The downturn which the commercial property market has undergone in the last few years has had the not unsurprising effect of increasing the tension between landlords and tenants. More and more issues which might once have been resolved by way of negotiation are becoming increasingly contentious and often require legal advice.
Given the high number of vacant shops on the average high street, it is not surprising that landlords want to maximise receipts from existing tenants, and that tenants in strained trading conditions want to limit their liabilities as much as possible.
For both parties the landlord and tenant relationship can be difficult, but in particular the inexperienced tenant can get a big shock when a landlord presents him or her with a claim, usually at the end of the tenancy, for the costs of putting the property into the state required under the terms of the lease. These details usually come in the form of a ‘schedule of dilapidations’ which sets out the defects and items of disrepair or redecoration which the landlord requires to be put right.
It is often not until a schedule is received that the lease gets dusted off so that the tenant can work out what was or was not agreed all those years ago. What the tenant usually finds is that he or she has signed up to a full repairing and insuring lease that invariably contains a provision that the tenant must keep the property in a good state of repair and decoration. If the lease has been drafted with the landlord’s interests in mind, the tenant can find that he or she has a large liability which was not expected. Often, to the tenant’s horror, the terms of a lease will require the premises to be put into a condition which is, in fact, better than it had been when the lease was taken over.
Needless to say, prevention is cheaper than cure, and getting proper advice and a survey report on the condition of the premises prior to entering into the lease can result in exposure to dilapidations being significantly reduced. This will be of little comfort to tenants who find themselves with a claim from their landlord at a time when they thought their obligations under the lease were coming to an end.
For both landlords and tenants, dealing with dilapidations can be a time-consuming and complicated business which, more often than not, requires legal, building survey and property valuation advice. Having the tenant’s obligations under the lease, and the cost of the dilapidations, decided by the court is a last resort and the vast majority of cases are resolved by negotiation following the exchange of surveyors’ reports.
Getting legal advice early can save both time and money in the long term, whether you are a landlord wanting to make sure that you receive all you are entitled to, or a tenant wanting to reduce the size of a claim received.
Matthew Hill is a solicitor in the Dispute Resolution Unit and specialises in Property and Commercial Disputes. To contact Raworths telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate, HG1 1HF. Alternatively, you can email Matt by emailing: matthew.hill@raworths.co.uk
