South Carolina Lawyer
SC Lawyer, July 2010, #3.
What You Don't Say Can Hurt You: The Duty of Repair and Maintenance in the Commercial Setting
South Carolina LawyerJuly 2010What You Don't Say Can Hurt You: The Duty of Repair and Maintenance in the Commercial SettingBy David K. Haller and Matthew E. PecoyThe phrase, "What you don't say can't hurt you," is often a prudent guidepost in the practice of law. Especially when considered in relation to the commercial landlord's duty of repair and maintenance, silence in a lease agreement may be golden. At common law, there is no duty of a landlord to maintain or repair leased premises absent a contractual obligation. Further, the warranty of fitness and habitability, that is, to keep the premises in the condition for which it was leased, is not imparted on the commercial landlord in the same way it is statutorily mandated to his residential counterpart. Once the door is opened and the duty of repair and maintenance is drafted into a commercial lease agreement, however, certain pitfalls await the landlord and his counsel. This article examines the duty of repair and maintenance in the commercial setting and outlines areas the practitioner should be aware of in representing either the landlord or tenant in a commercial lease agreement.
The duty of repair and maintenance in a commercial lease relationship
As noted above, there is no general duty of a commercial landlord to repair, maintain or ensure the tenantability in a commercial setting. South Carolina courts have routinely noted, "absent an express agreement, a landlord in South Carolina has no obligation to maintain commercial leased property in good repair because South Carolina law does not recognize an implied warranty of fitness or habitability in a commercial lease." Brendle's Stores, Inc.v. OTR, 978 F.2d 150, 154 (4th Cir. 1992) (citing Edwards, Inc. v. Arlen Realty & Dev. Corp., 466 F. Supp. 505, 509 (D.S.C. 1978)).
Importantly, the lack of a warranty of habitability between a commercial landlord and tenant is contrary to that which exists in the residential setting. See S.C. Code Ann. § 27-40-440 (2009). In the residential setting, as a matter of public policy, the landlord is obligated to maintain the leased premises in a fit and habitable condition and the tenant is given established rights on the failure of the landlord to do so after notice. Id. However, except in the circumstance of constructive eviction, these obligations and rights are not imparted on the commercial landlord by statute or common law.
In the commercial setting, the law views the landlord and the tenant as generally being on equal footing-two businesspeople engaged in an arms length transaction, exchanging a place to conduct one's business for consideration. Thus, the relationship between the commercial landlord and his tenant is contractual. If a commercial lease agreement is silent about who is responsible for the maintenance and repair of the leased premises, the commercial tenant cannot rely on any implied obligations on the landlord to remedy problems or to otherwise maintain the premises. In other words, the tenant will generally have to shoulder the burden.
Commercial lease agreements as contracts
In their most basic form, lease agreements, both commercial and residential, are construed in the same manner as contracts:
The terms of a lease, like the terms of any contract, are construed to achieve the intent of the...