Full Repair Leases

We have a large and specialist team of commercial property specialists who act for both Landlords and Tenants.

From negotiating the terms to ensuring you fully understand the possible risks, we ensure your position is protected as strongly as possible.

What is an FRI Lease?

A Full Repairing and Insuring (FRI) lease places complete responsibility for property repairs, maintenance and insurance on the tenant and including :-

• Structural repairs and maintenance.

• Internal decorations and fixtures.

• Building services and utilities.

• Insurance premium payments.

• Payment towards common areas upkeep.

From a Landlord’s perspective, requiring a new tenant to take a commercial premises lease on a full repair and insuring (FRI) basis is often the preferred option.

What are the risks in agreeing an FRI lease?

• Not negotiating - tenants are almost always well advised to seek to negotiate on the exact terms even if agreeing an FRO lease in principle.Whether a tenant should or will accept FRI terms depends on the overall bargaining position between the parties, the length of the lease term and how badly the tenant wants or needs the premises in question.

• Potential obligations to improve premises - Depending on the exact wording of the lease, the tenant may end up taking on obligations to actually improve the condition of the premises, which can extend to things such as gas, water, electricity, heating and air conditioning, all of which can be very expensive.

Risk reduction for tenants

The starting point is to understand that you do not have to agree the terms offered. If the Landlord won’t budge on the principle that the lease must be full repair, be prepared to negotiate hard. Options include :

• Insisting that full repair relates to internal areas only - so, instead of an FRI lease, you agree an Internal Repairing Lease (IRL)

• Insisting on a full and detailed schedule of condition - agreed on at the time of the lease. Tenants are also well advised to commission a detailed survey of the condition of key aspects of the building including mechanical and electrical condition.

• Negotiate a maximum cap on overall liability

• Negotiate over the wording of the repair covenants - there are very important differences, for example between keeping in repair or putting into repair. The differences between just a few words make a very big difference.

• Consider a break clause – the option to terminate the lease early, typically half way through. This is potentially problematic though as the landlord will still insist you make good and break clauses almost always require full compliance by the tenant for the clause to become operative.

If you need lawyers to draft, advise on or review an FRI lease, please do get in contact. We also advise on disputes relating to repair and other obligations in leases.