Commercial Tenant Pays Price for Leaving Site Contaminated by Asbestos
Most commercial leases require tenants to leave premises in a decent state of repair on their departure, failure to comply can have financial consequences for the tenant and this was the case recently on an industrial site where asbestos was discovered following termination of a lease.
“When I act for a tenant I seek to limit their liability in the lease in terms of the repair and condition of the property when handing it back,” explained Pearson's Commercial Property Solicitor, Ben Tatters.
Leases usually provide that the tenant has to maintain the property “in good and substantial repair and condition” meaning that they’ve got to keep it in decent condition.
“If they take the property in poor condition this can mean, in theory at least, that the landlord insist they put the property into “good” condition before the end of the lease even though they did not find it that way. Practically, though, this isn’t such an issue because few tenants – although it does depend on their intended use of the property – operate from premises that are of a poor standard,” added Ben.
“Nevertheless, I seek to limit the tenant’s liability from the outset so that they’re not required to put the property into any better state of repair than it was at the outset of the lease. This would usually be evidenced by a schedule of condition, ideally prepared by a professional, although some tenants just take photos themselves. As always I would advise tenants take sensible legal advice as they really can save themselves money and a lot of effort in the long run.”
“A landlord will not always agree to this and so where it happens I will take a client’s instructions and advise them in any event to take their photos to evidence (at least from their perspective) the state of repair at the outset. That way, if there is a dispute with the landlord (for example as to whether or not that great big hole in the wall was there when they entered into the lease) they have something to fall back on,” he added
When acting for a tenant the commercial property solicitors at Pearson's always look to obtain a copy of an asbestos survey and a fire risk assessment and advise the tenant of the risks should either – or neither – document be available.
In this most recent case covenants in the lease required the tenant on departure to remove any buildings it had erected site as well as making good any repairs. On termination of the lease the landlord said the tenant had failed to comply and actually left on the site remains of buildings which included asbestos-containing materials (ACMs).
The landlord claimed that ACMs remained on the site and ended up being spread more widely, necessitating costly remediation works.
The landlord accepted that it should pay relatively modest compensation to the tenant in respect of the termination of the lease but lodged a much more substantial counterclaim.
The High Court found the tenant had breached the covenants and the buildings and the asbestos had not been dealt with and properly removed.
It was also found that the company had failed to inform either the landlord or contractors clearing up the site about the partially buried asbestos cladding and failed to use its best endeavours to prevent the distribution of asbestos around the site.
The parent company was ruled liable to the landlord in respect of the full costs of the remediation works. Damages payable by the tenant in respect of its breaches of the covenant will be assessed at a further hearing, if not agreed.Subscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
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