Dilapidations!! I was asked to do a blog on dilapidations, and my immediate thought washow do I make this sound remotely exciting? How can I make a blog about disrepair sound interesting? It will be difficult but I will give it my best shot . However, it is an important issue. As a tenant, you should know about dilapidations when the lease of your commercial premises is about to come to an end or you are going to surrender the lease. You should consider whether you may be liable for a claim for dilapidations by the landlord.
The starting point is to look at the wording of the lease in relation to your obligations as tenant. There will be covenants (your obligations) in the lease such as keeping the property in good repair and good decorative order. The lease will also state whether the property needs to be reinstated to the same condition it was in at the beginning of the lease.
You should also look at the provisions of any supplemental documents such as Licence for Alterations. Check that these do not contain clauses relating to dilapidations.
How do you avoid a huge dilapidations bill after the expiry of the lease?
You should consider in very good time what needs to be done to comply with your obligations under the lease. Remember, once the lease has expired and you have vacated the premises, you won’t be allowed back in . Also, you will not necessarily have a say in how the work should be done. By carrying out the works yourself, you can be in control of how much you spend. If the landlord carries out the works, he will not be mindful of the expenses it incurs and you could end up with a huge bill. Whilst the Landlord and Tenant Act 1927 does aim to limit the loss the landlord can justify, it may still be higher than the sum you would have spent.
Check if the landlord already has plans for the premises after you have surrendered the lease. Why would you do this? If he was going to redevelop the building, you could negotiate with the landlord and pay less than paying for the work yourself.
The landlord will prepare a schedule of dilapidations. You should consider instructing a surveyor to advise if the schedule is reasonable. It is always a good idea to instruct a surveyor when it comes to the state of the building. They can cast an expert eye on this rather than seeing it from a layman’s point of view.
You should also get expert valuation advice if the landlord claims a “diminution in value” in his dilapidations claim. This archaic term simply means a reduction in value. What does this involve and what does the release require? You must take into account the value of the state and condition of the premises. This meansthe premises in its actual state when the lease is surrendered.
In addition, I suggest you take photographs of the condition of the property when you surrender the lease and hand the property back to the landlord. This can be produced to the landlord if the landlord makes a dilapidations claim.
As the tenant you should always make sure that your legal adviser looks at any deadlines in the lease. The lease will set out the time limits for compliance with any provisions relating to dilapidations. What if the landlord does not comply with the contractual time limits in the lease? Answer, he will not be able to make a dilapidations claim. Ordinarily, the landlord should serve the schedule of dilapidations within 56 days of expiry of the lease. If the landlord misses a deadline, it could be to your advantage.
The landlord is entitled to recover its reasonable costs of doing any works. It is also entitled to recover any loss of rent incurred until the works have been completed. The landlord is entitled to recover his reasonable costs and fees in pursuing any dilapidations claim. Whether you do the work or leave it to the landlord to do, you should factor these costs into your budget.
So if you found this blog exciting (or even if you haven’t!) and you need advice on dilapidations, please contact me, Shakeel Mir, of the Law House solicitors on 020 3150 1919.