A general provision to most lease agreements, both residential and commercial, is that the lessee will be responsible for the maintenance of the interior of the leased premises in a state of good order and condition and shall return the premises to the lessor on expiration of the lease in the same state of good order and condition, fair wear and tear excepted.
In circumstances where damage to the leased premises falls beyond the scope of what would be considered as fair wear and tear, the lessor is entitled to deduct the costs of such repairs from the lessee’s deposit. Therefore, the exact meaning and scope of fair wear and tear is usually only called into question once the lessee vacates the leased premises and the lessor seeks right of recourse against the lessee for certain “repairs” to the leased premises.
“Fair wear and tear” or “reasonable wear and tear” should be distinguished from “negligent or intentional damage to the leased property”. Our courts have defined fair wear and tear as “the amount of damage that can be expected to affect a product or property in normal use” or “the acceptable damage caused by normal use”. However, the definition is not particularly helpful as the term “normal use” is not defined.
It is clear from case law that there are no hard and fast rules when it comes to determining the exact scope of fair wear and tear, but rather that each case should be judged on its own merits. Our courts have however, set out some important factors to consider in assessing whether deterioration of the leased premises constitutes fair wear and tear, alternatively damage to property.
1) Duration of the lease:
It goes without saying that the duration of the lease period is directly proportional to the extent of the anticipated deterioration to the leased premises. For example, a lessee occupying a residential property for a period of 10 years or more, will inevitably cause more damage to the carpets than the same lessee occupying the same premises for a period of two years or less.
However, the mere fact that a lessee has occupied certain premises for an extended period of time, does not indemnify such lessee from all damages that might be caused to the carpet. In circumstances where the damage to the carpet is occasioned by the negligent conduct of the lessee or its guests, for instance burn marks or permanent stains, such damage will fall beyond the scope of fair wear and tear and the lessee will be held liable for the replacement thereof; light marks on the carpet might have to be viewed as unavoidable, whereas burn marks are suggestive of negligence or malicious damage to property.
2) Purpose for which the leased premises is used:
The phrase “normal use” as per the Court’s definition of fair wear and tear, suggests that the type of business activities conducted by the lessee at the leased premises, should be taken into consideration. For example, an administrative office with few employees will have less impact on the flooring than a retail business with hundreds of customers walking through the leased premises.
In light of the above, it is essential for the lessor and lessee to agree, prior to signing the lease agreement, on the intended use of the leased premises by the lessee.
3) Pre-lease condition of the leased premises:
It is crucial for the lessor and lessee to record the condition of the leased premises at inception of the lease period, so as to ensure that both parties have a reference point from which future fair wear and tear may be assessed. It is further advised that the initial inspection be conducted by the lessor and lessee in the presence of a third party. In addition thereto, any existing wear and tear brought on by previous tenants should be recorded by any means possible, preferably by photographs. It follows that same should be done at the end of the lease period, prior to the lessee vacating the leased premises.
Relatively similar deterioration to property may in one instance constitute fair wear and tear, and yet in another seemingly similar situation, be deemed negligent damage to property and as such constitutes the basis of a claim for damages against the lessee. It is accordingly vital that property owners, managers and leasing agents give proper consideration to the above-mentioned factors when conducting outgoing inspections, as this will assist in determining whether the damage to the leased premises constitutes fair wear and tear alternatively, whether same constitutes damage to the leased premises, for which the lessee is liable.