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?

With an FRI lease the tenant will have full legal responsibility for all repairs and building insurance.

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

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.

Risks to tenants include :-

• 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.

• where the lease is of an entire building, the full repair obligation will include structural condition (roof, windows and many other areas).

Tips for Tenants Offered an FRI Lease

The starting point is to understand that you do not have to agree an FRI lease. If the Landlord won’t budge on the principle that the lease must be full repair, 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

• 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.