Commercial Maintenance and Repair Obligations in the Canary Islands

Managing commercial property in the Canary Islands—whether an industrial warehouse in Arinaga (Gran Canaria) or a hospitality venue in the tourist hubs of Tenerife South—requires precise contractual drafting. Unlike residential leases, commercial B2B agreements are governed primarily by the principle of freedom of contract, as established by the Spanish Urban Leases Act (LAU), effective 1 January 1995. Relying on "silence" or residential-style templates can leave landlords liable for significant maintenance costs, including the accelerated wear caused by the islands' high salinity.

1. The Primacy of the Contract (Art. 4.3 LAU)

Under the Spanish Urban Leases Act (LAU), commercial leases ("uso distinto del de vivienda") are governed first and foremost by the will of the parties. If the contract does not explicitly define maintenance responsibilities:

• Statutory Default: Article 30 of the LAU makes the repair rules of Article 21 applicable. This requires the landlord to perform all repairs necessary to maintain the property in a state suitable for the agreed use (structural repairs, roofs, and main installations) without increasing the rent.
• The Risk of Silence: Without a specific waiver, the landlord remains responsible for major structural repairs and those required by the maritime environment (corrosion and structural integrity).

2. Triple Net (NNN) Leases and Cost Shifting

To mitigate financial risks, Canary Island landlords typically implement "Triple Net" or "Total Net" clauses. These allow the 100% transfer of maintenance and operational costs to the tenant:

• Maintenance & Repairs: Shifting the obligation for all repairs—ordinary, extraordinary, and structural—to the tenant. This is common in long-term industrial and retail leases.
• Tax and Fee Pass-Through: In addition to repairs, the tenant is often required to pay the IGIC (Canary Islands Indirect Tax), the IBI (Property Tax), and all Community Fees associated with the premises.

3. Fit-out Works and Reinstatement

When leasing "raw" premises or those requiring significant renovation in the Canary Islands:

• Licensing: The tenant is typically responsible for obtaining all necessary Municipal Building and Opening Licenses. The contract should specify that the landlord's consent for works does not imply liability for these administrative requirements.
• Alterations Clause: Landlords should include a strict prohibition on structural alterations without prior written consent.
• Reinstatement (Dilapidations): It is critical to define whether the tenant must return the premises to their original state ("estado de obra") at the end of the term or if the improvements stay with the property for the benefit of the landlord without compensation.

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