Leasing Tip: Condition of Premises at the End of the Term

Most leases will provide that a tenant is required to return a premises to a certain condition once the lease comes to an end.

The requirements of the lease can vary greatly. For instance:

1. Returning the premises to an empty shell where, if the tenant has made any changes to the lighting or the plumbing, for instance, these all need to be returned to the condition they were in prior to that time; and
2. Returning the premises to the condition they were in at the date of entering into the lease. This can lead to dispute between the parties because there may be a dispute about the condition the premises were in at the commencement of the lease. We strongly suggest that the parties take photos and complete a condition report to help to avoid any dispute.

Also, disputes can arise if the tenant has taken an assignment of the lease and was not the original tenant. This can cause issues as the tenant may not be aware of the condition the premises were in at the commencement date. The tenant should obtain from the landlord and the assignor details of the condition of the premises and what is required of the tenant in those circumstances. If condition reports have been completed, then they should be obtained.

Even though an assignee of a lease may not have had the benefit of the lease for the whole of the term, they will be required to spend the money on returning the lease to the condition they were in at the time of entering into the lease.

It is important that assignees are aware of their obligations in these circumstances.

Leases can be tricky, especially when it comes to the condition of the premises at the end of the term! Let us help you avoid disputes and ensure a smooth lease transition. Contact us today!