Dilapidations _ Understand your lease laibilities

Why a tenant should always take advice from a surveyor

It never ceases to amaze me the number of commercial tenants who do not understand the repairing liabilities of their lease. Frequently, in fact in 95% of the cases where we prepare a Schedule of Dilapidations for a landlord, the tenant does not understand what their liabilities have been during their lease. In many case the tenants have never even read their lease.

It is then very important to spend time before signing a lease to have a Schedule of Condition prepared. This can be attached to the lease to set a benchmark of the condition of the building at the start of the lease. Not having a Schedule of Condition could mean the tenant may have an unlimited liability for repairing the building.

In many cases tenants tell me the building was in poor condition when they took the lease on why should they then have to repair and decorate the building at the end of the lease. In 99% of cases it’s very simple it’s because that is what the lease says you are would do.

I have never seen a Full Repairing and Insuring lease that does not contain a covenant requiring the tenant to decorate the inside and outside of the building in the last year or few months of the lease. A reference to the condition of the decorations at the start of the lease is never made. So even if the building is poor decorated when a tenant takes it on they have a liability to hand it back full decorated.

Likewise how many tenants have a repairing covenant in their lease which says to put and keep the building in good repair? A sneaky way maybe of some landlords to get a tenant to repair the building at their expense and to keep it in that repaired condition. A new roof anyone at the tenant’s expenses.

So how can a tenant limit their liability?

Quite simply by employing the services of a Chartered Building Surveyor to prepare a Schedule of Condition of the building at the start of the lease. Make sure the repairing covenants in the lease are amended to record existence of the Schedule of Condition and that the building should be kept in no better repair than that recorded in the Schedule. Yes it may cost up to £1000 to have the Schedule prepared but that will be very small beer compared to a Dilapidation liability at the end of the lease which may run to tens of thousands of pounds.

Tenants frequently take advice from a solicitor before signing a lease but in my experience a solicitor will only provide advice to a specific question. If the tenant doesn’t know the right question to ask then they may never have the repairing liabilities of their lease explained to them.

Save a few hundred pounds at the start of your lease at your peril by not using a good experienced Chartered Surveyor and it will come back and bite you at the end of the lease.