Top tips

  1. Understand the repairing liability, before you sign a commercial lease
  2. Record the property’s state of repair prior to the lease commencement in a Schedule of Condition
  3. Check that any rent free period in a lease is sufficient to compensate for a tenant’s repair obligations
  4. Plan for repairing obligations in advance of lease expiry break. Develop a proactive approach to managing repairs prior to lease end
  5. Keep a property in good repair during the lease and clarify whether any or all of the tenant’s alterations to the building will have to be reinstated
  6. Clarify what needs to be redecorated, when and whether any surfaces require specialist cleaning to maintain finish and/or warranties
  7. Comply with the strict conditions under which a break clause can be exercised
  8. Start early dialogue with the landlord to help ensure a smooth exit at lease end
  9. Set aside finance during the term of the lease to pay for dilapidations on termination
  10. Respond to a Quantified Demand within the 56 days period recommendation in the Dilapidations Protocol

The Dilapidations Protocol

The Dilapidations Protocol sets out the steps the court would normally expect prospective parties to have followed at lease end and prior to the commencement of proceedings.

It establishes a reasonable process and timetable for the exchange of information relevant to the dispute. It also sets standards for the content and quality of the schedules of dilapidations and quantified demands and the conduct of pre-action negotiations. Its ultimate aim is to enable tenant and landlord to avoid litigation and agree a settlement of their dispute.

Common areas of dispute

Unless a tenant has completed the repair and other works required under their lease obligations the landlord will issue a Schedule of Dilapidations outlining the works required to be completed at, or before, lease end. A landlord may issue a Schedule of Dilapidations after lease end and claim damages in lieu of dilapidations accrued to the lease end date.

Disputes can arise over:

  • Whether the items identified by the landlord’s surveyor are really a breach of the lease covenants.
  • What repairs and other works will need to be undertaken?
  • What constitutes an appropriate repair?
  • What is an appropriate response for a tenant in repairing or renewing the elements that were in disrepair at the start of a lease?
  • Whether any or all of the tenant’s alterations to the building have to be reinstated.
  • What needs to be redecorated or cleaned, with what materials and possibly in what colours?
  • What works are actually required under an Interim Schedule of Dilapidations and what relief is possible from these repairs until lease end?
  • The circumstances under which a tenant can exercise a break clause and whether a tenant has complied with the break clause conditions.
  • The landlord’s estimates of the cost of the remedial works in the schedule.
  • The value by which a premises has been reduced as a result of it being in disrepair.
  • The impact of any future redevelopment of the premises on the tenant’s dilapidations liabilities.

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Kevin Maddern
National Head of Building Consultancy

01604 664 343

Easy as ABC?

Case study: Brindley Place