The obligations

The management obligations on the duty holder include:-

• To ensure a suitable and sufficient assessment is carried out as to whether asbestos is present – (NB – the assumption is that asbestos is present in a property unless shown otherwise)
• If asbestos is found at the property:-
  • To assess the risk from that asbestos
  • To prepare a written plan outlining the measures for managing the risk
  • To review the management plan at regular intervals, or without delay in the event of any change in circumstances

Practical implications

In reality, the only way to establish whether asbestos is present is to ask a suitably qualified contractor to carry out a survey. However, a survey itself is not sufficient to discharge the statutory duties. There must also be a management plan. It is not necessary for asbestos to be removed from the property if it can be effectively managed in place e.g. sufficiently encased that there is no risk to anyone working at the property. The asbestos surveyor will be able to advise on the best course of action.

Further guidance

Health & Safety Executive:  http://www.hse.gov.uk/asbestos/duty.htm

FIRE SAFETY

The fire regulations in Scotland apply to employers or anyone having ‘control’ of relevant (i.e. non-domestic) premise.

The obligations

The duties in respect of relevant premises are:-

• To carry out a risk assessment of the property in relation to the risk of harm from fire
• To take such fire safety measures as are reasonable in all the circumstances
• To review the assessment regularly or if there is a significant change in circumstances

Practical implications

 All non-domestic properties should have a fire risk assessment in place confirming the fire risks and relevant fire safety measures.

Further guidance

 Scottish Fire and Rescue Service: http://www.firescotland.gov.uk/your-safety/for-businesses/your-duties.aspx

ELECTRICAL SAFETY

The Electricity at Work regulations apply to all employers and self-employed persons. Whilst the regulations are fairly broad, and are not directly aimed at occupiers specifically, anyone purchasing or taking on a lease of non-domestic properties may well want to know that the electrical systems can be safely used for their business.

The obligations

Broadly speaking, all electrical systems are to be conducted and maintained so as to prevent danger so far as is reasonably practicable. The regulations also specify a number of methods by which safety can be ensured, such as insulation of any electrical conductors, and provisions of safe systems of work.

Practical implications

Tenants, assignees, and purchasers who intend to occupy non-domestic premises themselves will want to know that any electrical systems associated with the property are safe. A seller or landlord may therefore be asked to provide any or all of:-

• Electrical Installation Condition Reports – detailed reports on the condition of the internal wiring (sometimes known as Fixed Wiring or Periodic Inspection Reports). This relates to the condition of the wiring of the property not any individual appliances. Although there is no formal legal requirement, the Institute of Electrical Engineers recommend that these are carried out every five years
• Portable Appliance Testing Certificates – confirming the safety of any electrical appliances which are plugged in to the mains sockets. The Health and Safety Executive recommends that PAT testing should be carried out different intervals depending on the type of appliance and the nature of the Property:-
•  Offices, Shops and Hotels  – Class 1 (higher risk) equipment including stationary and IT equipment should be tested every 48 months. Moveable equipment such as extension leads and portable equipment should be tested every 24 months.. Handheld equipment should be tested every 12 months
• Industrial – Class 1 equipment including stationary and IT equipment should be tested every 48 months. Moveable equipment such as extension leads and portable equipment should be tested every 24 months. Handheld equipment should be tested every 12 months.
• Fixed Appliance Testing Certificates – similar to PAT testing, but relating to appliances which are hardwired, such as cookers, storage heaters or hand driers

Further guidance:

Health and Safety Executive: http://www.hse.gov.uk/electricity/information/testing.htm

These are just some of the rules which aren’t written in to the lease, but which are the Tenant’s responsibility. Failure to comply with any of the obligations not only runs the risk of a fine or other enforcement from the relevant statutory body, but gives the Landlord grounds to terminate the lease (since the tenant hasn’t fulfilled its obligations to comply with statute).

In our next real estate blog, we’ll look at some of the other statutory rules which affect tenants, including environmental and building regulations.

If you require any advice on your obligations as a tenant, the Gilson Gray real estate team would be happy to assist.

[info]

For More Information Contact:
Murray Stewart
Mobile: 07920 866 998
Direct Dial: 0131 516 5370
Email: mstewart@gilsongray.co.uk

[/info]

[info]

For More Information Contact:
Donna Kelly-Gilmour
Mobile: 07956 177 541
Direct Dial: 0141 530 2043
Email: dkellygilmour@gilsongray.co.uk

[/info]

[info]

For More Information Contact:
John Fulton
Mobile: 07487 801 616
Direct Dial: 0141 433 7759
Email: jfulton@gilsongray.co.uk 

[/info]

[info]

For More Information Contact:
Gregor Duthie
Mobile: 07841 022651
Direct Dial: 0141 433 7753
Email: gduthie@gilsongray.co.uk 

[/info]

[info]

For More Information Contact:
Iain Witheyman
Direct Dial: 0131 516 5358
Email: iwitheyman@gilsongray.co.uk 

[/info]

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.