#16683 - Insurance And Repair - Property Law and Practice

INSURANCE AND REPAIR

Provision in Lease			Relevance & Action to be Taken (if any)
How does the lease deal with damage and repair?
Cl. 4.1	T covenants to perform the Tenant’s Covenants.
Cl. 1.14	The ‘Tenant’s Covenants’ means the covenants set out in Sch. IV.
Cl. 4.2	L covenants to perform the Landlord’s Covenants.
Cl. 1.6	The ‘Landlord’s Covenants’ means the covenants set out in Sch. V.
Cl. 4.1 Cl. 1.14 Sch. IV Para. 6.1	T covenants to “repair the Premises and to keep them in good repair except where damage is caused by any of the Insured Risks”.		T is responsible for repairs – need to check: what the ‘Premises’ includes; and what falls within the ‘Insured Risks’.
Cl. 1.10	Defines ‘Premises’ as all the land shown edged red on the attached plan together with the building erected on it and known as Britannia House, 18 Hollydown Road, Cobham, Surrey KT11 3EP.		‘Premises’ includes the whole building so T will definitely be responsible unless the damage is covered by insurance.
Cl. 1.4	Defines ‘Insured Risks’ as fire, lightning, explosion, impact, storm, tempest, flood, bursting and overflowing of water tanks apparatus or pipes, impact from aircraft and other aerial devices and any article dropped from them, earthquake, riot, civil commotion, strikes, locked-out workers, and malicious persons and such other risks as L may from time to time reasonable consider to be necessary.		Check if damage is an Insured Risk. If yes, the damage should be covered by insurance. If no, T will be responsible.
Cl. 4.1 Cl. 1.14 Sch. IV Para. 27	T covenants to notify L immediately of any damage to the Premises caused by an Insured Risk and take steps to minimise such.		So L can arrange for insurance. If client has not already done so, advise client to notify L ASAP.
Damage to the Premises caused by an Insured Risk
Cl. 4.2 Cl. 1.6 Sch. V Para. 2.1	L covenants to insure the Premises [Cl. 1.2] up to the full value of reinstatement if damage is caused by an Insured Risk [Cl. 1.5]. L’s obligation to insure is subject to insurer’s exclusions/limitations.		L is responsible for insurance BUT claim could be withheld. Need to find out such exclusions.
Cl. 3.2 & 4.1 Cl. 1.14 Sch. IV Paras. 1 & 4.1	L grants the Premises to T together with the Rights [Cl. 1.12] but except and reserving to L the Exceptions [Cl. 1.3] – BASED ON T paying Rent [Cl. 1.11]. T covenants to pay Rent and all other sums payable as rent under the lease. T covenants to pay the sums which L pays by way of premiums for keeping the Premises insured in accordance with L’s covenants on demand as rent.		If this is not paid, L would not be liable to claim from insurance for the repairs. * Do the facts make it clear whether this has been paid or not?
Cl. 4.2 Cl. 1.6 Sch. V Para. 3	L covenants to reinstate (repair) the Premises from insurance monies.		L will effect repairs at no cost to T.
What if the damage renders the Premises unfit for occupation or cannot be repaired at all?
Cl. 5.11(a)	Rent is suspended until the Premises is either fit for use or until monies L receives from insurance for loss of rent is exhausted.		If L could not reinstate the Premises within 3 years, T would have to start paying rent again, even though the Premises are unusable.
Cl. 4.2 Cl. 1.6 Sch. V Para. 2.2	L covenants in insure the Premises against 3 years’ loss of rent.
Cl. 5.11(b)	If the Premises cannot be reinstated within 3 years after the date of damage/destruction by an Insured Risk:	L may end the lease by giving 6 months’ written notice to T.	L can end the lease.
Cl. 5.11(c)		T may end the lease by giving notice to L.	T can end the lease.
Cl. 5.11(d)	If the lease is terminated under clauses 5.17(b) or (c), all insurance monies will belong to L.		T loses premises and is not entitled to insurance monies (should have had own insurance!).
What if the damage is NOT covered by insurance (T contributed/caused)?
Cl. 4.1 Cl. 1.14 Sch. IV Para. 6.1	T covenants to “repair the Premises and to keep them in good repair except where damage is caused by any of the Insured Risks unless (through the fault of T or anyone at the Premises* expressly or by implication with their authority) L’s insurance policy has been vitiated*”.		If any acts of T have voided the insurance, T will be responsible for the repairs and any other related costs.	T must repair damage caused – unclear as to standard of repair or timescale of repair. So – can T just leave it?
Cl. 4.1 Cl. 1.14 Sch. IV Para. 4.5	T must rebuild/reinstate damage to the Premises where insurance is withheld by reason of any act or omission of T or its employees.		Insurers won’t pay out – so no point in even trying to claim.
What if T does not carry out the necessary repairs straight away?
Cl. 41 Cl. 1.14 Sch. IV Para. 10.1	T covenants to allow L to enter the Premises to: check state of repair [paras. 10.1(a) & (b)] serve notice on T to immediate effect repairs [paras. 10.1(c) & 10.2]		L can enter the Premises and service notice on T, who must then immediately commence such repairs.
Cl. 4.1 Cl. 1.14 Sch. IV Para. 10.3	If T fails to start repairs within one month of service of notice or fails to complete repairs within two months, L may enter the Premises to effect the repairs and recover the costs from T + Interest [Cl. 1.5: interest = 3% above National Westminster Bank base rate].		If T fails to start/complete...

#16683 - Insurance And Repair - Property Law and Practice

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