HVAC maintenance – who is responsible?
The demarcation of responsibility for repairs and maintenance in commercial buildings is something of a grey area, particularly where there are multiple business tenants. Steven Booth, Managing Director at Guardian Water Treatment, discusses what the law tells us about who is responsible and explains how Facilities Managers can tie up the loose ends and improve accountability.
Commercial landlords have a duty to ensure their property is safe for tenants and other users, but if Facilities Managers (FMs) want to pass HVAC maintenance costs on to tenants and they are resistant, it can lead to a stalemate. With neither side willing to pay, essential maintenance is delayed. If matters remain unresolved, legal fees can be costly meanwhile critical HVAC systems may be operating inefficiently, at risk of breakdown and posing a danger to occupants.
In the matter of who is responsible, the law can only take us so far. However, FMs and landlords can take steps to protect themselves and their interests. Evidence is the key to resolving legal disputes, therefore landlords must ensure they have a water-tight Lease Agreement in place that specifies responsibility for HVAC maintenance. Additionally, real-time HVAC monitoring technology can help to identify when problems have started and the root cause, improving clarity, control and transparency. Crucially allowing landlords and FMs to pass on the cost of HVAC maintenance to tenants when appropriate.
What does the law say?
In residential property, rights and responsibilities are clearly defined for the most part, but the business property is more ambiguous. This is because there are so many different types of commercial building and uses, it would be impractical to lump them all together for the purposes of the law.
The Health & Safety at Work Act 1974 states that employers or persons concerned with the premises (including landlords) owe the common duty of care both to employees and others who may use or visit the premises (including business tenants). This duty must be exercised so far as is reasonably practicable.
Landlords are generally responsible for health and safety matters in communal areas, while tenants are responsible for matters such as compliance with fire safety regulations, temperature, lighting and ventilation control, toilet facilities and equipment safety. But how this relates to HVAC systems which run throughout the entire building and may service multiple tenancies is up for debate.
Fixture or fitting?
Fixtures are defined as items attached to the property, for example, lighting, toilets, sinks and building services, including HVAC systems, would fall under this category. Fittings are items that are not a permanent part of the building itself, for example, office equipment, shelves or cabinets. Generally, landlords and tenants are responsible for the maintenance and repair of all the fixtures and fittings that they own.
Structural repairs would usually lie with the landlord, whereas non-structural repairs, for example, air conditioning and plumbing would be the tenant’s responsibility.
It is clear that within this, there is significant potential for misunderstanding and conflict. Commercial landlords should seek advice from a specialist commercial property lawyer who will ensure that all rights and responsibilities, including who pays for HVAC maintenance costs, are set- out clearly in the Lease Agreement.
Lease Agreement
FMs and landlords should consider which of the following options best suits their building and its use, which will form the starting point for the Lease Agreement:
- Landlord takes full responsibility for HVAC system: This situation can be written so that the landlord can pass on any costs to the tenants through a regular service charge or maintenance fee.
- Tenant takes full responsibility for HVAC system: This may be a suitable option if each rental unit has its own HVAC system. However, it could put landlords at a disadvantage at the end of a tenancy if proper maintenance has been neglected.
- Shared responsibility for HVAC system: Rights and responsibilities clearly defined in Lease Agreement.
Improve transparency
Commercial buildings are becoming increasingly advanced as they are adapted to meet modern requirements, with continuous innovation in construction materials, automated building controls and smart technologies. The essential building services that run through these properties are incredibly complex and require a wide variety of contractors and sub-contractors to ensure maximum performance and operational efficiency.
If things go wrong and the Lease Agreement is unclear, landlords and FMs can end up shouldering the cost of putting things right. In the case of closed-circuit HVAC systems, inefficiencies or damage can cost millions to rectify; old-school methods of water sampling do not give the required insight or transparency. Alongside the Lease Agreement, remote HVAC monitoring technology can pinpoint accountability and help FMs avoid costly litigation for issues they did not cause.
We have seen many cases over the years where issues caused by tenants have been blamed on facilities managers, who do not have the right data to rebut the claims. The best way to mitigate this risk is through 24/7 monitoring, which collects key readings every 15 minutes and ensures landlords and FMs have data to show when a problem started and often, the root cause can be identified.
Crucially, this approach also means that landlords and maintenance teams are alerted to problems much earlier when corrosion is just a threat. In many cases, damage can be prevented and maintenance costs saved.
Take back control
HVAC monitoring can be used at any phase of a building’s life, including:
- Pre-commission cleaning: During construction, remote monitoring technology tracks water quality during fit-out, speeding up the PPC process and reducing uncertainty for landlords at handover.
- HVAC Health Check: A one-off health check where the technology is installed onsite for a fixed period, anywhere from two weeks to several months. This is a good option for landlords taking on responsibility for a new building, providing them with instantaneous access to critical data.
- Ongoing maintenance: Throughout a building’s life, remote monitoring technology provides real-time alerts to maintenance teams when significant changes occur. These changes can be attributed to planned or unplanned events, improving clarity, transparency and control.
Long-term savings
In one example, we worked on a building where unnecessary interventions and a lack of maintenance on behalf of the tenant resulted in remediation works to the cost of £300,000 – a bill that could easily have landed in the building operator’s lap.
However, in this instance, the client had installed real-time corrosion monitoring; a technology that tracks parameters that indicate early corrosive conditions in real-time, including dosing levels, unplanned events such as water loss, pressure and temperature every 15 minutes, 24/7.
Using data collected from the unit, the tenant was found to be at fault and the cost of remediation work passed on. In this case, the cost of the monitoring system was £2,500 per year, resulting in significant savings for the building owner.
Knowledge is power
Closed circuit water systems are hugely complex and the consequences of inadequate water system management can be disastrous, with the price of downtime, replacement and litigation potentially running into the millions. Improving control and transparency is a critical step in mitigating hefty maintenance costs and litigation.
The ability for landlords to hold real-time data, literally in their hand, provides the best possible insight into the health of their HVAC system, providing the opportunity to make informed service interventions, minimise unplanned callouts and reduce maintenance costs in general.
When things go wrong, as they inevitably will, being in possession of a wealth of cumulative data ensures that root causes can easily be identified and blame attributed to the right party with the costs passed on accordingly.
The value of evidence in this process should not be underestimated. By avoiding legal disputes, landlords can not only save money, but also ensure their reputation stays intact, disruption is kept to a minimum and business continues as normal.
