Landlords Information Tenants Information

DILAPIDATIONS DIRECT

Dilapidations are now a critical issue for both Landlords and Tenants of commercial properties. Dilapidations Direct provides an expert dilapidation consultancy service for Tenants and Landlords throughout the UK.

Dilapidations claims are becoming an increasingly specialist area of surveying and legal practice. This procedural and legal complexity leads us to believe our clients are best served by a team solely and exclusively focused on dilapidations.

Dilapidations Direct has unrivaled expertise in achieving positive outcomes for both Tenants and Landlords across a broad range of property types and client base.

We provide acccurate timely advice to ensure dilapidations claims are quickly and fairly settled at minimum cost to our client.

DILAPIDATIONS OVERVIEW

The term "dilapidations" refers to a state of disrepair in a property where there is a legal liability for the condition of disrepair. This legal liability usual arises from express covenants contained within a lease, but may be a consequence of the law of tort or implied contract.

Landlords and Tenants frequently enter into a lease for a commercial property without any particular regard for its condition at the commencement of the tenancy and no particular strategy to maintain the building in accordance with the repairing provisions in the lease during the period of occupation.

The landlord may see the building in terms of an income producing asset and the tenant may be primarily concerned with operating his/her business. Neither party are normally focused upon routine building maintenance.

During the course of occupation, the landlord and tenant may well periodically renew the original tenancy without necessarily considering the condition of the property or the implication of any improvements or alterations which might have been undertaken.

Sooner or later, the landlord/tenant relationship will end, usually when the tenant decides to leave. Attention will then focus on the contractual matters arising from termination of the lease, including the condition of the building, and any dilapidations issues which might exist.

Landlords are usually primarily concerned with ensuring the condition of the building will allow reletting or sale. Tenants are normally intent upon leaving the building without incurring any significant expenditure.

Unless the parties to the lease have had the foresight to consider a dilapidations procedure well before the end of the tenancy, this is very often the starting point for a dilapidations dispute between the landlord and tenant which can be a fraught and expensive process.

Schedule of Dilapidations.

A schedule of dilapidations is the basis of a dilapidations claim and is a list in prescribed format, detailing items of repair maintenance and decoration which a Landlord considers in need of remedy in order to comply with the terms of a lease.

The type of Schedule of Dilapidation the Landord serves depends upon the time it is served in relation to the term of the lease.

1. An interim schedule is served during the term of the lease, giving the tenant the opportunity to remedy any breaches before outstanding works escalate. Regular interim schedules are considered best practice in avoiding large dilapidations claims when the lease is terminated.

2. A terminal schedule is one that is served within the last three years of the term of the lease. This gives the tenant early warning of any potential claim and the opportunity to remedy breaches before the termination of the lease. It is often the case that completing outstanding repairs and maintenance proves less financially onerous that a claim for financial compensation once the lease has terminated.

3. A final schedule is served at the end of the lease. The final schedule may list the same breaches of convenant as the interim and terminal schedule, but the tenant will not be entitled to undertake remedial works themselves once their right of occupation has come to an end.

Procedure for service of Schedule of Dilapidations.

If a Landlord elects to serve a schedule of dilapidations upon a tenant, the schedule must specify:-

1. The terms of the lease that have been breached.

2. The Landlord's opinion of what is required to return the condition of the building to that detailed in the lease terms.

3. The cost of necessary remedial works.

Civil Procedure Rules

The Lord Chancellor's Department is currently considering a dilapidations protocol prepared by the Property Litigation Association in respect of terminal dilapidations claims.

The draft protocol proposes that Landlords should serve a schedule of dilapidations within two months of the end of the lease. The tenant is expected to respond to the schedule within two months of receipt.

The parties should disclose any relevant documents and meet without prejudice in an attempt to settle the claim, or at least narrow the range of disputed items.

The Civil Procedure Rules are not mandatory, although Courts are taking a dim view of non compliance and are likely to penalise any party who has acted unreasonably.

The Royal Institution of Chartered Surveyors has also issued its own Guidance Note on Dilapidations. This gives practical advice to surveyors and explains their role in preparing, serving and responding to dilapidations claims, both before and after the commencement of proceedings. It also contains examples of how both a schedule of dilapidations and Scott Schedule should be produced.