Why HVAC Language Can Become a Big Commercial Lease Issue

September 28, 2026

Repair, maintenance and replacement of an HVAC system can be very costly, and
disputes over a problematic system are common after a commercial lease is executed.
For that reason, each party’s obligation regarding the HVAC system should be negotiated
prior to signing the lease.

In many negotiations, landlords view the HVAC system as the tenant’s
responsibility regardless of the system’s age or condition at the time the lease is signed.
A more balanced approach depends in part on who installed the system. If the tenant
installed the HVAC system, responsibility for repair, maintenance, and replacement will
often fall on the tenant. If the landlord installed the system, repair and replacement are
more commonly treated as the landlord’s responsibility, although the lease may still shift
some or all of those obligations to the tenant. Because these allocations vary widely, the
lease should state them expressly so both parties understand their responsibilities if the
system fails

Before signing the lease, the tenant should have the HVAC system inspected to
determine its current condition and anticipated useful life. If the inspection shows that
the system is not in good condition, the parties should address that risk directly in the
lease, either by placing repair and replacement responsibility on the landlord or by
agreeing to an annual cap on the tenant’s exposure if significant repairs or replacement
become necessary.

It is also common for landlords to require tenants, at the tenant’s expense and
regardless of the system’s condition, to maintain the HVAC system through quarterly or
semiannual service calls. The lease may further require the tenant to provide proof of
those service visits and maintenance reports documenting that the tenant fulfilled their
maintenance obligations. It is important to outline these responsibilities in the lease
agreement to ensure each party knows the extent of their responsibilities and financial
obligations.

From the landlord’s perspective, the lease should also make clear that the
landlord is not responsible for damage caused by the tenant’s negligence or breach of
the lease. For example, if the tenant fails to change filters regularly or neglects required
inspections and that failure causes a problem, the resulting repair costs should be the
responsibility of the tenant.

Additionally, if the HVAC system exclusively serves one tenant, the landlord may
also include language requiring that tenant to contribute a reasonable and fair portion of
repair costs during the remainder of the lease term. By contrast, if the system serves
multiple tenants, the landlord will typically remain responsible for HVAC costs, including
the maintenance contract, but may pass those costs through to tenants as operating
expenses based on each tenant’s proportionate share of the building.

In practice, HVAC responsibility can be structured in several different ways. In
some leases, particularly where the landlord owns and maintains the entire building, the
landlord retains full responsibility for HVAC repairs. In others, the tenant is responsible
for maintaining the system within the leased premises, including changing filters
regularly and keeping the unit clean. Split arrangements are also common, with tenants
handling day-to-day maintenance and minor repairs while landlords remain responsible
for major repairs or replacement.

Common lease clauses often address preventative maintenance, emergency
repairs, and routine servicing. For example, a lease may require the tenant to perform
regular preventative maintenance such as changing filters and cleaning vents, while
assigning emergency repairs involving critical components to the landlord and requiring
routine servicing and inspections to keep the system in good working order. The more
clearly these obligations are spelled out in the lease, the less likely the parties are to face
confusion or dispute during the lease term.