Schedules of Condition and Dilapidations
The landlord often serves a Schedule of Dilapidations at the end of a tenancy or lease detailing outstanding repairs that are required of the tenant.
In respect of commercial premises such schedules are sometimes served during the rent review process to add pressure to the negotiations and are sometimes used to gain possession of the premises on the ground that the lease terms have not been adhered to.
The landlord normally seeks to enforce a tenants repairing obligations, although the reverse is possible, e.g. when a tenant in part of a building seeks to enforce the landlord´s obligation to repair the building as a whole.
Claims may include the cost of repairs, reinstatement of alterations, professional fees and loss of rent.
A schedule may be served at the end of a lease or during the lease term, usually with a landlord instructing a surveyor to inspect the property and prepare a schedule. The schedule includes items of disrepair, remedial work required, reference to the clause in the lease which applies to each item and the estimated cost of repair.
Additionally, the schedule may include items such as professional fees and loss of rent incurred during the period when repairs are being dealt with.
1. Reason for Landlord requiring a schedule
- During the lease term, the landlord may serve a schedule simply to ensure that the property is adequately repaired and maintained.
- The landlord may wish to enter the premises to carry out repairs at the tenant´s expense.
- The landlord may be seeking forfeiture of the lease on the ground that the tenant has not complied with the repairing covenants.
- The landlord may use a schedule as a lever in other negotiations with the tenant which are not related to repair.
- To seek a cash settlement at the end of a lease.
The tenant may decide to carry out repairs prior to the end of the lease to control the method of repair and costs, but also to avoid any claim for consequential damages such as loss of rent.
2. Types of Schedules of Dilapidations
Interim schedule - made during the lease term, usually prior to the final three years.
Terminal schedule - made during the last three years of the term.
Final schedule - after expiry of the term. This schedule would normally be costed.
The surveyors acting for the landlord and tenant if such are instructed will often meet at the property and go through the schedule to agree what should be included and negotiate a method of settlement. failing an agreement the matter may be dealt with by the courts, by arbitration or by an alternative dispute resolution system. Settlement terms to be set down in writing and any works will be signed off by the surveyor