Schedules of Dilapidations
At the end of a commercial tenancy, it is common for landlords to present their tenants with what is known as a Schedule of Dilapidations.
This is a list of outstanding work which a landlord says is necessary to ensure that lease requirements are complied with.
Some tenants will look at this list of work that looks very formal and unquestioningly complete much of the listed work as possible, but is this really the best thing to do?
In some circumstances, our answer would be a resounding yes. But, for other tenants, our advice might be a little different. Let’s look at some of the reasons why.
The landlord is asking for too much
We have all heard stories of unscrupulous landlords trying to take advantage of their tenants. Whilst many of these stories are exaggerated, there are, unfortunately, instances where a landlord will deliberately ask the tenants to complete more work than is required by the lease.
Sometimes, this will be due to an innocent misunderstanding of what the lease actually says. But, in other instances, it can constitute a deliberate attempt to have their building upgraded at their tenant’s cost.
Leases are almost always individually drafted. Because of this, small changes in wording can lead to big differences in meaning.
Even the length of a lease can affect things. For example, in a 20 year lease where a tenant is not allowed to make alterations, if they have done so at the beginning of a 20 year lease the landlord may not be entitled to require unauthorised alterations to be reinstated due to the passage of time. At the end of a five year lease, though, it is a different story.
It is definitely worth commissioning an expert dilapidations surveyor to review your lease against the Schedule of Dilapidations you have received, so that they can advise you on which items on that list your landlord would have a valid claim for if you do not complete those works.
The landlord has other plans for the building
What will happen to the building after the tenant moved out is a very important consideration for a dilapidations claim.
Commercial properties are versatile and can often be subjected to a change of use. This change of use can require landlords to complete works which will render some dilapidations work unnecessary.
In this instance, your dilapidations surveyor will work with you to consider a risk-based approach, estimating the likelihood of a claim falling away due to a change of use.
A future tenant will take the building as it is
Some buildings are in such demand that the next tenant will take on the property in a less than perfect condition. In these cases, it is common for the new tenant to take on some, or all, of the liabilities accrued by the outgoing tenant.
In this instance, the dilapidations claim will fall away, either in whole or in part.
Again, relying on this happening without taking expert advice can be a gamble. Your dilapidations surveyor will be able to help you to balance the chance of this happening against the potential cost of building work.
It will cost less to do nothing
Sometimes, for many reasons, it might be preferable not to complete any work at all – where your dilapidations surveyor believes there are issues still to be bottomed out that, once addressed, are likely to lead to the majority of the claim falling away.
This is often the most cost-effective method of exiting premises. We see many large, national chains adopting this approach when they leave buildings.
Note: It can be hard for a landlord to evidence loss, which can benefit the tenant.
If you have appointed an expert dilapidations surveyor, they will work with you to identify any risk areas and the most likely future scenarios, to help you fully understand whether it is worth doing any work at all.
Every situation is unique
It is easy for us to give you generic advice on various dilapidations approaches, but it really is the case that each and every circumstance is different.
That is why we stress that, if you receive a Schedule of Dilapidations from your landlord, the first thing you should do is ask a specialist dilapidations surveyor to represent you/your business and review the claim.
They will help you to understand the likelihood and the scale of your landlord’s claim, and work with you to reduce your overall dilapidations costs.
How do you find a dilapidations specialist?
Many building surveyors offer dilapidation services but be careful who you choose, because few really specialise in this area. Look at online reviews, and ask firms to give you examples of cases they have worked on, to reassure you of their experience.
How Harrison Clarke can help
At Harrison Clarke we have an expert and tenacious team of dilapidation surveyors, who have a strong track record of reducing dilapidations claims for our tenant clients.
For further guidance and useful tips and information on the range of surveying services we provide, you can read our blogs and watch our videos. These are available on our website and our YouTube channel.
How you can contact Harrison Clarke
To put your business in safe hands, and minimise your financial obligation when it comes to a Schedule of Dilapidations, call our friendly, expert and highly qualified surveyors on 023 8155 0051, or email us at firstname.lastname@example.org.
We would welcome the opportunity to help with any queries or needs you may have.
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