Leases typically require landlords to repair, maintain, and perform other work on the building or center. However, tenants may want the right to do the work themselves should the landlord fail to do so. Having “self-help” rights assures tenants that they won’t get stuck with leaky roofs, defective plumbing, etc. 

But ceding this kind of control to a tenant puts landlords in a precarious position. One danger of self-help arrangements is their potential impact on the warranties contained in the landlord’s contracts with third-party service providers. These warranties are subject to strict terms and limitations. If the self-help work a tenant performs violates them, the provider/warrantor may seek to void the warranty. 

Example: A tenant exercising its self-help right to repair a leaky roof uses substandard materials or shoddy work methods not permitted under the terms of the roofing contractor’s warranty. So, the contractor claims that the warranty is void, leaving the landlord to foot the bill for fixing the tenant’s faulty repairs and performing future roofing work that the warranty would have covered.   

How do you avoid this situation? 

First choice: Don’t grant self-help rights to any tenants. The problem with this strategy is that it’s inflexible and may undermine your ability to attract and retain national chains and other desirable tenants with unusually strong bargaining leverage. 

Second choice: Grant self-help rights only to select tenants that have the clout to command them and also limit the right to work that your current warranties don’t cover. The problem with this strategy is that a tenant powerful enough to command self-help rights may not settle for a diluted provision that carves out work covered by the landlord’s warranties. 

Compromise Strategy 

The good news is that there’s a more realistic compromise approach that a New York City leasing attorney says will effectively safeguard your warranty protections and satisfy a tenant’s demand for self-help: Allow the tenant to perform self-help work covered by warranties but also include language in the lease ensuring that the tenant will be aware of and held accountable for complying with the terms of any warranties that apply to the particular work. 

Here’s a look at the strategy, along with a Model Lease Clause you can use to implement it. 

Include 4 Lease Protections

If you can’t avoid giving a tenant self-help rights, insist on including a special lease provision that includes four protections:

1. Tenant must request warranty information. The first goal is to ensure that tenants actually know about the warranties their proposed self-help work may affect. Leases typically require tenants to give the landlord written notice of their intention to exercise their self-help rights before carrying out the work. Specify that the tenant must also request copies of any applicable warranties when furnishing the self-help notice to the landlord. Agree to supply the requested warranty information within a reasonable time—say, five business days—to reassure the tenant that you won’t unduly delay the proposed self-help action [Clause, par. a].

2. Tenant must comply with warranties’ terms. Having provided for the necessary transparency, spell out that the tenant must ensure that the self-help work complies with all terms and conditions of all warranties that apply [Clause, par. b].

3. Tenant is liable for failure to comply. To add teeth to the clause, specify that the tenant will be liable to you for any consequences of its: 

• Failure to request the warranty information before proceeding with the self-help action;
• Breach of any warranty term or condition; or
• Failure to fully observe a warranty term or condition.

The latter trigger is significant to the extent that a tenant’s omissions or partial compliance would be grounds for the landlord’s services provider/warrantor to void the warranty [Clause, par. c]. 

4. Tenant isn’t liable if landlord doesn’t provide warranty information. Accountability cuts both ways, as do the respective obligations of the parties under the clause. The landlord’s side of the bargain is to deliver the warranty information the tenant requests within the time specified in paragraph a—that is, five business days. The lease should say that the landlord’s failure to do this relieves the tenant of liability for failure to abide by the terms and conditions of the applicable warranties. But add a stipulation. For the tenant to avoid liability, it must perform the self-help work in accordance with the terms of the lease applicable to the particular type of work. This way you can still hold the tenant liable for violating its lease duty to perform repairs, maintenance, and other work on the premises in accordance with standards specified in the lease provision governing tenant repairs, maintenance, and other work [Clause, par. d].