Dilapidations is the claim a landlord makes at or near the end of a commercial lease for the tenant's failure to meet the repairing, decorating and reinstatement obligations in it. For tenants it is the largest and least expected bill of the whole tenancy.
The short version
The claim is limited by what the lease requires and by the condition the property was in when you took it. Without a schedule of condition annexed at the start, proving that second point is very difficult.
Where the liability comes from
From the lease, and only from the lease. The usual sources are the repairing covenant, the decorating covenant, the covenant to comply with statute, and any obligation to reinstate alterations at the end of the term. A full repairing and insuring lease puts nearly all of it on the tenant.
The trap is the phrase 'good repair' with no reference to the starting condition. On an older building that can oblige a tenant to hand back premises in better condition than they received them, which is precisely what a schedule of condition prevents.
The documents, in order
- Schedule of condition — a factual, photographic record of the premises at lease start, annexed to the lease. Not a claim; the baseline a claim is measured against.
- Interim schedule — served during the term, requiring the tenant to put right breaches while the lease still has time to run.
- Terminal schedule — served at or near lease end, listing the breaches and what is required.
- Quantified demand — the money: the landlord's costed claim, usually prepared by a building surveyor.
The protocol, and the timing
Dilapidations claims in England and Wales follow a pre-action protocol. In broad terms the landlord serves the schedule and quantified demand within a reasonable period of lease end, the tenant responds within a reasonable period, and both are expected to have their surveyors engage before proceedings. Timescales are set out in the protocol and it is worth taking advice on them rather than guessing.
The statutory cap most tenants have never heard of
Section 18(1) of the Landlord and Tenant Act 1927 caps a damages claim for disrepair at the amount by which the landlord's reversion has actually diminished in value. In plain terms, if the landlord is going to demolish or comprehensively refurbish the unit anyway, the claim can fall dramatically, sometimes to nothing, regardless of what the schedule lists.
This is a valuation argument and it needs a surveyor and usually a solicitor. It is mentioned here because a great many tenants pay a quantified demand in full without anyone raising it.
What a tenant should actually do
- Before signing: get a schedule of condition and have your solicitor annex it to the lease with a clause limiting your repairing obligation by reference to it.
- During the term: keep the property maintained, and keep evidence that you did.
- Twelve months before lease end: take advice, and budget. This is the point at which the number can still be influenced.
- At lease end: get an exit record walked against the original schedule, so the comparison is factual rather than argued.
- On receipt of a claim: do not pay it without advice. Quantified demands are opening positions.
Where we fit, and where we do not
We produce the factual documents: the schedule of condition at the start and the exit record at the end. We do not draft or serve schedules of dilapidations, do not quantify claims and do not advise on the lease. That is building surveyor and solicitor work, and it is usually built on a record like ours.
Written by The Surveyor Co, a trading name of LW Renovation Group Ltd, Lincoln. This guide describes how records are written and read; it is not legal advice. Where a deposit scheme, lease or insurer sets a rule, that rule wins.