Whilst many will have welcomed the recent hot spell, unless you are blessed with a workplace that has air-conditioning it can be a miserable time. Other than squabbles about what temperature to set it on, what else should you be thinking about when it comes to air-conditioning in commercial property?
Servicing
If an air-conditioning system is used correctly and is regularly serviced it can last for many years. Ensure that you know how to operate it – read the manual, ask the installer or service engineer to show you, or watch a You Tube video (there is bound to be one out there!). When purchasing a property that has air-conditioning installed, obtain a copy of the most recent service report from the seller. This is a question that is covered in Commercial Property Standard Enquiries, and so will be raised by your solicitor.
If you are selling a property that has air-con, then pre-empt this question and get the system serviced in readiness. Legislation provides that all air conditioning systems with an effective rated output of more than 12kW must be regularly inspected by an energy assessor. The inspections must be no more than five years apart.
Repair/replacement
If you are taking a lease of a property that contains air-conditioning, the same comments as above apply as the tenant will potentially be responsible for the system during the tenancy and will want to make sure that it is in good working order. The parties will need to agree who is liable for repairing and maintaining the system and the cost of replacing it if it fails, as this is likely to be a costly exercise wiping out the benefit of any competitive rent, or rent-free period, that you may have negotiated.
Some older systems are not capable of repair as they contain refrigerant gases which have been banned by legislation, and so as tenant you would want to avoid responsibility for replacing the system in the event of its failure. Ascertain whether the system has the benefit of any warranty or guarantee.
Planning and building control
Consider whether planning permission or other building control consents may have been required for an existing system, or will be needed if you plan to install a new system. This will depend on the specific property, type and size of system to be installed. For example, if the property is listed or situated within a conservation area it is likely to require consent. In some instances, building regulations approval will be required. Where plant overhangs a public highway, you will need an Oversailing Licence from the local authority.
As a new owner or tenant you will want to ensure that any existing system is compliant with planning and building control requirements and again, on purchasing or leasing a property your solicitor will request evidence of compliance.
Installation of a new air conditioning system/access to maintain, repair or replace an existing system
If you are a tenant taking a new lease, you may wish to install air-conditioning as part of your fit-out works. You will need to ensure that you have your landlord’s permission prior to commencing works. This permission is usually given in the form of a Licence for Alterations. If this is entered into at the same time as the lease is granted, it is common that the landlord and tenant each bear their own legal costs for preparation and negotiation of the Licence. However, if the tenant wishes to carry out works part way through its tenancy, the lease will require the tenant to cover both the landlord’s and the tenant’s legal costs and potentially the landlord’s surveyor’s fees. These sums will need to be factored into the tenant’s costings.
A landlord may also need to obtain consent to any alterations from a third party, such as its mortgage lender, if a mortgage is secured against the property or superior landlord. This process may take a few weeks, and so any consent for a Licence for Alterations should be made as early as possible. You should always endeavour to plan ahead where possible. It is no good requesting a Licence for Alterations from your landlord a week before you want to start work, as it can take a number of weeks to draft, negotiate and finalise a Licence for Alterations.
The air conditioning system will consist of the indoor units that cool the office, retail or other space and an external condensing unit. You will need to consider where the external condensing unit is, or is proposed, to be positioned. If it is not positioned on, or within, the boundary of the property being acquired, does the seller or landlord have the necessary rights to place it in its current position? The external condensing unit could be situated in a shared compound, or on a roof or wall of building that does not form part of the property being acquired or let.
If you are installing a new system, you need to consider logistics. How is your contractor going to get the external units (which are likely to be large and heavy) into position, or remove any existing units that are no longer required? Will they need to go through or over a neighbouring property? Will a crane be necessary, and if so, will a crane oversail licence be required to enable this? If the property forms part of a larger site such as a shopping centre, will the contractor need to speak with the manager of the shopping centre to agree the route and time of access and what documentation, such as risk assessments and method statements, are needed?
Insurance
It is important to check the buildings insurance policy as to whether there are any conditions that may affect the installation of an air-conditioning system. There might be a requirement that where a naked flame is used such as when soldering the pipes that connect the units, the contractor remains within the vicinity of the heated pipe for a certain time to minimise the risk of fire. Failure to comply with this condition could invalidate the insurance policy and, in the case of a tenant, the insurance covenants contained in the lease are likely to require that the tenant reinstates or rebuilds the building at its own cost.
If you are buying, selling or leasing a property or proposing to install a new air-conditioning system and require advice, please do not hesitate to contact the Commercial Property team. In the meantime enjoy the good weather while it lasts!