Dilapidation Claims

This page will answer many of your questions including what tenants are responsible for repairing at lease end and what you can do if the parties cannot agree on the costs involved in a dilapidations claim. You will learn more about our property disputes team, including how our experience in this area can help you resolve your dispute without having to go to court.

Acting for clients of all sizes from small business to PLCs, we regularly advise on complex disputes surrounding dilapidations and who is responsible for repairing what at the end of a lease. Our expert property litigation solicitors are accredited members of the Property Litigation Association, a professional body that brings together proven experts in this complex area of law. We offer highly practical, specialist advice to help you settle dilapidations claims as quickly as possible and with beneficial outcomes for your business.

Proactive guidance at the end of a lease

Landlords and tenants of business premises often run into disputes relating to disrepair at the end of a lease. Disagreements arise when the parties cannot agree on what the tenant is responsible for repairing and stripping out of the premises, and who should pay the costs of such works.

While the lease contains the contractual agreement concerning the repair of the property, this is a specialist and technical area of law and the amount claimed can often exceed a year’s worth of rent. Problems can occur if the lease is ambiguous or tenants are not fully aware of the duties and obligations they are subject to.

At Osbornes, we advise landlords and tenants in taking the most appropriate course of action. As a landlord, we help to preserve the full value of your property and be compensated for losses if the tenant fails to comply with their repair obligations. As a tenant, we provide you with timely advice on your potential liabilities, as well the protections you are given by law.

What are dilapidations?

Leases of business property generally contain clauses requiring the tenant to keep the property in good repair, and outlining the tenant’s obligation both during and at the end of the lease. The term ‘dilapidations’ refers to breaches of the repair clauses in the lease. These beaches can arise during the lease term but more commonly are dealt with at the end of the lease. This is sometimes known as ‘terminal dilapidations.’

When disputes arise, it’s usually because the parties cannot agree on what repairs should be done and who is responsible for them. Often, the landlord believes that the tenant has not done enough to make good any disrepair, while the tenant believes he is being asked to do too much.

How does a dilapidations dispute arise?

Generally, a landlord or his surveyors will inspect the property at the end of the lease and serve a ‘schedule of dilapidations’ on the tenant. This is a document that lists all the disrepair that need to be made good by the tenant, and any alterations that need to be removed.

If the tenant refuses to make the repairs or pay for the cost of having those works carried out, or if the tenant disputes the schedule, then the landlord may need to take legal action to claim damages. Where the court rules in favour of the landlord, the tenant may be liable to pay:

• The cost of the repairs
• Landlord’s professional fees
• Court costs
• In some circumstances, damages to the landlord arising from any decrease to the value of the property as a result of the tenant’s actions and any loss of rent.

From the tenant’s perspective, it is often in your best interests to negotiate the schedule of dilapidations rather than end up in court. A specialist commercial property dilapidations solicitor with a proven track record can advise on the legal and valuation issues that surround dilapidation claims, and save you a lot of time and money when negotiating the claim’s value.

What is the Dilapidations Protocol?

The Dilapidations Protocol established by the Property Litigation Association sets out a framework for landlords and tenants to follow in dilapidations disputes. There are strict processes and time limits to follow which are designed to encourage an early and amicable settlement of disputes without going to court.

While each claim is different, each party will usually hire a solicitor and specialist surveyor to negotiate the claim. Actions might include:

• Checking the lease and see what each person’s rights and responsibilities are
• Determining what is recoverable in terms of costs and damages
• Preparing and serving a schedule of dilapidations
• Estimating the costs involved in putting the issues right
• Negotiating a settlement, with a sum of money being agreed upon to cover the cost of making good the dilapidations
• Pursuing alternative forms of dispute resolution before taking the matter to court.

How can dilapidation disputes be avoided?

This is a technical area of law and the stakes are high. Prevention is better than cure and good legal advice before you enter into a lease is essential, for both the landlord and tenant. Using clear and precise language in the lease will remove ambiguity over what each party’s repair obligations are and remove any misunderstandings at the end of the lease.

Having a ‘schedule of condition’ drawn upfront can also minimise the likelihood of any disputes. This detailed photographic report is carried out by a surveyor and shows exactly what condition the property is in at the start of the lease, so the tenant’s liability for pre-existing problems is limited.

How can an expert help with dilapidation claims?

At Osbornes, our commercial property dispute lawyers have a proven track record in dilapidations claims. We offer a bespoke service and can work with landlords or tenants, whatever the size of your property or business. We can guide you through the options and the best steps to take to resolve matters quickly with minimal stress.

This is one area of law where swift and proactive action can put you in a better position. It is recommended you speak to a solicitor within the last 6 to 12 months of the lease to start the negotiation process. For landlords, early advice from an expert solicitor can ensure a favourable outcome and minimise the possibility of a delay in re-leasing the property. For tenants, carrying out repair works before the lease ends will generally achieve a much better settlement than leaving the property in a state of disrepair.

For more information, please contact Osbornes’ property litigation specialists today.