Dilapidations advice
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.
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.
How we can help
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.
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. 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 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
Whether 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 lease documentation (Inc. Licence to Alter (LTA), Schedules of Condition etc)
- Conduct a thorough inspection of the premises
- Preparation of the Dilapidations Schedule setting out any 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 Condition:
As part of lease negotiations at the beginning of the term, a Schedule of Condition may be included within the signed lease – this 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. It 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.
