When a commercial lease agreement comes to an end, the ensuing dilapidations process can be tricky and is often contentious. Put simply, dilapidations represent ‘exit costs’ for the tenants, associated with returning the property back to its original, pre-let state. When a Schedule of Dilapidations is presented to the tenant, it can often come as an unwelcome surprise, and disputes can arise.
As a landlord, it’s worth remembering that dilapidations are there to hep protect your interests from the actions of your tenants. You may find it help full to carry out a dilapidations survey on your commercial property as the end of the tenancy is approaching, in order to smooth the process.
Let’s take a look as your rights as the property owner and how you will be protected.
Why do you need a dilapidations agreement?
Dilapidations agreements are primarily put in place for your benefit as the property owner. When your tenants were first presented with the lease contract, it will most likely have contained repairing obligations to make your tenants liable for the condition of the property, including decoration covenants to ensure the building is kept in a reasonable state, and alteration and reinstatement clauses. Crucially, the contract will also stipulate that any amendments to the property must be restored to their original state at the end of the lease or tenancy.
These legal clauses are for your protection, ensuring that when the tenants vacate the building, your property remains in the same rentable condition as it was before they took possession.
What happens when your tenant moves out?
Before you tenant vacates the property at the end of the tenancy or lease, it may be necessary to notify them that you plan to enforce any dilapidations agreement in order to return the property to its original condition.
A building surveyor will draw up a Schedule of Dilapidations which sets out the required repairs, renovations and redecorations and the costs associated therewith. Should your tenant refuse to honour this agreement, either party can take legal action, so that a fair settlement can be reached and any payments enforced.
What is the process for pursuing dilapidation payments?
In the event that the terms of the dilapidations agreement have not been met by your tenant, or that any repairs and amendments are not of the required quality, you should consider taking further action.
While it is in both parties’ interests to settle the matter out of court, you may have no choice to pursue the matter through the proper channels if the tenant refuses to engage, refuses to make the changes you requested, or you feel that you may have been wronged.
At Bradley-Mason LLP, we typically advise our clients to carry out a thorough property inspection before the end of any tenancy agreement, so that ample time is provided to allow for any dilapidations disputes to be settled out of court – a quicker and lower cost option all round.
What happens if the matter goes to court?
If the dilapidations dispute does go to court, you will be required to produce evidence of the tenancy agreement along with evidence of the property’s condition following the most recent tenancy.
Based on the evidence and testimony provided by yourself and your tenants, a judgement will be made by the courts. If they rule in your favour, the tenant will be required to pay for the dilapidations and cover your legal fees too.
However, there are occasions where natural processes (e.g. subsidence) may have taken their toll. If the property was in poor condition, this in itself may also have resulted in a dilapidation, for which the tenant may not be responsible. In many of these instances, you may have to rely on insurance cover for the building repairs.
Dilapidations can be a complicated and often contentious matter that can be notoriously difficult to resolve. This is where our dilapidation surveys can offer real benefits. Our dilapidation surveyors will help identify the areas where damage or alteration to the property has occurred and where tenants are liable for repairs. We can even provide expert assistance to help with any court cases.
To find out more about commercial dilapidation surveys at Bradley-Mason LLP and how we can help you, contact us today and we will be delighted to answer any queries.