Who Pays for HVAC Repairs in a Commercial Lease?

Who pays for HVAC repairs in a commercial lease is decided by the lease itself, not by a general rule. In single-tenant industrial and triple net leases, the tenant usually maintains and repairs the HVAC and must keep a service contract, while replacing a dead unit is often split out to the landlord or amortized. In multi-tenant office buildings, the landlord usually runs the base building HVAC, recovers routine costs through operating expenses, and bills after-hours cooling separately. To know who pays in your building, read four things: the repair clause, how the lease defines "repair" or "maintain", what operating expenses include for capital work, and the after-hours HVAC rate.

The word that decides most disputes is replacement. A tenant who agreed to "repair" the HVAC has not always agreed to buy a new one.

Why there is no default answer

Commercial leases are read as contracts, and the law fills fewer gaps than most people expect.

• California's repair statute, Civil Code section 1941, applies "in the absence of an agreement to the contrary". The list of what makes a place untenantable, in section 1941.1, is written for "a dwelling" and names heating, not cooling.
• Texas is one of the exceptions. Its Supreme Court, in Gym-N-I Playgrounds v. Snider (2007), confirmed that "commercial real estate landlords impliedly warrant that their premises are suitable for the tenants' intended commercial purposes", and in the same opinion held that the warranty "is waived when, as here, the lease expressly disclaims that warranty." The court also noted that four of the six state high courts to consider such a warranty for commercial leases had declined to adopt it.
• Texas Property Code chapter 93, which covers commercial rentals, deals with lockouts, security deposits and utility interruptions. It does not set a duty to repair HVAC.

So the practical answer is always the same: find the clause. If the lease is silent, that is a question for your lawyer, not your service contractor.

Four ways real leases split the HVAC

Public companies file their material leases with the SEC, which makes them one of the few places you can read real commercial lease language for free. We read four of them, plus the US government's own lease template. They show the range.

Three things stand out. Where the tenant maintains the HVAC, the lease tells it how: a service contract, a frequency, sometimes a licensed contractor. Four of the five deal with replacement in so many words: a definition, a dollar line, a duty to replace, or an exclusion from operating expenses. And the money for a replacement can land on the tenant even when the landlord does the work, through operating expenses.

These are five documents, not a survey. Do not read them as "most leases say X". Read them as the clauses to look for in yours.

Repair is not replacement

The clearest court opinion on this is Capital City Mortgage v. Habana Village (D.C. 2000). A restaurant and night club's heating and cooling units failed and could not be repaired. The tenant had agreed to "make all repairs or improvements" and "perform all minor and major maintenance", and demanded the landlord buy new units.

The court agreed with the tenant on the words:

"replacement of-meaning a substitution for-the defective heating and cooling units does not amount to a "repair" or an "improvement""

It added that "maintenance" most likely meant no more than custodial "upkeep". Then the tenant lost anyway, because the lease also said the property was leased "as is". With that clause, the court held, replacing the units "plainly is up to the tenant holding the property "as is.""

Two lessons for anyone reading a lease:

1. Look for the definition, not just the verb. The QuantumScape lease avoids the whole argument by defining "Maintain" to include replacement. Without a definition, "repair" may stop short of a new unit.
2. Read the whole lease. In Capital City, the answer was not in the repair clause at all. It was two words in a typed addition.

How replacement costs come back to the tenant

A landlord who replaces a rooftop unit often has the right to recover part of the cost through operating expenses. The question is how much, and how fast.

The Lifetime Brands lease is a good example of a careful answer, and of why the HVAC clause has to be read on its own. Costs of capital repairs or replacements allowed into operating expenses "shall be amortized at a rate of seven percent (7%) per annum over their useful lives". For HVAC specifically, the tenant keeps a preventive service contract and pays for routine service, while the landlord is responsible for "all major repairs, or complete unit replacements of the HVAC during the last two (2) years of the Lease Term", with "major repairs" meaning any cost over $10,000. The same clause lets the landlord perform such work and pass the cost through operating expenses on an amortized basis.

Section 6.04(b) adds a general formula for systems that "cannot be fully repaired or restored": the landlord replaces them, and the tenant reimburses a share equal to the years left on the lease divided by the replacement's useful life. It does not apply to items the lease lists as the tenant's own maintenance obligations, so it has to be read together with the HVAC clause and its exceptions.

Here is what a formula like that does, as plain arithmetic with illustrative numbers (ours, not the lease's, and not a reading of how this lease treats HVAC): a unit with a 15 year useful life, replaced with 3 years left on the lease, puts 3 / 15 = 20% of the cost on the tenant. The same unit replaced in year one of a 10 year lease would put roughly 60% on the tenant.

Other leases close the door instead. The HealthStream office lease excludes "capital repairs and replacements" from operating expenses, apart from defined "Permitted Capital Expenditures" such as work required by new laws and equipment that improves energy efficiency or safety.

If your lease has neither an amortization rule nor an exclusion, the first replacement bill is where you will find out what it means.

After-hours HVAC is billed separately

In office buildings, the landlord usually provides heating and cooling during set hours. HealthStream's lease names them: 7:00 AM to 6:00 PM, Monday through Friday. Outside those hours, the tenant pays "a flat rate of $42 per hour, per floor".

Rates vary widely. A 2017 sub-sublease filed by Rosetta Stone passed through $89.50 per hour for up to three hours and $196.50 per hour for four or more. The federal government's own template does not name a number at all: it says overtime HVAC must be "provided at the hourly rates set forth elsewhere in the Lease", which leaves a blank for each lease to fill.

If your team works late or runs a server room, abstract this rate. It is often the HVAC cost a tenant actually sees each month.

