Croyland Building Surveyors are pleased to provide these introductory guides to specific surveying topics. We find that they give our clients a good understanding of the potential issues that may arise in properties of all descriptions. These guides also serve as an introduction to the work which we are able to undertake.
“Dilapidations” is a legal term referring to breaches of obligations under a lease to repair, reinstate or redecorate a property. The law is complicated and stems from the lease (which is a contract) and also from various statutes, legal cases, and formal protocols...
A landlord will be concerned to see that the property is not devalued by a tenant’s neglect. Clauses in the lease will stipulate regular cleaning, redecoration, repair, prevention of alterations, and so on. If the tenant fails to comply with these, the landlord could take action to enforce the lease covenants. However, such action is unlikely to succeed unless there is clear risk of damage to the landlord’s “reversionary” interest – being the value at the end of the lease. The tenant is generally protected from a dilapidations claim until towards the end of the lease, unless the place is about to fall down.
Towards the end of a lease several factors often come into play. The tenant might want to renew the lease but on more favourable terms, or might be looking at a more attractive alternative. The landlord will not want the property empty and might want to push the tenant towards renewing. The threat of a large dilapidations claim might seem a useful lever. Or the landlord might see an opportunity to retain the tenant’s deposit and update the property at the same time as doing the repairs.
In nearly all cases, the end of a lease needs a technical understanding of repairs and what ought to be done to put the building into reasonable condition. However, this must be tempered with a clear understanding of the parties’ legal situation. This occasionally contradicts what might seem like common sense, and lead to a situation that you were not expecting.
Early advice can save a lot of time and money. We prefer to meet clients early on, and to provide initial high-level advice on liabilities and likely costs. This usually requires no more than a copy of the lease and a walk around the building for us to provide a report. If this is done a year or so in advance of the lease end, it will give useful advice for budgeting and programming.
Preparing (or responding to) a full “terminal schedule of dilapidations” is more time consuming. It requires appraisal of a full set of lease documents, side agreements, licences etc. It will also require a thorough survey of the building and testing of plant installations. The cost of doing this can be substantial so it’s best to get fee quotes, and to make sure that all the documents are in order. The lease will probably allow the landlord to recover fees for preparation of a schedule. However, unreasonable fees, and unreasonable schedules, can be successfully resisted. There are pit-falls for both landlords and tenants, so you need a good surveyor.