Posted: Wednesday, 20 August 2008 @ 16:17
The law is littered with terms that tend to only mean something to lawyers and other professionals. Dilapidations is a term every landlord and tenant of commercial premises needs to understand.
All leases have obligations on a tenant to keep a property in a certain state of repair and decoration and dilapidations refers to a state of repair and decorative order that falls below the level required by the lease.
The first time a tenant tends to hear the term dilapidations is when it receives a schedule of dilapidations in the post from its landlord.
A schedule of dilapidations is a formal document which a landlord must prepare before being able to make a formal claim against the tenant (known unsurprisingly as a dilapidations claim). This document will list all the clauses in the lease which impose obligations on the tenant in relation to the state and condition of the property. It therefore includes not just the repairing obligation in the lease but also decoration obligations and (if the schedule is served at the end of a lease - known as a terminal schedule of dilapidations) obligations to reinstate alterations carried out by the tenant during the term. The document will then identify areas of work needed to the property (eg replace cracked ceiling tiles, repaint windowsills, etc) and also list in a separate column the landlord's surveyors' opinion of the cost of carrying out the works.
As anyone who has been on the receiving end of such a schedule will confirm, these are intimidating documents often with a frighteningly high figure for the total repair bill at the end. The first thing to do when you receive such a schedule is to stay calm. The total at the end almost certainly bears no relation to what it is actually going to cost you to settle any claim.
The second thing you should do is contact your lawyer and a building surveyor (if you don't know any good building surveyors your lawyer should be able to recommend one).
Your lawyer and building surveyor will then work together to assess the true extent of your liability. Various items of repair listed in the schedule may not, in fact, be your responsiblity on a proper interpretation of your lease and there may be other items listed for which the work required is overstated.
There is also a statutory limit on the amount a landlord can claim for dilapidations which is based on the reduction in the value of the premises resulting from the dilapidations. If, for example, the landlord is planning to demolish the premises and redevelop them then the dilapidations will have no effect on the value of the premises and so the landlord will have no right to make a claim against you.
As ever, prevention is better than cure. Rather than wait for a landlord to serve a schedule (most leases require the tenant to pay for the cost incurred by the landlord in preparing the schedule which can run into hundreds, if not thousands of pounds) you should always ensure you are aware of your obligations and have a rolling programme of works to keep the premises in good condition. It also pays to ascertain the landlord's plans for the property once your lease ends just in case there are some repairs that you won't need to undertake.
If you are unsure as to your potential dilapidations liabilities then contact commercial property lawyer, Steven Petty, on 01926 629005.
Steve Petty, Commercial Property Lawyer
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