A lease usually contains covenants where the tenant needs to return the premises back to the landlord in a particular condition. The covenants essentially provide that any damage or other defects to the premises must be rectified by the tenant before leaving the Premises.
When a lease expires, and the tenant has not complied with its repairing obligations under the lease, the landlord may be able to issue a claim for ‘terminal dilapidations’ as a result of the tenant’s breach.
What is a Dilapidations Claim?
A dilapidatiossn claim is a claim made by a landlord against a tenant for breach of the tenant’s repairing obligations under the lease. This usually means that the tenant has failed to keep the premises in repair or has failed to comply with any repairing obligations set out in the lease.
A dilapidations claim can be made at the end of the lease term. Also, a landlord can make a dilapidations claim during the lease term if the tenant is in breach of their repairing obligations under the lease. This can help to ensure that the premises is maintained in a good state of repair throughout the lease term and can help to avoid a large dilapidations claim at the end of the lease.
A dilapidations claim can be costly for both landlords and tenants, so it’s important to ensure that the lease is clear on the repairing obligations of each party.
How Can You Start a Dilapidations Claim?
As a landlord, you must comply with the Pre-Action Protocol for Claims to Damages in Relation to the Physical State of Commercial Property at the termination of the lease. A landlord, or landlord’s solicitor, will need to comply with the following steps:
- Appoint a surveyor to inspect the premises and prepare a Schedule of Dilapidations. A Schedule of Dilapidations will set out the breaches of the tenant’s covenants and what is needed to rectify each breach. The Schedule of Dilapidations will be accompanied by a Quantified Demand (in Excel format) which will be landlord’s surveyors’s estimated costs to remedy each breach.
- The Schedule of Dilapidations and Quantified Demand will need to be sent to the tenant as per the lease. The letter should explain the tenant has 56 days to respond. Ideally the letter should be sent before the end of the lease term to provide a tenant with an opportunity to carry out the required works itself.
- The Tenant has 56 days upon receipt of the notice to respond to by admitting, or denying, each alleged breach in the Schedule of Dilapidations.
- If settlement cannot be reached then the landlord should consider starting court proceedings against the tenant. Plus seek recovery of professional fees which is usually allowed under the lease.
How is a Landlord’s Claim for Dilapidations Calculated?
Dilapidations are usually calculated based on the cost of repairing the premises to the condition it should be in according to the terms of the lease.
The costs involved in a dilapidations claim may include: (a) the cost of repairs, (b) loss of rent while the repairs are being carried out, and (c) professional fees such as surveyor’s fees and legal fees.
The cost of repairs can vary greatly depending on the extent of the repairs required, and it’s important for both landlords and tenants to instruct a surveyor to prepare a breakdown of the repair costs.
How Can You Dispute a Dilapidations Claim?
A tenant can dispute a dilapidations claim by challenging the extent of the repairs required or the cost of the repairs.
Legal defences to a claim for dilapidation may include: (a) serving a counter schedule for dilapidations, (b) S18(1) Valuation Defence and/or (c) dispute over the wording of the covenants of the lease to limit liability.
How Can You Support a Dilapidations Claim?
To support a dilapidations claim, the landlord will need to provide evidence of the damage to the premises, such as: photographs or survey reports, as well as estimates for the cost of repairs in the form of ‘Dilapidations Schedule’.
The tenant may also be required to provide evidence to support their position. This may include:
- Evidence that the damage was caused by the landlord’s failure to carry out repairs or maintain the premises.
- Evidence that the damage was pre-existing or caused by factors outside the tenant’s control.
- Evidence that the landlord has failed to comply with their statutory obligations, such as providing a valid EPC or Gas Safety Certificate.
How Much Will It Cost You?
At the very beginning we will discuss the different ways to fund your case such as fixed legal costs or hourly rates. We will keep your legal costs to a minimum and be clear at the very outset. For more information, see Fixed Legal Costs And Fixed Fee Litigation Advice
Any landlord and tenant involved in a dilapidations dispute should consider whether early mediation is a possibility to negotiate a settlement. Mediation can be highly successful. For more information, see Mediation and Alternative Dispute Resolution (ADR).
If you need help with a dilapidations dispute or property dispute, you can book a Consultation Call with the team at Anwar Legal by completing the Contact Us Form or emailing us on firstname.lastname@example.org
Still not convinced? Read some of our property client’s success stories and testimonials on how they settled their property disputes using our legal service.