In commercial leases, Texas courts have held that a ‘warranty of suitability’ applies to all commercial real estate leases. This means that any latent defects in the building and land are the responsibility of the landlord, even if the tenant is contractually obligated to repair the premises. The theory is that the commercial tenant is not in the best position to know of–or pay have the place inspected for–hidden structural problems that will need to be repaired during the lease term.

My recommendation for commercial tenants and landlords is the same: Don’t disclaim the warranty of suitability.

For the tenant, the reason is pretty obvious. For the landlord, the reason may not be obvious at first. While a commercial landlord might feel great about obtaining a disclaimer from his or her tenant, such happiness is short-sighted. What happens when something goes wrong with the structure–something that would normally be covered by the warranty of suitability? Even if the tenant fully assented to the disclaimer, they are going to feel hoodwinked by the landlord. Thus, the landlord-tenant relationship will quickly deteriorate. And this deterioration may spread to the building’s other tenants. Furthermore, when the landlord relies on tenants to make repairs to latent defects, the landlord has no incentive to perform any ‘check-up’ inspections to make sure the building and land is structurally sound, which may lead to a overall deterioration of the building and reduction in market value.