Refrigerant rules follow whoever operates the unit

Whoever services the HVAC also takes on federal refrigerant rules, and the lease is what decides who that is in practice.

• Technician certification. Under 40 CFR 82.161, anyone who could be expected to open the refrigerant circuit while servicing equipment "must pass a certification exam offered by an approved technician certification program". A tenant's service contract should require certified technicians.
• Leak repair for older refrigerants. 40 CFR 82.157 applies to appliances holding 50 or more pounds of an ozone-depleting refrigerant. For comfort cooling, the trigger is a 10 percent leak rate, and owners or operators must repair within 30 days of adding refrigerant above that rate.
• Leak repair for HFC systems, since January 1, 2026. 40 CFR 84.106 extends leak repair to appliances with 15 or more pounds of HFC refrigerant, with the same 10 percent comfort cooling threshold. It does not apply to the "residential and light commercial air conditioning and heat pump subsector". EPA's January 2026 fact sheet describes that subsector as equipment for individual rooms, single-family homes and small commercial buildings, and notes that chillers and certain variable refrigerant flow systems are covered separately.

The definition is worth noticing. Under 40 CFR 84.102, an "owner or operator" is "any person who owns, leases, operates, or controls" the equipment. A tenant who runs the system under a triple net lease should assume the leak records are its job unless the lease says otherwise, and should ask counsel if the split is unclear. GSA's template, for its part, puts 40 CFR 82 and 84 on the lessor in writing.

What happens when nobody checks

A lease that puts HVAC on the landlord only works if the tenant checks. The federal government's own audits show what happens when it does not.

• In Tampa, GSA issued a notice of non-compliance to the landlord of the Kress Building in September 2014, naming HVAC system maintenance among the problems. A year later, the GSA Inspector General found those items "still unresolved", and auditors saw "HVAC systems that leaked and required water collectors". The lease said the lessor was "responsible for the total maintenance and repair of the leased premises."
• A 2022 GSA Inspector General audit inspected 16 leased spaces and found three that did not meet their lease's minimum air filter requirement. In one Kansas City building, the lease had required MERV 13 filters since 2010; the inspectors found MERV 11, and the landlord's engineer said the air handlers could not take MERV 13.
• The US Postal Service Inspector General found in 2020 that landlords did not complete 118 of 192 urgent or routine repair requests as required. The repairs it named were roofs, docks, doors and potholes rather than HVAC, but the pattern is the same: a duty on paper, and nobody tracking it.

GSA's general clauses give it the right to ask for proof: on request, the lessor must provide "written documentation that building systems have been properly maintained, tested, and are operational". Write the same right into your leases, and use it.

How to find the answer for your building

1. Find the repair clause for each party. Note exactly which systems each one covers. "HVAC serving the premises" and "building systems" are not the same thing.
2. Check the definitions. Does "repair", "maintain" or "Maintain" include replacement? Is there an "as is" clause?
3. Read the operating expense section. Are capital repairs and replacements excluded, allowed with amortization, or not mentioned?
4. Find the service contract requirement. Who must hold it, how often visits happen, and whether the landlord can demand a copy.
5. Abstract the after-hours rate and normal hours. Then record all five answers per building, with the section and page, so the next person does not reread the lease. Our post on ASC 842 lease abstraction covers the accounting fields to capture at the same time.

Once the split is clear, the tenant's share is ordinary maintenance work. Schedule it like any other recurring task, as in our guide to preventive maintenance schedules, and keep the HVAC contractor's insurance current, as in our post on certificate of insurance tracking.

How MAFM answers it

The demo below, with sample data, asks "Who pays for HVAC repairs?" across 14 leases in MAFM. The answer covers three tenants, cites its sources, and one click opens the lease PDF at section 9.3 on page 14.

That is the point of keeping leases in the same system as the work orders: when a rooftop unit fails, the person dispatching the technician can see whose cost it is before the invoice arrives. See the lease and compliance solution for how leases are stored and searched.

Frequently asked questions

Who is responsible for HVAC in a triple net lease?

Usually the tenant, for maintenance and repair, often with a required service contract. Replacement varies: some triple net leases put it on the tenant outright, others on the landlord with the cost amortized back. The lease's definitions and operating expense section decide.

Does a landlord have to replace a broken HVAC unit in a commercial lease?

Not automatically. Most commercial leases settle it in writing, and courts usually enforce what the lease says: in Capital City Mortgage v. Habana Village, a District of Columbia court held that replacement was not a "repair", yet the tenant still had to pay because it took the property "as is". Where a lease is silent, state law can still put duties on the landlord, such as the implied warranty of suitability Texas recognizes, unless the lease validly waives them. Read the whole lease, not only the repair clause, and ask counsel when it says nothing.

Can a landlord charge tenants for a new HVAC system?

Often yes, through operating expenses, if the lease allows capital costs in. Careful leases spread the cost over the equipment's useful life, as the Lifetime Brands lease does. Others exclude capital replacements entirely.

What are after-hours HVAC charges?

A separate fee for heating or cooling outside the building's normal hours. Rates are set in each lease: one filed office lease charges $42 per hour per floor, and a filed sub-sublease passed through $89.50 to $196.50 per hour.

Who handles refrigerant leaks in a leased building?

The owner or operator of the equipment, which under EPA's HFC rule includes anyone who "leases, operates, or controls" it. Since January 1, 2026, HFC systems with 15 or more pounds of refrigerant fall under leak repair rules, with an exemption for residential and light commercial units.

This post explains lease language and public rules. It is not legal advice; have counsel read your lease before you act on it. If you want every lease question answered with the page attached, talk to an operator who runs their own buildings on MAFM.