No Implied Warranty of Habitability for Commercial Tenants in Pennsylvania

No Implied Warranty of Habitability for Commercial Tenants in Pennsylvania:

What Are My Options If Landlord Will Not Make Repairs?

Under Pennsylvania law, residential tenants benefit from an implied warranty of habitability. Because the warranty is “implied”, it does not need to be written into a residential lease. Tenants can rely on this unwritten rule to ensure that their rented apartment or house is safe for human habitation. Accordingly, the landlord is responsible for meeting basic health and safety standards, such as heat, water, electricity, and structural integrity of the property. Commercial tenants, however, do not benefit from an implied warranty of habitability. Nevertheless, they may still have remedies or options available under general contract principles and specific lease terms. Below are the potential remedies and options for a commercial tenant in Pennsylvania:

Negotiated Lease Terms:
It might appear obvious, but a commercial tenant may bargain for a warranty of habitability clause in the lease. If the landlord refuses, commercial tenants are advised to negotiate specific terms in their leases to address potential issues, such as repair obligations, rent abatements, or termination rights in the event of a landlord’s default. These negotiated terms will govern the tenant’s remedies in most cases.

Contractual Remedies:
Pennsylvania courts apply contract law principles to lease agreements, including commercial leases. This means that the remedies available to a commercial tenant are primarily governed by the terms of the lease itself. If the lease includes specific provisions for remedies in the event of a landlord’s default, such as repair obligations or rent abatements, the tenant may enforce those provisions.

A commercial tenant may also seek rescission of the lease or damages for breach of contract if the landlord fails to fulfill express covenants in the lease. A rescission means a cancellation of the lease, thereby leaving the parties in their original positions, that is, as if the lease never existed. The remedy of rescission should be used sparingly because it is not available or even wise to assert in all situations where the tenant believes the landlord breached the lease.

Termination of Lease:
A common workaround of the implied warranty of habitability utilized by tenants is the claim of violation of quiet enjoyment and/or constructive eviction. If the landlord breaches the covenant of quiet enjoyment (the tenant’s right to undisturbed possession of the premises free from the landlord’s disruptive actions) or if a constructive eviction occurs (e.g., the premises become unusable for the intended purpose due to the landlord’s actions or inactions), the tenant may have the right to terminate the lease.

Right to Withhold Rent or Setoff:
While there is no common law right for a commercial tenant to withhold rent or be reimbursed for payments made to cure the landlord’s defaults, such rights may be negotiated and included in the lease. Without such provisions, withholding rent is generally not permissible.

Repair and Deduct:
Although the “repair and deduct” remedy is more commonly associated with residential leases, Pennsylvania courts have applied this principle in commercial contexts as well. Tenants may perform repairs at their own expense and deduct the reasonable costs from rent if the landlord fails to fulfill express repair obligations under the lease.

Pennsylvania courts have consistently held that there is no implied warranty that commercial properties are suitable for the tenant’s intended use. Courts rely on the premise that, in the commercial context, the parties have, more or less, equal bargaining power and ought to negotiate and memorialize all of their rights and obligations into a lease. The doctrine of “caveat emptor” (let the buyer beware) applies, meaning the tenant assumes the risk of the premises’ condition unless the lease explicitly provides otherwise.

For these reasons, it is crucial for commercial tenants to carefully review and negotiate lease terms to ensure adequate protection in the event of a landlord’s default. An attorney experienced in negotiating commercial leases will be able to assist in providing tenant protection. Contact Moretsky Law at (215) 344-8343 for additional information.

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