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A Court of Appeal decision is a useful reminder that landlords should consider the interplay between the classification of an item as a landlord's fixture and the restrictions placed on alterations in a lease says commercial property agent Prop-Search.
In the case of South Essex Partnership University NHS Foundation Trust v Laindon Holdings Ltd, it was found that the commercial property tenant did not breach repair covenants set out in the lease when it replaced carpet tiles in the property with strip carpeting.
Samantha Jones, an Associate Director of Prop-Search, said: “The court in this case had to decide on the interpretation of two conflicting provisions in the lease; one giving the tenant an apparently unqualified right to make internal non-structural alterations - including landlords fixtures and fittings - and the other placing it under a duty to repair and replace the landlord's fixtures and fittings. The wording of the lease in this case meant that the replacement of carpet tiles with strip carpeting could be classed as a 'tenant's alteration', taking it out of the scope of the repair clause.”
Shortly before the lease ended, the tenant wrote to the landlord to inform it that it would be replacing the tiled carpeting with strip carpeting ‘of the same colour and specification’. When the landlord did not object, it went ahead and did so. After the lease ended the landlord claimed that the re-carpeting breached the repair clause in the lease.
Both the trial judge and the appeal court heard arguments from the parties over whether the previous carpet should be classed as 'landlord's fixtures and fittings', regardless of the fact that they were re-laid at the tenant's cost at the start of the lease term. The landlord argued that the lease obliged the tenant to remove the new carpet on expiry and re-instate the previous carpet. The Court of Appeal backed the trial judge's view that the carpets should be classed as fittings, but added that the alternations clause elsewhere in the lease made this irrelevant.
Samantha Jones, add: “The case provides helpful guidance to landlords and tenants about how to deal with alteration and repair clauses that appear to conflict. The court's decision in this case that a right to undertake internal non-structural alterations extended to all works to the landlord's property within, or forming part of, the building, whether it was to a landlord's fixture or fitting, provides further useful guidance on what words may qualify as tenant alterations - depending, of course, on the wording of the clause in question.”
"This is another reminder of the importance for landlords to check whether they need to request reinstatement of tenant alterations upon expiry of a lease, but also a cautionary tale about considering potentially conflicting lease provisions and ensuring steps are taken to protect the required remedy on either interpretation of the lease.”
Further information or advice can be obtained from Prop-Search - Tel: 01933 223300 or its website: www.prop-search.com