Repair and Deduct by Commercial Tenants

It is common for commercial landlords and tenants to have disputes over needed repairs.  Most commercial leases require tenants to make needed repairs to the leased premises while repair and maintenance to the structural elements of the commercial center and its common areas are left to the landlord.  Moreover, even though the landlord maintains the structural elements of the center, those costs are most often passed on to the tenant as common area maintenance expenses (CAMs).   

Escalator.jpgProblems arise where either the landlord or the tenant misconstrue respective responsibilities.  When this happens, commercial tenants are tempted to make the needed repairs and simply deduct the cost from their monthly rent.  Unfortunately, this commonly referred to “repair and deduct” remedy is not available to commercial tenants unless the remedy is specifically provided for in the lease.  Even if the repair and deduct remedy is provided for under the lease, commercial tenants need to be careful about what repairs the landlord is legitimately responsible for under the terms of the lease.  Commercial tenants that mistakenly withhold rent for repairs that weren’t the landlord’s responsibility or where the lease doesn’t specifically provide for the “repair and deduct” remedy risk being evicted (unlawful detainer).  

Where a landlord clearly breaches the lease by failing to make repairs it is obligated to make under the express terms of the lease and there is no “repair and deduct” clause in the lease, commercial tenants are left with the unfortunate and expensive task of suing the landlord seeking declaratory relief (an order forcing the landlord to perform) or damages to compensate the commercial tenant for losses associated with the breach.  See Realities of Pursuing Breach of Contract Actions.  Ideally, San Diego business owners will negotiate with their landlords and look to resolve any outstanding issues amicably.  Otherwise, the costs of battling a commercial landlord in court can be extensive.  

Before making any decisions, the commercial tenant should carefully review its lease regarding the parties’ respective obligations and determine whether a “repair and deduct” clause is included.  Understanding the terms of the lease is the best way to ensure that a proper remedy to is sought. Ultimately, consulting with a San Diego commercial lease lawyer is best.

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