04 Feb What do you need to know about property dilapidations?

Posted at 00:00h in Residential Conveyancing by

Dilapidations can be a major issue for landlords and a source of fear and mystery for tenants.  Nicholas Davies, Commercial Property Solicitor at HRJ Foreman Laws Solicitors highlights some of the most important things to know for landlords and tenants.

What is dilapidations?

Dilapidations is a catch-all term used to describe breaches by a tenant of the lease obligations.  The breaches will be in relation to the condition of the premises.  They may include areas such as repair, redecoration, putting back alterations and statutory obligations.

Dilapidations clauses for landlords

Landlords can give the tenant a schedule of dilapidations detailing any breaches at the end of the lease (a “terminal schedule”), or at any time during the lease (“an interim schedule”).

The landlord is usually entitled to recover the cost of producing the schedule from the tenant but often is given to the tenant within a specified period from the end of the lease.

Interim schedules will require the tenant to carry any work required within a reasonable period. If the tenant does not comply, then the landlord will normally be entitled to carry out the works themselves and charge the cost back to the tenant or terminate the lease.

If negotiating a financial settlement, both parties must attempt to reach a fair and reasonable settlement based on the cost of works which are necessary to restore the premises to their proper condition.

The maximum amount a landlord is entitled to recover from the tenant is the amount by which the value of the property has been reduced because of the disrepair.  This may not be as much as it would cost to carry out the repairs.

Dilapidations clauses for tenants

Tenants who receive a schedule of dilapidations should consult an experienced solicitor for advice on the legal process, and a surveyor who can advise on the specific dilapidations referred to in the schedule.  It may be possible to dispute many of the dilapidations alleged by the landlord in the schedule.

If the tenant receives a terminal schedule in good time before the end of the lease, they can do the necessary remedial works themselves.  Alternatively, they may return the premises to the landlord at the end of the lease without doing any works and try to negotiate a financial settlement.

Failure to carry out any repairs stipulated in the commercial lease, may put a tenant in breach of the terms of the lease. As a result the landlord can then make a dilapidations claim against the tenant.

Prospective tenants should consider dilapidations before they take on a lease.  The specific wording of the lease obligations will make a big difference to the size of their dilapidations liabilities when the lease comes to an end (or sooner). Legal advice before entering the lease is essential and a building survey may also be advisable.

For more information about dilapidations and commercial leases contact our Commercial Property Legal Team today.

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