Tenants can avoid or limit their Dilapidations Liability
How a Tenant might avoid or limit their Dilapidations Liability
If your lease is coming to an end – some issues to remember
Dilapidations can be a very large expense, often coming at a time of other large business expenses.
If your lease directs you to repair your premises, and they are not in good repair, your landlord will probably have a claim.
If your lease states that you are “to keep in good and substantial repair”, this really means “to put and keep in good and substantial repair”, which may mean that you are required to hand back your premises in much better repair than they were when you leased them.
If you have a liability for dilapidations, it is often better to repair the premises yourself rather than paying your landlord to do so as your landlord will also claim for the loss of rent, service charge and possibly rates if he has to carry out the works after the lease has ended. This is not always the case, as sometimes the negotiation is a straight ‘horse deal’, but needs to be considered with much care. This is an area requiring professional advice and judgement.
Your landlord cannot claim more than the damages they have suffered from the lack of repair and if they plan to carry out significant refurbishment works or demolish to redevelop, they may not be able to claim damages against you at all.
If the repair work that needs to be carried out under the dilapidations claim would be rendered valueless as a result of the landlord’s refurbishment or redevelopment works, then this is grounds for avoiding the liability altogether. However, again this is an area requiring specific professional advice, as the situation is seldom clear cut.
But the best way to limit your liability for Dilapidations is Before you take the lease
Avoid, where possible, the standard repairing clause, by including that the premises are not to be handed back in any better condition than at the time of the lease. This is an issue for negotiation, but should be achievable in all but the most buoyant letting markets.
Limiting the repairing covenant can best be achieved by including within the lease a Schedule of Condition which details, by description and photographs, the state of repair of the premises at the start of the lease.
Dron & Wright deal with dilapidations for both tenants and landlords and are currently representing clients in claims ranging from £15,000 to £2.3m. We have many years experience in settling claims and aim to do so by providing realistic early advise and a quick resolution where possible.
If you have any dilapidations queries, wish to discuss Lease documentation supplied by a landlord or have been served a schedule of dilapidations by your landlord and wish for some early advice please contact our John Murray or Nigel Green.
