A dilapidations claim arises at the end of a commercial lease when a landlord claims that the tenant has failed to comply with their repairing and decorating obligations under the lease. Dilapidations disputes can involve very significant sums and it is important for both landlords and tenants to understand their position.
Most commercial leases impose substantial repairing obligations on tenants, including keeping the property in repair, redecorating at specified intervals, and reinstating any alterations made during the tenancy to their original condition at the end of the lease. The precise obligations depend on the terms of the specific lease.
A schedule of dilapidations is a document prepared by the landlord's surveyor that sets out all of the alleged breaches of the tenant's repairing obligations and the cost of remedying each breach. Terminal schedules are served at or near the end of the lease. Interim schedules can be served during the lease where breaches have already arisen.
Yes, and doing so is very often worthwhile. Many dilapidations schedules claim for works that exceed what the lease actually requires, that have been over-valued, or that the landlord is not entitled to claim for at all. For example, where the landlord intends to redevelop the property in any event.
The tenant's surveyor prepares a response to the schedule, setting out which items are disputed, what counter-valuations apply, and what arguments are available to reduce the claim. This response forms the basis of negotiations with the landlord.
Under the Landlord and Tenant Act 1927, a landlord's damages for breach of a repairing covenant are capped at the diminution in the value of the landlord's reversion caused by the disrepair. If the property would be worth the same whether or not the repairs were done, the landlord's claim may be worth nothing, even if the schedule is technically valid.
A dilapidations claim requires the tenant to remedy breaches of repairing obligations under a commercial lease. Schedules of dilapidations can often be successfully challenged through expert surveyor evidence and legal argument. The landlord's damages are capped by the diminution in the value of their interest. A specialist property barrister can advise on the merits of a dispute and represent either party in any litigation.
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