The term ‘dilapidations’ is often referred to during or at the termination of a commercial lease and refers to the overall condition of a property. The process of a dilapidations claim is governed by the Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy (the Dilapidations Protocol). Lease end dilapidations claim can have significant financial and legal implications on both landlords and tenants where early advice is key to resolving potential disputes effectively. Our team at Fenn Wright have a wealth of experience representing both landlords and tenants on dilapidation matters, providing advice and guidance throughout the process and effectively settling claims.
The Dilapidations Schedule
A dilapidations schedule contains the alleged breach of the lease covenants which occur when a tenant has not fulfilled their obligations of the lease. These breaches typically relate to the following areas:
Repair and maintenance
Full Repairing and Insuring (FRI) leases generally state the tenant is responsible for keeping the property in good repair and condition throughout the lease term. Internal repairing only leases will also require repair and maintenance with the landlord responsible for the external parts.
Decoration
A tenant will typically have an obligation to decorate the property internally and externally within the final year of a lease,
Returning the property at lease end
The tenant is generally expected to return the property to the Landlord in a condition compliant with re-instatement conditions of the lease which would normally include the removal of any tenant alterations such as internal partitions or chattels. This is a key point and one where the lease is to be properly interpreted, particularly if a break clause is dependant on returning a property to the landlord with ‘vacant possession’.
Statutory compliance
Lease clauses normally stipulate that the tenant is responsible for ensuring statutory compliance throughout the term and holding up to date records of any statutory documentation
The schedule also specifies the remedial action required for the tenant to be in compliance with their lease obligations, followed by the estimated cost of undertaking the remedial works.
The Dilapidations Process
Weather appointed by a landlord or tenant our team will undertake the following actions in order to achieve the best outcome for the client:
- Review of the lease documentation (Inc. Licence to Alter (LTA), Schedules of Condition etc).
- Conduct a thorough inspection of the premises, recording the tenant breach items.
- Preparation of the Dilapidations Schedule setting out the breaches, remedial action and estimated costs.
- Settlement of the claim.
For Tenants:
We provide tenants with early advice, usually by producing an anticipated dilapidations report during their term, identifying the likely breach items and estimating the dilapidation claim figure range.
When appointed by the tenant where a Schedule has been served upon them, we will provide a response to the landlord’s representatives via a ‘Scott Schedule’ to reduce and remove any non-applicable breaches to ultimately reach a fair settlement. This is part of the formal process as detailed in the Pre-Action Protocol.
Schedule of Conditions:
As part of lease negotiations at the beginning of the term, a schedule of Condition may be included within the signed lease. A Schedule of Condition is a snapshot in time of the property prior to the commencement of the lease. This provides a detailed and accurate record of the property and provides the tenant with a layer of protection at lease end when returning the property to the landlord. This is particularly relevant where a property may not be in full repair at the outset to avoid a claim at lease end for damages not incurred during the lease term.
We’re here to help
If you are a landlord or tenant who requires assistance with a dilapidations matter, our team of Building Surveyors would be pleased to discuss your requirements and provide you with further information. Contact us on 01206216565 or click below.