Dilapidation claims can be a significant concern for both landlords and tenants at the end of a commercial lease. These claims involve assessing the condition of the property and determining whether the tenant has fulfilled their obligations under the lease to maintain and repair the premises. When faced with a dilapidations claim, it’s crucial to take the proper steps to protect your interests and avoid costly disputes. In this article, we’ll outline the essential steps to take when dealing with dilapidation claims, ensuring you’re well-prepared and informed.
Understanding Dilapidations Claims
Dilapidations refer to the breaches of a tenant’s obligations to repair and maintain a property during and at the end of a lease. These claims often arise when a landlord believes the property has yet to be returned in the condition required by the lease. A dilapidations survey, conducted by a professional such as those at Chekes & Co, is used to assess the condition of the property and quantify the cost of repairs.
Step 1: Review the Lease Agreement
The first and most crucial step when facing a dilapidations claim is to review the lease agreement thoroughly. The lease will specify the tenant’s obligations regarding maintenance, repairs, and any reinstatement work required at the end of the tenancy.
- Repairing Obligations: Understand the extent of the tenant’s repairing obligations. Some leases require the tenant to maintain the property to a high standard, while others may only require essential maintenance.
- Alterations and Reinstatement: If the tenant made any alterations during the lease, determine whether there is an obligation to reinstate the property to its original condition.
- Break Clauses: Check for any break clauses that might affect the timing or scope of the dilapidations claim.
Understanding the specific terms of the lease will help you better assess the validity of the claim and prepare your response.
Step 2: Conduct a Pre-Survey Inspection
It’s advisable to conduct a pre-survey inspection before the landlord carries out the formal dilapidations survey. This proactive step can help identify potential issues early and provide an opportunity to address them before the landlord raises a formal claim.
- Hire a Complete Inspection Surveyor: Engage a qualified complete inspection surveyor to conduct a thorough inspection of the property. This surveyor will assess the current condition of the premises and identify any areas that may not meet the lease’s requirements.
- Document the Condition: Take photographs and detailed notes of the property’s condition. This documentation can be valuable evidence if there is a dispute over the extent of the dilapidated claim.
- Identify Required Repairs: Based on the pre-survey inspection, identify any repairs or reinstatement work that needs to be completed before the end of the lease.
Step 3: Engage a Party Wall Surveyor
If the property shares walls with neighbouring buildings, it’s essential to involve a party wall surveyor early in the process. If alterations have affected the shared structures, party wall issues can significantly complicate dilapidation claims.
- Assess Party Wall Implications: Determine if any work carried out during the lease term has impacted the party walls. If so, the party wall surveyor can advise on the necessary steps to rectify the situation.
- Avoid Disputes: By proactively addressing party wall issues, you can avoid disputes with neighbouring property owners that might arise during the dilapidations process.
Step 4: Respond to the Dilapidations Schedule
Once the landlord has conducted their dilapidations survey, they will issue a dilapidations schedule outlining the breaches and associated costs. It’s crucial to respond to this schedule promptly and professionally.
- Review the Schedule: Carefully review the dilapidations schedule with the assistance of your surveyor and legal advisor. Ensure that the claims made by the landlord are in line with the lease obligations.
- Challenge Unreasonable Claims: If any items in the schedule seem unreasonable or unjustified, challenge them with evidence from your pre-survey inspection. This could include photographic evidence, maintenance records, or expert opinions.
- Negotiate a Settlement: In many cases, it may be possible to negotiate a financial settlement instead of carrying out the repairs. This can save time and avoid further disputes. Ensure that any settlement is fair and reflects the actual cost of necessary repairs.
Step 5: Carry Out Agreed Repairs
If an agreement is reached on the necessary repairs, they must be completed promptly and to a high standard. Delays or substandard work can lead to further claims and increased costs.
- Hire Professional Contractors: Engage reputable contractors to carry out the repairs. Ensure that the work meets the standards required by the lease and is completed within the agreed timeframe.
- Provide Documentation: Keep detailed records of all repairs, including invoices, photographs of completed work, and any correspondence with contractors. This documentation can be used to demonstrate that the repairs have been carried out satisfactorily.
Step 6: Finalize the Process
Once the repairs have been completed and any disputes resolved, the dilapidations process can be finalized. This may involve further inspections to confirm that the property has been restored to the required condition.
- Conduct a Final Inspection: It may be necessary to conduct a final inspection with the landlord’s surveyor to confirm that all agreed repairs have been completed. Ensure that both parties sign off on the condition of the property to avoid future disputes.
- Settle Any Remaining Claims: If there are any outstanding claims or costs, work with your surveyor and legal advisor to settle them. Ensure that all agreements are documented in writing.
Step 7: Prevent Future Issues
To avoid future dilapidation claims, both landlords and tenants should take proactive steps throughout the lease term.
- Regular Maintenance: To avoid substantial dilapidated claims at the end of the lease, tenants should conduct regular maintenance and repairs to keep the property in good condition. Engaging a party wall surveyor can also be beneficial in managing any issues that might arise, ensuring that both the property and any adjacent structures are well-maintained and compliant with legal requirements.
- Clear Communication: Maintain clear communication between the landlord and tenant regarding any repairs or alterations during the lease. This can prevent misunderstandings and disputes later on.
- Lease Negotiations: When negotiating a new lease, both parties should ensure that the terms regarding repairs and maintenance are clear and reasonable. This can reduce the likelihood of disputes when the lease ends.
Conclusion
Facing a dilapidated claim can be a complex and potentially costly process, but by taking the proper steps, both landlords and tenants can protect their interests and avoid unnecessary disputes. Understanding the lease obligations, conducting a pre-survey inspection, engaging professional surveyors like those at Chekes & Co, and responding promptly to the dilapidations schedule are all essential actions in managing these claims effectively.
Whether you’re dealing with dilapidations, need a party wall surveyor, or require the services of complete inspection surveyors, Chekes & Co. offers the expertise and support needed to navigate the process smoothly. By following the steps outlined in this guide, you can ensure a fair outcome and minimize the financial impact of dilapidation claims.
