Repair Obligations Under a Full Repairing and Insuring Lease in Scotland – How to Negotiate Better Terms and Manage Risk

09 Oct 2025

By Jennifer Davidson, Associate, Real Estate, at Gilson Gray.

What is a Full Repairing and Insuring Lease (FRI Lease) in Scotland?

In Scotland, a full repairing and insuring lease (FRI lease) is the standard format for commercial leases, placing substantial responsibility on the tenant. If you’re considering entering into a commercial property lease, it’s vital to understand the repair obligations and how they can impact your finances long-term.

Under an FRI lease, the tenant is responsible for repairs, maintenance, and insurance of the leased premises, often including the structural parts of the property such as roofs, foundations, and external walls.

The Extent of the Tenant’s Repair Obligation

The repair obligation in a typical Scottish FRI lease usually requires the tenant to maintain the property in “good and substantial repair”. This can even mean putting the property into a better state than it was at the beginning of the lease, regardless of pre-existing conditions.

Importantly, many leases also include responsibility for latent and inherent defects, which are hidden or historical issues not visible during a routine inspection. Unless explicitly excluded, these defects become the tenant’s liability, often leading to unexpected repair costs.

Dilapidations in Scotland: The End-of-Lease Costs Tenants Often Miss

At lease end, tenants may face a dilapidations claim. This is a schedule of works and costs the landlord believes are required to return the property to an acceptable condition. Under an FRI lease, tenants may also be liable for the landlord’s legal and surveyor’s fees.

If you’re taking over a commercial unit, make sure to clarify the dilapidations position of the previous tenant. Otherwise, you could inherit costly repair obligations you didn’t create.

How to Limit Your Repair Liability in a Commercial Lease

To reduce risk and avoid significant repair costs under an FRI lease, consider the following strategies:

1. Commission a Schedule of Condition (Scotland)

A Schedule of Condition is a professionally prepared, photographic report of the property’s condition at lease commencement. If incorporated into the lease, it can limit your obligations to “no worse than the condition shown”, rather than requiring full reinstatement.

2. Instruct a Full Building Survey

Even if a Schedule of Condition isn’t pursued, a building survey is still highly recommended. It identifies hidden issues and gives you the opportunity to:

• Request repairs by the landlord before you take occupancy
• Exclude certain defects from your repair obligations
• Walk away if the liability is too high

3. Maintain the Property Proactively

Many dilapidations claims arise from poor maintenance. Avoid this by managing the property properly during your lease term:

• Fix issues promptly
• Carry out regular inspections
• Keep clear maintenance records

4. Negotiating Commercial Lease Terms in Scotland

Negotiating the lease terms at the heads of terms stage is key. Don’t accept the landlord’s standard draft without review. Consider negotiating:

• Exclusion of latent and inherent defects
• Responsibility for structural repairs
• Fair limits on dilapidations liability

Speak Experts in Commercial Leasing in Scotland at Gilson Gray

At Gilson Gray, our commercial property solicitors work with both landlords and tenants across Scotland to draft, negotiate, and review commercial lease agreements, including FRI leases.

We can assist with:

• Reviewing and negotiating lease terms
• Drafting or reviewing Schedule of Condition reports
• Managing and defending dilapidations claims
• Minimising tenant repair liability

Need Legal Advice on an FRI Lease?

Whether you’re about to sign a commercial lease in Scotland or facing a repair dispute, we can help. Contact the Commercial Real Estate team at Gilson Gray today to protect your position.

Find out more about our Real Estate services here.

The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.