Dilapidation Disputes

Dilapidation disputes are often found at the end of commercial tenancies. Most commercial tenancies require the tenant to keep the premises in good repair. This may include specific obligations on the tenant to decorate, remove fittings and alterations and make good any damage to the property before yielding up the property at the end of the lease. Where a tenant fails to comply with these specific obligations, they could be liable for the costs of these repairs. Further, where matters require court action, a tenant could be liable for the legal costs if the landlord succeeds.

When commencing a dilapidation claim, a landlord is limited to the diminution in value of the property (i.e. the decrease in value of the property if it is less than the cost of the repairs. 

Considerations for the landlords include the following:

1. Is there a Schedule of Dilapidation? This is usually produced by a qualified building surveyor. This schedule will set out:
   1. The tenant’s repairing obligations.
   2. How the tenants repairing obligations have been breached. 
   3. The cost of putting the problem right.
      
      
2. Is there a Quantified Demand? The Schedule of Dilapidation should contain a quantified demand produced by the surveyor which sets out the damages limited to the actual loss.
   
   
3. Has the Schedule of Dilapidation and Quantified Demand been given to the tenant? You may instruct a solicitor to formally serve these documents on the outgoing tenant.
   
   
4. Has the tenant instructed their own surveyor? A surveyor may be instructed by the tenant to review the Schedule of Dilapidation and Quantified Demand as well as complete a site visit of the property.
   
   
5. Has there been a negotiation exercise between the two surveyors? Both surveyors may discuss the Schedule of Dilapidation and Quantified Demand with the view of negotiating a settlement. 

If a tenant has been served with a Schedule of Dilapidation but have been unable to settle matters with the landlords, tenants may consider the next steps.

1. Has a formal response been provided to the landlord? Tenants must provide a formal response within a reasonable time or 56 days from receipt of the landlord’s claim.
   
   
2. Has the tenant responded to each of the claims as set out in the Schedule of Dilapidation? A tenant should respond to each item on the Schedule of Dilapidation in a methodical manner and in particular setting out whether they agree or disagree with each item and also setting out reasons for any disagreement.
   
   
3. Is the schedule’s costs of repairs higher than the loss in value caused to the property? If so, the tenant may consider instructing a surveyor to carry out a valuation of the property.

Many dilapidation disputes can be resolved through negotiation or alternative dispute resolution and we would be happy to assist you through this process. Nevertheless, if court action is necessary we can assist you with this process to ensure you are robustly protected throughout the action.