What is the dispute and when might the dispute arise?
Your lease will require you to maintain your premises in a certain state of repair and decoration. If the condition of the premises falls short of the standards specified in the lease, the landlord can serve a schedule of dilapidations. Disputes regarding the extent of dilapidations claims are common.
You can undertake dilapidations negotiations yourself, however should significant disagreement arise it may be advisable to appoint a surveyor who specialises in dilapidations to review the schedule and advise you whether it is reasonable. The surveyor can:
• negotiate on your behalf to reduce the cost of dilapidations
• get alternative quotes for work that needs to be done
• put you in touch with reputable firms to carry out the work
What to do if a dispute occurs?
For a detailed analysis of the issues and procedure for dealing with dilapidations claims, please click here to visit the Dilapidations section of our web resources.
Some key practical points to remember when addressing any dispute over dilapidations are:
• Assess current repair
- Walk around the building (and ask people about it). It is very likely that you can gain a good impression about the general state of repair of the building just by looking at it and understanding the experiences of people who have been working there. It is highly likely that there might be some items in the building which are not in a good state of repair. Some of that disrepair might even on the face of it amount to a breach of the repairing covenant under the lease. It is rare to find premises which would not breach the tenant's obligations to keep them in good repair.
• Consider the timing
- Unless the lease is very short, or coming to its end, or the disrepair is very serious, there is probably little the landlord can do about it. Schedules of dilapidations are sometimes served during the course of a lease term, but there is generally less cause for concern than there would be at the end of a lease. However, even when a schedule of dilapidations is served at the end of a lease term you should not assume that you will be liable for what is claimed by the landlord and you should aim to negotiate the extent of any necessary repairs.
• Analyse the value of the claim
- Dilapidations claims are almost by their very nature exaggerated. Even if the lease is coming to an end, there are limits on the amount which a landlord could reasonably claim for disrepair. These are complicated limits, usually referred to as a ‘statutory cap’, and which the surveyor who prepared the schedule of dilapidations may or may not have understood. In any event, the statutory cap usually assists a tenant. Some of the items might well not be your responsibility, they might be the landlord’s responsibility, or they could be the responsibility of another having been effectively delegated by way of a sublease or similar.
• Gather Evidence
- Pull together all the available paperwork about the premises – its condition, maintenance, prior indications of the landlord’s approach, previous advice from surveyors, solicitors or contractors when the property was taken over, reports and photos. This information will be invaluable if you or your surveyor wish to dispute the claim.
In certain circumstances you may not be able, or your surveyor may not be able, to reach a settlement with the landlord. In such circumstances, the matter may be resolved by:
• Litigation – the matter may be resolved by litigation. This can be an expensive option without guaranteed outcomes and potential liability for extensive legal costs on both sides. Careful consideration should be given to a course of action that may result in legal proceedings.
• Arbitration – Some leases may make provision for definitive determination by an arbitrator, who on the balance of evidence presented will determine the extent of the claim. The decision is binding.
• Alternative dispute resolution, such as Independent Expert – An independent expert, usually an experienced building surveyor, can be appointed by agreement of both parties to provide his considered view of the extent of dilapidations. The Royal Institute of Chartered Surveyors can provide details of independent and experienced experts suitable for your type of property. It is worth seeking a few options, as cost may vary and both you and the landlord must agree to the use of the professional.