Commercial Properties – Dilapidations – ‘The Sting in the Tail!’

16 Nov 2017

Commercial Tenants who leave a property without carrying our repairs at the end of their lease, can create a financial liability which may undermine its future solvency. The state of the economy plays a major influence on a Landlord’s decision whether to pursue claims for disrepair (‘dilapidations’) against former tenants. In bad times, Landlord’s are more likely to do so; in good times, less so.

The golden rule: Don’t ignore dilapidations –Landlords won’t!

 

Tips for commercial tenants:

1. Try limiting your repairing obligations at the start of the lease by reference to a well drafted Schedule of Condition.

2. ‘A stitch in time’ - maintain the property throughout the term. It can save tenants a fortune in damages that may otherwise be pursued by a Landlord.

3. Get advice from a specialist dilapidations surveyor at least 12 months before the lease ends to advise on your potential financial exposure.

4. ‘Keep your ear to the ground’. Try to find out if the Landlord intends to redevelop the property. If so, this could substantially reduce/extinguish any subsequent damages claim subsequently pursued by your Landlord.

5. If you are unable to agree a financial settlement with the Landlord, it is far cheaper for you to carry out the works (as advised by your surveyor) than having to defend an expensive claim by the Landlord seeking damages to cover the costs of work, professional fees, loss of rent and all other losses it can think of!

 

Commercial Landlords

1. Avoid limiting your tenant’s repairing obligations with a Schedule of Condition;

2. Carry out periodic inspections of the property throughout the term to ensure it is properly maintained. If not, serve an interim Schedule of Condition.

3. Instruct your surveyor to inspect the Property at least 6 months before lease end.

4. Serve a interim Schedule of Condition putting your tenant on notice as to likely remedial works required before lease end. At this stage, it can, though need not be, a ‘terminal’ Schedule complying with the Dilapidations Protocol.

5. Serve a terminal Schedule of Dilapidations within 56 days (or such time as the lease provides) from the date the lease ends complying with the Dilapidations Protocol.

6. If alterations have been carried out to the property, ensure that notice to reinstate is served in good time before the lease ends.

7. Adherence to the Dilapidations Protocol will ensure a tenant treats claims far more seriously than if pursued months (or years) later!

Further reading

Supporting employees through the next lockdown

Blog
22/01/2021
Managing your employees through uncertainty and equipping them to thrive, remain engaged and feel part of a team environment, must be a HR priority for 2021.
Read more Read

Remote working and home security

Blog, News & PR
20/01/2021
With a large proportion of the workforce now working from home, security arrangements for home workers need to be addressed - Robert Ganpatsingh explains
Read more Read

Tenants take note: dilapidations damages to be subject to VAT

Blog, Legal Updates
19/01/2021
Property expert Cheraine Williams explains why dilapidations could be about to get more expensive
Read more Read

Covid business interruption insurance payments due to small and medium companies

Blog, Legal Updates
19/01/2021
Partner Jonathan Compton looks at the Supreme Court’s decision on business interruption insurance
Read more Read
  • Brighton Office

    1 Jubilee Street

    Brighton

    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street

    Crawley

    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road

    Guildford

    Surrey

    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax

    Horsham

    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane

    London

    EC4A 3BF

  • Get in touch