In the UK, especially in cities, it can be quite common to have a situation where a residential property is above a business. When a commercial unit suffers water damage due to a residential leak from the property above, legal responsibility can be complex, especially when both units share the same landlord. The primary legal question is whether the commercial tenant should claim against the residential tenant directly or hold the landlord accountable for enforcing the lease covenants.
Should a commercial tenant claim against the residential tenant or landlord?
Generally, a tenant experiencing water damage would initiate a contractual claim against their own landlord for breaching repairing obligations or violating the covenant of quiet enjoyment.
However, this route is not viable if the landlord’s breach pertains to their contract with another tenant — such as the residential tenant above. Due to the legal principle of privity of contract, the commercial tenant cannot sue the landlord over obligations owed to someone else unless certain conditions under the Contracts (Rights of Third Parties) Act 1999 are met. However, this is rarely the case in standard tenancy agreements.
How can the commercial tenant claim?
Despite this, the commercial tenant is not without recourse when it comes to residential leaks. They may pursue a non-contractual claim against the landlord, such as one based on negligence or nuisance. Courts have held landlords liable for nuisance where a failure to repair an upstairs leak causes damage to a downstairs property. Additionally, the Defective Premises Act 1972 may apply if the landlord retains repairing obligations under the residential lease.
Direct claims against the residential tenant are typically unviable unless the tenant was personally negligent or caused a private nuisance. If the cause of the leak stems from the landlord’s failure to maintain the property, the responsibility is more appropriately directed toward the landlord through tortious or statutory remedies.
Our thoughts
In conclusion, when it comes to a residential leak and a commercial property is impacted in a situation where both tenants share the same landlord, the commercial tenant is more likely to succeed by pursuing the landlord through non-contractual claims rather than taking action against the residential tenant.
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