Schedules of condition and lease end records: what are they and why do you need them?
Commercial tenancies are never without risk, but there are steps you can take to protect yourself in the event of property repairs and dilapidations claims at the end of your lease.
In particular, we recommend that all commercial tenants commission a schedule of condition (SoC) at the beginning of their tenancy, and a lease end record (LER) as close as possible to the last day of their tenancy.
In brief, a schedule of condition survey is a record of the building’s condition before a tenant moves into the property. A lease end record is a record of the building’s condition at the very end of a tenancy.
Here, we’ll take a closer look at SoCs and LERs and how they can protect you as a tenant from avoidable repair expenses and dilapidation payouts. We’ll also cover what quality looks like when it comes to these reports and what additional surveys you may want to take to protect yourself further.
Starting your lease on the right foot: schedule of condition surveys
When your tenancy ends, it’s your responsibility as the tenant to ensure the property is left in at least the same condition it was in when your tenancy began. Of course, without an official record of what this condition was, it’s impossible to say whether this responsibility has been fulfilled.
That’s where a schedule of condition (SoC) survey comes in. A SoC provides a highly detailed report of the condition of the property, with extensive supporting evidence, including photographs and annotated floor plans.
A SoC doesn’t just cover the immediately visible condition of the building. During their site visit, your surveyor should also carry out physical investigations, including taking damp meter readings, checking ceiling voids, and testing taps to create as detailed and accurate a report as possible.
“Can I save money by carrying out my own schedule of condition survey?”
We always recommend that your schedule of condition (SoC) survey is carried out by a qualified surveyor to ensure the necessary level of detail. While it’s true that this approach requires an upfront investment, you can save far more in the event of a dispute with a thorough SoC.
Negotiations and schedule of condition surveys
The schedule of condition (SoC) report is appended to your tenancy agreement and must be signed by both the tenant and landlord. If your landlord disagrees with anything included in the SoC, they can dispute it, and this dispute must be resolved before the tenancy begins.
Once the SoC is agreed, it effectively caps your future repair liability to the building’s baseline state documented in the report, protecting you from the responsibility of fixing pre-existing damage once your lease comes to an end.
Beware pre-existing defects: the limitations of a schedule of condition
It’s important to note that your landlord is not obligated to fix any defects in the property, such as leaks or electrical faults, even if they are documented within your schedule of condition (SoC) survey. The SoC provides a factual summary but does not require any action to be taken. This means that if the property’s condition worsens due to a pre-existing defect, you may be responsible for its repair.
For example, a SoC may document peeling paint around windows. If this is not addressed at the beginning of your tenancy, you may find yourself responsible for replacing rotting window frames five years later.
That’s why we recommend commissioning an executive summary report alongside your SoC. Through your executive summary report, you can formally request that your landlord repair critical defects before you move into the building, protecting you from costly repairs down the line. Alternatively, you may amend the lease to avoid liability for the further deterioration of these existing defects.
Handing back the keys with confidence: lease end records
A lease end record (LER) is another detailed report of the condition of the building, this time at the end of your tenancy. Without a LER, there’s no formal documentation of how you left the building in relation to the schedule of condition (SoC), making it easier for your landlord to make dilapidation claims. A LER can also protect you from footing the bill to repair anything that happens after the final day of your tenancy, such as criminal damage or unauthorised works.
You should aim to have your LER inspection carried out on the final day of your tenancy, or as close to that date as possible. Any earlier, and your landlord may be able to claim that the LER doesn’t accurately reflect the condition of the building.
Like the SoC, it’s essential for your LER to be as specific as possible to avoid unnecessary costs. For example, a landlord may submit a claim to resurface a car park. However, if your LER shows that there were only six potholes which can be filled in individually, you’ll likely be able to counter the claim and significantly reduce any costs.
“I’ve just had a final inspection. Why do I need to pay for a lease end record?”
The final inspection of the building is carried out towards the end of your tenancy to assess what work, if any, needs to be completed to bring the property to the standard documented in the schedule of condition (SoC).
The lease end record (LER) is still crucial because the building’s condition can change significantly in the final weeks of a tenancy. Without a LER, your landlord may be able to claim that you caused damage when moving out or failed to complete necessary repairs.
Commissioning detailed, professional reports of a property’s condition both before your tenancy begins (a schedule of condition survey) and as your lease ends (a lease end record) is the most effective way to protect yourself against unfair claims at the end of your tenancy. Investing in this work can save you far more money in the long term by helping you avoid unnecessary costs.
If you’re about to enter into a commercial tenancy, or your lease is coming to an end, contact Bradley-Mason LLP to arrange the right surveys for your needs.