In essence, dilapidations are breaches of repair covenants contained in a business lease. This could be anything from a broken window to a damaged roof.
There are term dilapidations that occur during the term of the lease and terminal dilapidations where the lease has come to an end. Whichever it is, dilapidations can often become contentious and if a dispute arises, it is important to obtain prompt advice in this complex area of law, as there can be serious financial implications.
It is important to firstly understand the standard of repair in the lease and what the tenant is actually obliged to do. This will always be the starting point as if there is no obligation to keep premises in a certain state of repair then there can be no breach capable of providing a remedy to the landlord. The meaning and extent of ‘repair’ will vary depending on the wording of the lease and any schedule of condition. This could include maintaining, renewing or replacing, so that it does not fall into a state of disrepair.
A landlord may require a tenant to carry out the repairs or pay damages equal to the cost of repair. Recoverable damages due to breach of a repair covenant are limited to the diminution in value of the property as a result of the breach. Other important considerations are where there is a sub-tenant or where there is a possibility that the landlord intends to demolish or alter the premises.
Terminal dilapidations claims are generally expected to follow a pre-action protocol which deals with the preparation and service of a schedule of dilapidations, the landlord’s formal demand, the tenant’s response, negotiations and quantification of loss. Failure to adhere to the protocol may result in adverse costs consequences should court proceedings be issued.
Whether you are a landlord or a tenant, we can assist at all stages of the process and will work closely with surveyors as necessary. This may involve engaging in negotiations to encourage settlement at an early stage or taking you through the protocol steps and dealing with court proceedings. We will always advise from a commercial perspective to help find the best solution for you or your business.
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