Disagreements On The Repairs Needed
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The dilapidations process
The dilapidations process involves the landlords surveyor preparing a schedule of breaches of the lease, known as a Schedule of Dilapidations. The schedule identifies what breaches have taken place by giving reference to the breach clause in the lease and specifying what the breach is. The onus is on the landlord to prove there has been a breach of the covenant. The tenant, assuming the breach is correct, decides how the work should be carried out.
Same dilapidations issue, different view on how it is best solved
The way landlords and tenants tend to view this work can be completely different. The landlord will generally wish to have the best long term job carried out, because he wishes to protect his assets and ensure minimal future problems, as he has a long term interest in the building. The tenant, who has no long term interest in the building and a dilapidations is served as he is about to leave, wishes to carry out the most economical repairs. It is this issue which is the cause of most disputes.
Quality of repair
So, how do we decide what quality of repair is required? This is best seen by giving an example.
First of all we need to advise that there is a limit to the repair work/replacement work and this is seen in Shortland case, also known as a Section 18 Valuation, which limits the maximum cost of damages to the diminution in value.
Replacement or betterment?
The roof example
A 1960's warehouse unit with an asbestos cement roof that is damaged at the valley gutter area and is leaking, and also has rusting/deteriorating fixing bolts. The landlords argument would generally be one for replacement, whilst the tenant's argument would be for repair. The overall riding factor is the extent of the deterioration. We have spoken to several surveyors on this matter and the general view is that where the deterioration of the roof is around 50% plus then there are arguments for renewal. However, less than this and there are arguments for repair.
It would certainly be in the tenant's best interest to carry out the repairs themselves, as at the end of the lease the landlord could have the roof renewed and charge them and it would be very difficult to argue otherwise, unless, for example, they had evidence to show that a repair was acceptable, perhaps by obtaining three quotations from specialists in this area. Another solution for the tenant would be to agree a financial settlement while they were still present in the property.
As an aside, one surveyor advised us that he had once argued that the tenant had only been in the property for the past three years and that the roof lights and asbestos had far worse deterioration than could possibly be caused in three years and accordingly he was only happy to pay a percentage. We don't really think this argument will hold much water in court, as the guidance is what the lease requires for the condition of the property to be put into and not the condition it was when the tenant took it.
Replacement not betterment
There is also the argument with regard to a floor which has dampness. If there is a damp proof course there and it has failed then it should be repaired. However, if there is no damp proof course present then it would be betterment to add a damp proof course.
Example of a Schedule of Dilapidations filled in
Dilapidations for Tenants, Leaseholders and Business Owners including examples of Commercial Building Surveys and Schedules of Conditions
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