Dilapidations is a specific area of law relating to breaches of a tenant’s lease obligations or covenants. A dilapidations claim can be made by the landlord against the tenant during or towards the end of a lease, or after the lease has ended. The landlord’s claim document – usually called a Schedule of Dilapidations – will contain references to breaches of the tenant’s lease obligations, mainly relating to physical alterations and their reinstatement, redecoration and repair.
The amount claimed can often be more than the cost of 12 months’ rent. If you don’t understand your lease obligations, your surveyor and solicitor can provide help and your surveyor can help you manage how to comply with them.
Subtleties in lease clause wording can significantly affect your liabilities, so start thinking about dilapidations when you first begin looking at a property and are discussing heads of terms with your prospective landlord. Be clear about what you are taking on and who is going to be responsible for what areas under the lease.
A Schedule of Condition can be a useful way of limiting your liability under a lease. Knowing a property’s condition from the start will also help stop you from signing a lease that states it’s in good condition, when it actually isn’t.
Once you have committed to a property, keep safe records of everything from the start of the lease negotiations to the executed lease documents to help resolve any disputes at the end of the lease. Good maintenance and facilities management during your occupation of the property will also help minimise your end of lease liabilities.
If you intend to alter or fit out the property, be sure to follow the lease procedures as you might require written permission from the landlord to do so. And at the end of the lease, you might not have to remove alterations if the landlord does not request their removal.
Take advice from a surveyor experienced in dilapidations as soon as you receive a Schedule of Dilapidations, as you should respond to it in a timely manner. Your dilapidations surveyor will assess your property and prepare an itemised response to the landlord’s claim on your behalf, as well as offering you strategic advice on managing the dilapidations process.
During the negotiation of the claim, your building surveyor will apply their understanding of the lease to your premises and will put together technical arguments to reduce the claim. There are many other tactics to support your defence and your building surveyor will discuss appropriate ones to use depending on the circumstances of the landlord’s claim.
If you can’t reach an agreement with your landlord, there are a number of dispute resolution options available, including the RICS Dispute Resolution Service, so check what your lease says about disputes.
This blog was first posted on the RICS website