Dilapidations refer to the condition of a property, in respect of a breach of the Tenants obligations and covenants within the lease, generally relating to disrepair, decoration or alterations and reinstatement.
In simple terms, dilapidations can be considered as the “Tenants Exit Costs” at the end of their lease.
Where a modern lease may be written in more simple plain English, older properties often refer to historical leases with archaic terms and complex phrasing, which can be difficult to interpret.
It is important for the Tenant to understand the extent of their repairing obligations and the terms used such as ‘to put in good and substantial repair’ or ‘to keep in good repair’. These would require the tenant to return the property, at the end of the lease, in good condition regardless of the condition when they first occupied.
When considering a lease, tenants should not be swayed by the visual appearance of a property, nor desire to move in quickly. They should consult with their solicitors and a chartered building surveyor to understand their repairing obligations, the condition of the property and their potential future to comply with the lease.
To protect themselves, tenants when first considering a commercial lease should be aware of the property condition and their potential responsibilities in the future and negotiate heads of terms to include clauses to limit their liability to ‘no worse or better state of condition than at commencement’.
A schedule of condition, when correctly referenced in the lease, is a good way of limiting your liability, especially if the building is old or in poor condition.
As soon as you receive a Schedule of Dilapidations you should appoint a Chartered Building Surveyor to inspect the property and produce an itemised response to the landlord’s claim. The surveyor can also offer strategic advice on how to proceed with the claim and the opportunities to mitigate any costs, which may include attending to some works themselves or acknowledging the level of financial settlement that may result.
The Landlord and Tenant’s surveyors will follow the Dilapidations Protocol which sets out the procedure and timeframe for an exchange of information, standards expected for quantified demands and pre-action negotiations, which will assist in a negotiated and agreed settlement avoiding litigation.
Please contact us, if you have the seed of an idea or a project to progress, our team of architects and surveyors will be happy to discuss your requirements.
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