A Full Repair and Insuring (FRI) lease is a type of commercial lease agreement that places specific responsibilities on tenants regarding the upkeep of a property and its insurance.
Typically, under an FRI lease, in addition to paying the rent, the Tenant is also liable for the upkeep of the Demised property, including repairs, maintenance, and insurance.
Under an FRI lease, Tenants are responsible for ensuring that the property is maintained in good condition, including structural repairs, interior upkeep, and external maintenance. This goes beyond routine cosmetic repairs, extending to more substantial tasks that preserve the property’s value and functionality.
What Happens in Most Cases of an FRI Lease?
In most cases, the Lease will covenant the Tenant to keep the Demised Premises in Good and Substantial Repair and Condition. This goes far beyond general cosmetic upkeep. We would always recommend that you procure a Dilapidations Liability Assessment before you agree to sign a Lease. Such an assessment can also help you offset any future financial liability upon cessation of the Lease.
Additionally, FRI leases require Tenants to arrange comprehensive insurance coverage for the property. While the landlord typically holds the insurance policy, the financial burden is shifted to the Tenant, who covers the cost as part of the lease agreement. Again, we would recommend that you seek professional Advice to ensure that you have the correct insurance in place.
Where are They Commonly Used?
FRI leases are commonly used in commercial property, offering benefits to both Landlords and Tenants.
Landlords enjoy the assurance that their properties will be well-maintained, while Tenants have greater control over their leased space and the opportunity to tailor it to their specific needs, unlike Internal Repair and Insuring Leases that often contain an additional Service Charge Provision.
Before entering into an FRI lease, it is essential to carefully review the terms and responsibilities outlined in the agreement. Unlike an IRI Lease, the liabilities placed upon a Tenant entering into a Full Repair and Insuring Lease are far more onerous and wide-ranging.
It is also important to document the condition of the property at the start of the lease in a Schedule of Condition so that you are not having to pay for repairs that are not your responsibility.
Speak to one of our Experts today to see how we can help you before you enter into a Lease.
