Dilapidations
Dilapidations are breaches of leases due to the condition of the property being leased, either during or at the end of the lease period. This may result from mistreatment of the property or poor or absent maintenance or repairs that are required by the lease. Further work may also be required at the end of a lease to reinstate alterations that have been made to the property by the tenant.
Tenants should be clear about their responsibility for dilapidations and reinstatement when signing a lease or carrying out alterations and should budget and account for any necessary works during the course of the lease. If they fail to do this they face the prospect of unexpected, or unaffordable works, or having insufficient time to carry out the works before the end of the lease.
If the required works are not carried out, the landlord may issue a schedule of dilapidations, or a notice to reinstate near the end of the lease (or an interim schedule during the course of the lease).
If dilapidations works are not carried out by the end of the lease, the landlord may claim damages from the tenant (a terminal dilapidations claim). This may take the form of a ‘quantified demand’ setting out details of the landlord’s losses as a result of the dilapidations, which may include loss of rent due to repairs being carried out. However, the landlord cannot profit from this claim, so if for example the landlord does not intend to reinstate the property, this must be taken into account.
These issues may result in a period of negotiation between the tenant and landlord in an attempt to agree a settlement figure. If the negotiation process fails then alternative dispute resolution or court proceedings may be necessary.
The valuation of works required, or the loss of value to the property can be complex calculations, and so both parties may wish to appoint surveyors to offer advice and prepare the appropriate documentation. Further specialist advice may be necessary for complex components or aspects of a property, such as building services plant. Court proceedings may also involve expert witnesses.
A ‘Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy’ (the 'Dilapidations Protocol') is available from the Ministry of Justice. This describes the conduct the court expects the parties to follow before commencing proceedings, setting out a process and timetable for the exchange of information, and establishing standards for the content and quality of schedules of dilapidations and quantified demands.
There is a separate Pre-Action Protocol for Housing Disrepair cases.
[edit] Related articles on Designing Buildings
- Alternative dispute resolution.
- Betterment.
- Break clauses in leases.
- Decay.
- Dilapidations claim.
- Deterioration.
- Dilapidations protocol.
- Forensic engineering in developing countries.
- Lease Negotiations - Tenants Checklist.
- Licence for Alterations for Apartment.
- Licence to alter.
- Opening up works for inspection and testing.
- Payment for dilapidations.
- Quantified demand.
- Rent-free period.
- Rent in administration.
- Rent review.
- Reversion.
- Sample retail lease.
- Schedule of condition.
- Schedule of dilapidations.
- Scott schedule.
- Supersession.
[edit] External references
- RICS, A clear, impartial guide to Dilapidations For use in England and Wales. November 2013
- Ministry of Justice, Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy.
- Ministry of Justice, Pre-Action Protocol for Housing Disrepair.
Featured articles and news
Specifying rendered external wall insulation for fire safety
How to interrogate the evidence provided to the specifier.
The benefits of writing articles for your organisation
How to create a profile for your organisation and publish for free.
No Falls Week. The importance of safe working at height
What to expect and what is on offer to avoid accidents.
Scottish Government action to reach net-zero targets
Retrofit expert group highlight critical actions needed.
A forward thinking, inclusive global community of members.
From engineered product life-spans, to their extension.
Circular economy in the built environment
A brief description from 2021. Where are we now?
Mental Health Awareness Week with ABS
Architects Benevolent Society programme of activity.
CLC publishes domestic retrofit competency framework
Roadmap of Skills for net zero.
May 13-19: Moving more for our mental health.
Understanding is key to conservation.
Open industry engagement survey seeks responses
Institutions and the importance of engagement.
National Retrofit Hub unveils new guide
Digital Building Logbooks and Retrofit: An Introduction.
Enhancing construction site reporting efficiency
Through digitisation and the digital revolution.
Comments
[edit] .To make a comment about this article, or to suggest changes, click 'Add a comment' above. Separate your comments from any existing comments by inserting a horizontal line.