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Dilapidations – Something for Everyone

Dilapidations disputes are rife, whether its overzealous Landlord claims due to Tenants not being fully aware of what they have signed up to or Tenants leaving premises in a state of disrepair leaving Landlords with an unlettable asset.

Failure to understand repairing obligations in a Lease gives rise to Dilapidations, but it can be easily avoided.

As a Landlord, you will want to preserve the value of your asset, whether that means enforcing the Tenants obligation to hand back the premises in a good state of repair or by way of a payment in lieu.

Tenants usually have a short-term interest in the premises and do not want to spend any more than they have to.

However, both parties can reduce the risk of drawn-out and miserable disputes with some easy steps: –

Landlords

  • Ensure the Lease is drafted to suit you and the building. For example, if you would like replacement carpets at the Lease end, say so.
  • Rather than wait until the Lease end, consider serving an Interim Schedule during the term if you are concerned about the Tenants neglect of the building causing deterioration to your asset value.
  • As the Lease approaches an end be clear as to your future intentions and aspirations for the building and look to engage with the Tenant early. Start to consider the process when there is around 12 months left on the Lease.

Tenants

  • Ensure you seek Pre-Lease advice from a Chartered Building Surveyor and negotiate any onerous aspects out of the Lease. Agree a rent-free period that covers the cost of the works or that the Landlord arranges these works prior to the Lease commencement.
  • Reduce your liability by reference to a Schedule of Condition stating that you will not return the premises in any better condition at Lease end than when you took it.
  • Plan your exit nice and early to minimise the risk of Dilapidations disputes and possibly loss of rent claims if a Landlord needs to undertake the works Post-Lease. Engage the services of a Chartered Building Surveyor around 12 months prior to the expiry of the Lease so that the liabilities can be established along with a clear exit strategy.

Whether acting for Landlords or Tenants, AG can advise parties at the critical stage of entering the Lease and towards the closing stages when a Terminal Schedule of Dilapidations is served.

For further information, please visit one of our dedicated Landlord / Tenant Services pages or get in touch via the contact details below. And remember, if you do not appoint somebody savvy maybe the other party will, and that could leave you out of pocket!