Dilapidations and Schedules of Conditions

Tenants often overlook the importance of this area, but the consequences can be severe. To avoid a major dilapidation claim from the landlord at the end of the tenancy, the proposed tenant must appoint a surveyor to prepare a Schedule of Conditions and provide relevant evidence. Likewise, landlords must use a surveyor to prepare a schedule of dilapidations and ensure that the tenant complies with their repairing obligations during the tenancy as set out in the lease. We strongly advise all our clients, whether landlord or tenant, to seek advice on dilapidations before, during, and after the tenancy. Our extensive experience guarantees that both parties can avoid legal action and major claims.

What is a Schedule of Conditions

A Schedule of Dilapidations is a comprehensive report that lists all defects present in a property during or at the end of a lease term, which violate the repairing covenants of the Lease. Our Building Surveying Team is highly experienced and knowledgeable in assessing and scrutinizing claims for dilapidations across various commercial properties. We provide both Interim Schedules and Terminal Schedules of Dilapidations for Landlords and Tenants. Our Interim Schedules focus on significant disrepair issues, while our Terminal Schedules provide a detailed account of all disrepair items, along with a quantified demand that outlines the associated costs. Trust us to provide a thorough and decisive report that protects your interests.

Upon receiving a Schedule of Dilapidations from your Landlord, you must seek immediate legal advice. While the initial cost of remediation may appear daunting, it is essential to note that a legislative cap is in place. The Landlord and Tenant Act 1927 Section 18(1) strictly prevents the cost of works from exceeding the decrease in property value due to disrepair. At CDL, we can provide expert advice on leveraging this legislation to reduce the remediation cost. 

How is the Schedule of Dilapidations Prepared and Issued?

Landlords use a surveyor's assessment to issue a Schedule of Dilapidations, which checks for lease breaches. The Schedule is given before the lease ends, allowing the tenant to make repairs. There are three types: an Interim Schedule for immediate repairs during the lease, a Terminal Schedule for identifying specific disrepair issues in the last three years to 18 months, and a Final Schedule for repairs after the lease has expired.

The primary purpose of a schedule of dilapidations is to protect a property's value by ensuring its condition remains intact. It comprehensively assesses a building's condition, from its integral structure to its minor damage. A terminal or final schedule of dilapidations is issued to outline the required repairs and estimate the costs, thereby preventing much more costly repairs later on if left untreated.

An interim dilapidations schedule is issued early in the lease, reminding the tenant of the repairs that must be carried out by the end of the lease. This prevents unexpected costs at the end of the lease.

Failure to complete dilapidated repairs by the end of the lease can result in a tenant facing a dilapidated claim. This may take the form of a quantified demand.

When responding to a dilapidated claim, tenants must assess the validity of the dilapidated schedule against the tenant's required obligations stated in the lease. If the costs are provided as quotes, it is crucial to verify them. Tenants may benefit from the services of a chartered dilapidations surveyor to assist them in this process.

Interim, Terminal, and Final Schedule

A Schedule of Dilapidations can be prepared at any point during the lease term, with the landlord or a chartered surveyor typically taking charge of the task. When done during the lease term, it is known as an Interim Schedule of Dilapidations or Repairs Notice. It is typically used to alert the tenant to immediate repair requirements or highlight areas where the tenant is not maintaining the property to an acceptable standard. This schedule will detail outstanding and required work, such as repairs and decoration, necessary to meet the lease terms. Alternatively, a Terminal Schedule of Dilapidation can be issued within the last three years to 18 months before the lease ends. It will provide more detailed information on specific disrepair issues that must be addressed on the site or building.

To ensure that leased properties are maintained in good condition, landlords conduct regular inspections and issue schedules of dilapidations to tenants. These schedules list the repairs and maintenance work tenants must do during the lease period. Tenants must fulfill these obligations to keep the property safe and maintain its value. After the lease ends, landlords issue a final schedule of dilapidations that includes the cost of remedial works, including lost rent, if repairs are not carried out promptly. This is a legal requirement that tenants must adhere to without exception.

The Importance of a Schedule of Condition in Dilapidation Disputes

Tenants who fail to comply with lease obligations, resulting in damage or disrepair to commercial premises, will face dilapidation disputes. Full repairing and insuring leases place responsibility for repairs on the tenant, making it crucial for them to limit their liability and avoid inheriting disrepair from previous tenants. To accomplish this, tenants should have a schedule of conditions prepared by a chartered building surveyor at the outset of the lease, which must be referenced and used as evidence during dilapidation negotiations. These steps can help tenants avoid costly disputes and ensure they are not held accountable for unnecessary repairs.

The tenant's solicitor can effectively negotiate and advise on the repairing obligations in a lease using a schedule of conditions. By modifying the covenants from a vague language such as "keep in good and substantial condition" and limiting the obligations to "no better condition than evidenced in the Schedule" or similar, the tenant can avoid being obligated to return a property in better condition than it was at the start of the lease, which could have significant financial repercussions. Therefore, investing in an initial schedule of conditions is an essential and worthwhile expense.