Health and Safety Considerations within Commercial Leases

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Commercial Property News

16 October, 2019

Contained within most commercial leases will usually be a clause that is referred to as "compliance with laws". The purpose of this clause is to determine the responsibility of adherence with the particular rules and regulations that relate to the property and its use, and more often than not, lean the responsibility onto the Tenant.

All areas of common law, primary and secondary legislation, and any other applicable law would be covered by this clause. However, what does this mean in practice, and how are the parties affected in relation to health and safety issues. There are many areas relating to health and safety considerations, five of which include:

CDM Regulations - What is the default position?

The CDM Regulations (Construction (Design and Management) Regulations 2015) apply to all construction projects, including alterations, fitting out, renovation and repair, redecoration and maintenance, of all size of projects. If a project is notifiable the CDM Regulations require that the Health and Safety Executive is notified and nearly all substantial commercial projects will be notifiable. Where a tenant carries out a construction project at the property, the tenant may have duties under the CDM Regulations to keep and maintain the health and safety file.

The landlord may also have duties under the CDM Regulations in respect of the tenant's construction project, for example if there are multi let properties, or the landlord specifies some of the materials used.

How does the compliance with laws clause change the default position?

In addition to the general obligation, the compliance with laws clause will often specifically require the tenant to:

  • Comply with its obligations under the CDM Regulations and give the landlord a direct right of action against the tenant for breach of covenant if the tenant fails to comply.
  • Keep the health and safety file due to restrictive cost on the landlord. This would include keeping the health and safety file available for inspection by the landlord; reviewing and updating the health and safety file properly in accordance with the CDM Regulations; ensuring that copyright licenses are obtained; delivering the health and safety file to the landlord when the lease comes to an end.
  • Supply information to the landlord, to enable the landlord to comply with CDM obligations.

Contaminated land - What is the default position?

Contamination is clearly a major and increasingly important issue in property related matters. Historical or more recent contamination can have a real and lasting detrimental effect on the environment and/or human health.

As a general rule liability for the investigation, clean up monitoring and mitigation of contaminated land is either: -

  • In the first instance, on those who caused or knowingly permitted the contamination.
  • If that person can't be found, liability passes to the current owners and occupiers of the site, regardless of whether they were aware of the contamination.

How does the compliance with laws clause change the default position?

Historic contamination

Whilst any contamination issues may not have been caused by tenants the general obligation in the compliance with laws clause could be wide enough to make the tenant responsible for any remediation works (any new contamination would generally fall to the tenant to clean up in any event).

If the contamination includes land on which more than one property / Tenant occupies then a remediation notice relating to a site as a whole would (except in exceptional circumstances) be served on the landlord. However service charge provisions may oblige the tenant to contribute to the cost of repairs to the structure and the landlord's costs of complying with legislation.

It is important for the Tenant to fully understand their obligations if contamination clean-up is a potential risk (an environmental search being one way of identifying this possibility). Equally it is important for Landlords to know what liability they are imposing on a tenant, as this will potentially form an important bargaining tool in negotiations.

Asbestos - What is the default position?

The Control of Asbestos Regulations 2012 imposes obligations on the "dutyholder" who may or may not be an employer) to:

  • Determine whether asbestos is present in a building, or is likely to be present.
  • Manage any asbestos that is or is likely to be present. This involves assessing the risk and putting action plans and systems in place for managing the risk.

An asbestos survey report is therefore a valuable and key part of initial pre-lease investigations. The "Dutyholder" is someone who has "control" of the premises. This means that a wide range of people have duties, including all owners of non-domestic property, landlords, tenants, licensees, and, potentially, managing agents.

It can mean, however, on occasions that the landlord retains some obligation to maintain or repair (for example, the structure) or has the power to carry out maintenance work if the tenant defaults, and to forfeit the lease.

How does the compliance with laws clause change the default position?

Although the landlord may continue to be a dutyholder, the general obligation gives the landlord a direct right of action against the tenant, if the tenant fails to comply with the duty to co-operate.

Fire safety - What is the default position?

Most properties are covered by the requirements of the Regulatory Reforms (Fire Safety) Order 2005 subject to certain exceptions. This applies both to buildings (occupied and vacant) and to external areas. The "responsible person" and any person with fire safety duties are primarily responsible for compliance with the Fire safety order.

For some properties, there may be more than one person with duties under the 2005 order, and occasionally, such as with multi let properties the correct person and their responsibility is not always clear.

How does the compliance with laws clause change the default position?

The general obligation will help to demonstrate that the tenant is responsible for fire safety at the demised property, and additionally the lease may impose a specific tenant's covenant in relation to fire safety measures that obliges the tenant to comply with the requirements and recommendations of the insurers and the reasonable requirements of the landlord.

Smoke-free premises - What is the default position?

The smoking ban applies to properties that are open to the public or used as a place of work. It is a criminal offence. Anyone who controls or is concerned in the management of smoke-free premises must also develop procedures and train staff on how to deal with anyone smoking on the premises.

The tenant is (and, arguably, the landlord might also be) a person that "controls or is concerned in the management of smoke-free premises".

How does the compliance with laws clause change the default position?

The general obligation seeks to transfer all responsibility to the tenant. If the landlord is prosecuted, the compliance with laws clause may support the landlord's defence that it was reasonable for the landlord to assume the property was smoke-free and correctly signed.

The compliance with laws clause gives the landlord a right of action against the tenant, if the tenant fails to comply with the law.

For more information contact Matthew Jones in our Commercial Property department via email or phone on 01254 222316. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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