Should commercial tenant pay for Periodic Electric Condition Report?

by Readers Question

16:43 PM, 28th January 2016
About 3 years ago

Should commercial tenant pay for Periodic Electric Condition Report?

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Should commercial tenant pay for Periodic Electric Condition Report?

We own a commercial building of roughly 6000 square foot. We bought this building in June 2014 for the purposes of relocating our business to this building.pay

We sold the business in June 2015 to a company who not only bought the business but decided to lease the building from us.

Our present insurers have made it a condition of our renewal that we have an electrical condition report done.

The tenant has replied to our request to get the report done by saying that; ‘As the previous report expired in March 2014 they are not willing to pay for the report at this time as they believe it should have been done before the lease was put in place. They have confirmed that going forward they would be happy to pay for the report but as the report expired prior to them occupying the building they do not believe it should be their responsibility.’

The terms of the lease says that, ‘the tenant is responsible for service media, maintenance, and repairs. Service media being the lifts and lift machinery and equipment and all the media for the supply or removal of heat, electricity, gas, water, sewage, air conditioning energy, telecommunications, data and all services and utilities and all structures, machinery and equipment ancillary to those media.’

Therefore, we believe the tenant is be responsible for carrying out and paying for this report and any recommendations found in this report. We also believe that if they had any concerns they should have raised them whilst they were doing there due diligence.

Can anyone please advise?

Harveydog



Comments

Chris Byways

8:37 AM, 29th January 2016
About 3 years ago

This is presumably a FRI lease. Have you, or tenant made any electrical changes? If not, would the original or any other competent electrician charge a minimal amount for a re-inspection, given sight of the 2014 Report? Such that it is not worth falling out over, nor even taking legal advice over.

An 'electrical condition report' may not even mean a redated full report, but simply to confirm it in a continuing similar condition.

Alternately, ask them to find an insurer, that does not make this stipulation, that is also acceptable to you. It is no concern of yours if it costs a little more, as they are paying the premium.

Neal Craven

11:42 AM, 29th January 2016
About 3 years ago

Normally, certainly in the case of condition unless its it’s expressly specified pervious condition is irrelevant and the tenant is responsible.

I suggest you look at the insuring provisions as they often require the tenant to comply with the demands of the insures.

Also may be worth looking at the Statutory Compliance provisions if the report is needed to comply

BUT “responsible for” may be a bit vague and

What’s the cost of reviewing the report if it keeps the relationship on a good footing?

Tony the hairdresser

13:07 PM, 29th January 2016
About 3 years ago

Hi Chris and Neal and thank you for your help,
Chris,
The lease is a full INTERNAL repairing lease.
When we purchased the property we made some alterations to the interior lighting...nothing major.
Neil,
Regarding the necessity for having an Electrical Condition report. This year it seems to have been a steep learning curve for us.
We own a number of residential houses which we let out and a couple of commercial properties this being one and another one which we use to trade from for our other business.
It seems that the regulations and law are a bit vague regarding this matter.
Ironically however we have just had to have an electical report done, on the instance of our insurers, on the other commercial property which we trade from and the contractor that carried it out has informed us that this needs to be done every 5 years. The rules around residential properties seem slightly different but just as vague.
When we purchased the 6000 square foot commercial unit we were unaware about the need for a report and hence didn't ask for it when WE were doing our due dillengence, neither were we advised about it by our solicitor. To be honest we were surprised when our tenants informed us of the existence of a report that expired just prior to our purchase in March 2014.
Does any one know where they would have found this information out? Would there be a national register?
However untimately we would like clarification on who's responsibility it is to pay for it? For armed is for warned..Before we make an offer to say contribute half we would be grateful if anyone can help.

Neal Craven

13:41 PM, 29th January 2016
About 3 years ago

What do the insuring and Statutory Compliance clauses in the lease say?

Also what does the tenant do? wont they have a duty to their staff to check the fixed wiring.

Has the tenant altered the wiring in any way?

Tony the hairdresser

14:33 PM, 29th January 2016
About 3 years ago

Hi Neal
Will check out the Insuring and Statutory Compliance clauses in the lease.
The tenant is a large training provider... mainly training young people/apprentices on NVQ programmes. They will contract with national government agencies.
we don't believe they have altered the wiring.

One of our contactors sent us a booklet....from The Institute of Engineering and Technology: and under Guidance Note 3; Inspection and Testing it says under Recommended initial frequencies of inspection of electrical installations; that Education establishments should be tested every 5 years.

Neal Craven

14:38 PM, 29th January 2016
About 3 years ago

With that sort of business I would be very surprised if the tenants SLA's didn't require production of a certificate

Neal Craven

14:39 PM, 29th January 2016
About 3 years ago

With that sort of business I would be very surprised if the tenants SLA's didn't require production of a certificate

PS where are you located?

Tony the hairdresser

14:39 PM, 29th January 2016
About 3 years ago

Sorry what is an SLA

We are based in Lancashire

Neal Craven

14:40 PM, 29th January 2016
About 3 years ago

Service Level Agreement, i.e. his contract with his customers

Tony the hairdresser

14:46 PM, 29th January 2016
About 3 years ago

We think the same.
We think they are just trying it on and hoping we are a bit naive!
How would they know of the existence of an electrical report that expired in March 2014 prior to our purchase when we didn't even know about it?
Is there a 'central registration centre'

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