Retained parts repair victory for landlord

Retained parts repair victory for landlord

From a landlord and a tenant perspective it is important for both parties to be aware of their respective repairing obligations from the outset of a Lease.

It is also important for the parties to agree provisions which relate to any part of the property which is to be retained by the landlord. However, where part of the property is retained by the landlord, the tenant’s lease does not always state what, if any, repairing obligations the landlord has in relation to those retained parts.

Whilst this may not appear problematic at the outset of the landlord and tenant relationship, if something later happens to the retained part of the property as the facts in Gavin and another v Community Housing Association Ltd [2013] EWCA Civ 580 demonstrate, which affects the part of the premises demised to the tenant, both parties will then want to know precisely what obligations each has in relation to works of repair.

In Gavin, Ms Gavin and another party occupied the ground and basement floors of commercial premises which they operated as an art gallery. 

During their occupation both floors were damaged by leaking pipes situated in the part of the property retained by the landlord. This happened on more than one occasion.  The landlord was a Community Housing Association and had sublet the retained part of the property as individual flats.

Whilst Ms Gavin’s lease required her to keep the demised premises in good and substantial repair, the lease did not require the landlord to repair the flats above Ms Gavin’s demised premises.  Instead, the lease contained a covenant requiring the landlord to reinstate Ms Gavin’s demised premises if they were destroyed and also to insure both the demised premises and the retained parts against damage.

After each incident, the landlord carried out remedial works to repair the leaking pipes in the retained premises and insurance payments were made to Ms Gavin.  However, despite this, Ms Gavin then withheld rent payments on the basis that she had been paying for the property when it had been unfit for occupation and accordingly she should not have been required to pay rent for the period during which it was unfit.

As a result of rent being withheld the landlord forfeited the lease by re-entering the demised premises and changing the locks.  Ms Gavin then brought proceedings against the landlord for damages as a result of financial loss suffered by her. 

Given that the lease did not contain a covenant requiring the landlord to repair the retained part (the flats), Ms Gavin needed to show that the landlord was under an implied duty to do so.

The matter went to the Court of Appeal who held that the landlord was not under an implied obligation to repair the retained parts.  Ms Gavin was provided with a remedy in the form of an insurance pay out and the Court held that to imply a repairing obligation into the lease in respect of the retained premises would be to improve Ms Gavin’s position under the contract between landlord and tenant.

Although landlords will welcome this decision tenants who are taking leases where the landlord retains part will want to make sure that either the landlord is under an express covenant to repair the retained parts or alternatively satisfy themselves that there is a landlord’s covenant to insure the retained parts against damages and that the lease provides for an adequate level of repair.

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