Liability of Building Owner to Fix Building Code Violations in Commercial Leases

Under the terms and conditions of residential leases, the law automatically imposes a duty on a landlord to maintain the premises in a habitable or safe and livable condition. This duty is called implied warranty of habitability. Failure to maintain the premises in accordance with the terms of residential leases carries several consequences. This may entitle the tenant to break the lease and move out, the tenant may withhold all or part of the rent, or the tenant may obtain reimbursement from the landlord for any repairs that he or she pays for out-of-pocket.

When it comes to whether implied warranty of habitability applies to commercial leases, this duty differs from state-to-state. In jurisdictions that do not extend the warranty to commercial settings, various reasons have been established. It has been successfully argued that housing codes do not apply to commercial leases and commercial tenants have more bargaining power than residential tenants do. Additionally, the expectations of commercial tenants differ greatly from those of residential tenants. Yet in other states, the warranty has been extended to include commercial leases. This has been accomplished either through a more liberal interpretation of common law by the courts as to the applicability of the warranty or through specific state statute. However, when the warranty is implied in commercial leases, just what remedies are available to a tenant for such a breach are determined on a case-by-case basis.

Generally, in a commercial lease a landlord has fewer responsibilities and the tenant has more. Typically, unless stated otherwise in the lease itself, a landlord is only responsible for repairs to the roof, exterior walls, and utilities. All other repairs are the responsibility of the tenant. However, in an attempt to extend more rights to commercial tenants, some courts may enforce “implied warranty of fitness for intended use” in commercial leases. The courts reason that services such as air-conditioning, working elevators, and cleaning might be essential to a business’s operation. This means, it is reasonable for a commercial leaseholder to expect these services as part of the lease agreement.