Who Pays for HVAC in Commercial Leases? Repair & Maintenance

Heating, ventilation, and air conditioning (HVAC) systems are critical for commercial real estate properties to maintain comfortable temperatures and air quality for tenants. However, these systems inevitably need repairs and replacement over time. In a commercial lease agreement, the responsibilities and costs for HVAC maintenance are typically spelled out. Here’s an overview of common HVAC provisions in commercial leases:

Repairs

For minor HVAC repairs like a clogged filter or faulty thermostat, the cost burden often falls on the tenant. However, for more intensive repairs of core HVAC components like compressors, coils, or ductwork, the landlord usually pays. The lease should specify thresholds for “minor” vs. “major” repairs if there is any ambiguity.

Preventative Maintenance

Landlords commonly take responsibility for scheduled preventative maintenance on HVAC systems, such as routine check-ups, filter changes, cleaning, etc. This helps prevent problems down the road. The lease will typically list required maintenance frequency such as quarterly or semi-annual.

Replacement

For complete HVAC replacement, the financial duty rests with the landlord in most standard commercial leases. HVAC systems have a typical lifespan of 10-15 years. Since replacing an entire unit is a major capital expenditure, it usually falls outside routine maintenance and is the landlord's prerogative.

Exceptions

The above represents general industry practice. But some leases have unique stipulations, like making the tenant responsible for all HVAC costs related to their particular usage patterns. It depends on the negotiations between both parties. Upfront communication about HVAC responsibilities is essential to avoid confusion.

Having clear HVAC repair and replacement clauses in commercial leases ensures that costly breakdowns get addressed promptly. Both landlords and tenants should understand their duties to keep these pivotal systems humming. Proper HVAC maintenance provides comfort to tenants and protects the value of the property asset.

I hope this overview on HVAC responsibilities assists anyone reviewing or drafting a commercial lease. Please let me know if you would like me to elaborate on any area in more detail!

Kaitlyn Page

Corporate Chief of Staff

North Star Commercial Real Estate AdvisorsKeller Williams Preferred Realty