DILAPIDATIONS DISPUTES & ADVICE

Dilapidations is a term in law, generally used to refer to items of disrepair that are covered by repairing covenants contained in a lease. The term is often used to mean breaches of the tenant’s covenants relating to the physical state of the premises when the lease ends.

 

Breaches of the following types of covenant are generally relevant to the tenant’s liability for dilapidations:

 

  • Repairing covenant.
  • Decorating covenant.
  • Covenant to comply with statute.
  • Covenant to yield up and any related obligations that specify the state in which the tenant is required to leave the premises at the end of the term.
  • Reinstatement requirements that relate to alterations carried out by the tenant (and usually apply at the end of the term).

 

Commercial leases are usually clear on the tenant’s dilapidations obligations and legal provisions. These will include the obligations to repair, decorate, clean and maintain mechanical and electrical systems. Landlords expect and are entitled to have their property kept in the state of repair stipulated by the covenants of the lease.

 

Where a tenant has failed to comply with repairs and other obligations noted in any contract lease, a landlord may bring a claim for damages, also known as a dilapidations claim, against the tenant for breach of contract. The issue of dilapidations can arise during or at the end of the lease.

When advising clients on dilapidations disputes, we also understand that there are also many implications that dilapidations can have for other provisions in the lease, which are as follows:

 

  • If the tenant would like to sub-let or assign their lease, there could be a provision to deal with all outstanding dilapidations before obtaining the landlord’s consent.
  • Dilapidations may form a reason for a landlord to deny a lease renewal under the Landlord and Tenant Act 1954; if a landlord refuses a lease renewal on these grounds then it will not be liable to pay compensation to a tenant under s37 of the LTA 1954.
  • Exercising a tenant’s break option: a break term, could be conditional with a tenant having complied with its covenants.
  • Expiry of the contract term. This is usually used as an opportunity for both parties to consider dilapidation issues. If the property is not given up in a state of repair the landlord may be entitled to such damages as he could reasonably said to have suffered.

 

All of the above must also be done in accordance with the correct dilapidation protocol.

When advising in connection with dilapidation protocol, our members at Mercantile Barristers are able to guide landlords and tenants alike on the obligations pursuant to the lease; the obligations set out by common law; whether caps can be imposed on the landlord’s ability to recover damages pursuant to the Landlord and Tenant Act 1927. If matters become contentious, our Barristers can advise on the Pre-Action Protocol for claims for damages in relation to the physical state of commercial property at the termination of a tenancy.

 

Our Barristers can act for both landlords and tenants in addressing the reasonableness of the extent of dilapidations provisions and assessment thereof. It may be that additional expert input is necessary from specialist building surveyors to prepare, or respond to, a schedule of dilapidations. We are more than capable of working with quality surveyors, specialist mechanical and electrical engineers in order to protect our client’s interests.

FAQ’s

In short, what are dilapidations?

Dilapidations are the cost calculated (via a Schedule of Dilapidations).

What remedy does a landlord have for breaches of repairing covenants?

Damages, forfeiture, self-help, specific performance. *(book a consultation to see which applies to your case).

When can a landlord enter a property?

This is usually covered by a provision in the lease, there are also common law grounds for landlord entry (e.g. to determine the extent of a breach).

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