Get 7 Lease Protections When Making Tenant Responsible for HVAC Maintenance
It costs a lot of money to maintain a heating, ventilating, and air conditioning (HVAC) system. There’s also a lot at stake. Keeping the HVAC system humming is crucial to maintaining comfort, ensuring air quality, and, in some cases, preserving tenants’ stored inventory. Accordingly, HVAC inefficiencies and breakdowns are a frequent source of landlord-tenant disputes, including potential constructive eviction claims. That’s why it’s essential for landlords and tenants to address the issue of responsibility for HVAC maintenance and repair before signing the lease.
One common solution is to make the landlord responsible for installing, replacing, and removing the HVAC system and make the tenant responsible for maintaining it. This makes sense because the tenant retains day-to-day control over the system and can directly affect how well it runs and the scope of maintenance, repairs, and improvements it needs. But entrusting a tenant with responsibility for HVAC maintenance is also risky. If the tenant doesn’t take proper care of it, the HVAC system may suffer significant damage or even a breakdown.
Solution: If you do make tenants responsible for HVAC maintenance, be sure to include lease language requiring them to ensure that the system is regularly checked, serviced, and repaired. Here are the seven elements to include in your HVAC service clause, along with a Model Lease Addendum: Require Tenant to Properly Maintain the HVAC System drafted by a veteran New York City attorney after an “engrossing” negotiation over a net lease.
1. Tenant Duty to Provide HVAC Service Contract
First and foremost, specifically require the tenant to enter into a service contract with a “professional, licensed, and reputable” commercial HVAC servicing company “to regularly and routinely service, maintain, and repair” the system, at the tenant’s sole cost and expense “and in a first-class manner.”
“This way, the system will less likely fail as a result of a tenant’s disregard for normal upkeep,” the New York attorney explains. And that’s a win-win: The tenant likely “avoids the inconvenience and financial hardship of dealing with a major breakdown,” and the landlord likely avoids having to replace or make major repairs to the system when the lease ends. As verification, require the tenant to deliver you a copy of the HVAC service contract within 30 days or other specified time [Addendum, section 1].
2. Tenant Duty to Provide Revised HVAC Service Contract
There’s a possibility that you won’t be satisfied with the HVAC service contract that the tenant provides you. So, reserve the right to suggest modifications to the contract. Agree to put your suggestions in writing and require the tenant to pass them along to the contractor and provide you with a written copy of the revised agreement within a specific period of, say, five days. While the Model Addendum doesn’t include it, the tenant might seek to limit your rights to suggest revisions to a certain number of days after you receive the initial service contract [Addendum, section 2].
3. Tenant Duty to Implement HVAC Service Contract
Require the tenant to keep the service contract in full force and effect at all times during the lease, including during any renewals or extensions [Addendum, section 3].
4. No Amendments to HVAC Service Agreement Without Your Consent
The service contract you sign off on, including the revisions you suggest, is the one that the tenant and contractor should implement. So, ban the tenant and contractor from making any revisions to the final contract without your prior written consent [Addendum, section 3].
5. Tenant Duty to Provide Proof of Payment of HVAC Service Contract Bills
Get the right to demand that the tenant furnish you written proof of payment in full of all bills due to the HVAC contractor under the service contract to ensure that the tenant is actually implementing the contract [Addendum, section 4].
6. Tenant Duty to Provide HVAC Service Contract Renewals or Extensions
Require the tenant to give you a complete copy of any renewals or extensions of the service contract it enters into with the HVAC contractor within 30 days of the expiration or termination of the previous contract, along with verification of the tenant’s full payment of all bills due under the renewal or extension [Addendum, section 5].
7. Clarification that Breach of Addendum Is Material Breach of Lease
Finally, specify your right to treat any breach of the HVAC Service Addendum that the tenant commits as a material breach under the lease justifying any and all remedies the lease provides you in the event of a material breach [Addendum, section 6].
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