Challenging a dilapidations claim – top tips

Once a tenant has decided to exit the lease of the commercial property that they occupy, they will likely have many considerations – predominantly how the business will continue to function, and the costs and practicalities of the move. However, they do not always fully consider the repair of the property they are exiting and their liability for that repair.

When the end of a lease term is approaching, the landlord or property owner will ordinarily send a Schedule of Dilapidations to the tenant, which will include a claim for dilapidations damages.

This leaves the tenant with a couple of options – to pay the sum included in the dilapidations claim, which may amount to several thousands of pounds, or to try and commence a programme of repair works, which may prove entirely impractical whilst still operating their business from the site.

However, there may be a third option – to challenge the contents of the dilapidations claim.

If a Schedule of Condition, detailing the repair of the property, was prepared prior to the commencement of the tenancy and appended to the lease, this is a good place to start. Unfortunately, if there was no Schedule of Condition attached to the lease when it was signed, it can be more difficult for the tenant to prove a limit to their liability.

There are some other ways in which the dilapidations claim can be challenged…

Obligation to repair

Although tenants have an obligation to repair under their lease, this does not mean that every single defect needs to be remedied, or that a perfect finish is required. Landlords can ask for perfection from exiting tenants whereas, in reality, it isn’t always appropriate for them to do so. The extent of the works required does come back to the original state of repair of the property – which is where evidence can help to defend a claim.

Reinstatement of alterations to the property

Where the alteration took place prior to the start of the lease term, the exiting tenant is not liable. Also, if alterations that have taken place add value to the property, or be of benefit to a future ingoing tenant, it could be argued that to ask for reinstatement would be unreasonable.

Reasonable quotations for works

The sums attributed to proposed repair works on a Schedule of Dilapidations can sometimes seem inflated or excessive. A tenant is perfectly within their rights to obtain alternative quotes – which can often prove more reasonable and reduce the overall liability due.

It is worth noting that if the property owner plans to carry out extensive alterations one the tenant has left, this could also put a limit on the amount they are able to claim in dilapidations.

Matthew Parkinson, Chartered Surveyor, regularly provides advice in relation to dilapidations from our office in Lancaster – working throughout the wider areas of Cumbria (Kendal, Grange, Ulverston, Bowness) and North Lancashire.

Along with our partner firm Lea Hough Chartered Surveyors, our team have extensive experience in the area of Dilapidations – acting for both landlords and tenants in Dilapidations assessments, preparation of Schedules of Dilapidations and defending Dilapidations Claims.