Falling foul of dilapidations

Good and tenantable condition

Most commercial leases make the tenant responsible for maintaining, repairing, and renewing the premises to a high standard known as "good and tenantable condition".

If the condition of the premises at any time falls short, the landlord can serve a schedule of dilapidations (a list of defects) on the tenant to carry out the repairs necessary.

Should the tenant not complete the necessary works, the landlord may be entitled to;

obtain a court order to force the tenant to complete the works;

carry out the repairs himself and bill the tenant for the costs; or
terminate the lease.

End of a lease

In addition to the above, when a lease is about to end, the landlord can normally serve a schedule of dilapidations on the tenant. If the tenant does not complete the remedial works before the lease ends the landlord may try to:

raise a court action for damages, or

reach a financial settlement with the tenant based on the schedule.

This puts the landlord in a powerful position. A schedule of dilapidations can be served on the tenant as a negotiating weapon – e.g. to get a revised rent agreed.

What can the tenant do?

The tenant may have;

a schedule of condition attached to the lease which describes, with photographs, the condition of the premises. The lease should then limit the tenant’s repairing obligation to the standard set out in the schedule.

a schedule of dilapidations attached to the lease, to indicate specific defects that will be excluded from the tenant’s repairing obligation.

anticipated that repairs will be required; a prudent tenant should plan for dilapidations to avoid potentially significant expense being incurred in a single year.