Experienced Business people
Understand the importance of a
Schedule of Condition
being appended to a Lease
We market the services of independent Surveyors. Surveyors pride themselves on a high standard of work. We can offer Schedules of Condition with regard to leases , Property Reports, Schedules of Dilapidations, Section 18 Valuations, Scott Schedules, Commercial Building Surveys, Structural Reports, Specific Defects Reports. Note these are not for bank lending but are to advise you how much we feel the property is really worth. If you have a property problem we may even already have written an article on it and we would refer you to the many articles we have on our website. All our independent surveyors are more than happy to chat to you about your property.
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Leases and Schedules of Conditions
We have been dealing with a business owner who has had many leased properties, who was insistent upon having a schedule of condition, which is relatively unusual as we normally have to explain what a Schedule of condition is.
Schedules of Conditions recommended
For many years we have always recommended schedules of conditions, but purchasers of leases in a bid to save money would only instruct us on a structural survey, now known as a building survey. Over many years we found that you would have left the new leaseholder exposed to massive claims if we had not carried out a schedule of condition. Therefore we used to carry them out and send them and hope that the business person would see the benefits and pay us for the work and if they didn't we would have to take the loss.
What we decided about ten years ago was that we would always produce a schedule of condition free of charge, where we felt one was necessary, which is in nearly all cases. We will explain more about this later on within this article on Leases and Schedules of Conditions.
No such thing as a free lunch
We know that many of the sceptics, or should we say cynics, amongst you are saying that the schedule of condition isn't free, it has simply been added onto the cost of the building survey.
Well, in part you are correct, but in part it was also one of the driving forces behind using a database to help surveyors prepare the building survey and the schedule of condition, as this would save the surveyor time, and therefore save everyone money, and enable us to give a better service for about the same price. We say about the same price as we are usually more expensive than a surveyor carrying out a basic building survey or structural survey, and we are about the same price to someone carrying out a structural survey which is of reasonable quality, and of course with us you in addition get the schedule of condition.
Experienced business needs a Schedule of Condition when taking on a lease
We were very pleased when we met the business person who was very keen on having a schedule of condition carried out. In fact they were keener on the schedule of condition than the property report, also known as a building survey and also known as a structural survey! When we had discussions with them it was explained because in the past they had learned a very big lesson when a Schedule of Dilapidations claim was made on them for tens of thousands of pounds, and this was on the property that they had much improved but unfortunately didn't have a schedule of condition and therefore didn't have a record of what it looked like when they went into the property.
Buildings don't fall down!
Interestingly, the outgoing tenant overheard us discussing this and made the comment that buildings don't fall down, which I'm pleased to say is true, or at least they don't fall down very often! We were even more pleased when our client explained to him that it was quite correct that buildings don't fall down. However, having a building survey and schedule of condition carried out on a lease was about establishing the condition of the property structurally in the property report and also getting advice on any possible extensions and alterations, together with establishing the repairs needed to bring it up to the lease standard could term this your liabilities because the property, regardless of what it looks like, has to be to the standards set out within the lease.
Typically in a lease there are four clauses that are important: the repairing covenant, the redecoration covenant, the reinstatement covenant and the statutory regulations covenant, together with the yield up clause that may be slightly different. Let us explain this a bit further: a covenant is a law or rule. Looking at the redecoration covenant; most standard full repairing and insuring leases require redecoration when the property is being vacated and most people don't redecorate when the property is being vacated. This to us is a standard area where our client can negotiate. It is often better for our client, the incoming tenant, to negotiate money off the lease, because then they can have the redecoration work carried out to their standard in the colours they like, rather than, as you can imagine, someone who's leaving the property tends to do, what we call, a minimal job.
We have also seen massive claims, in the hundreds of thousands of pounds, against leaseholders, where the property is being left to go to rack and ruin, although we have also been in situations where the property owners argue that they have vastly improved it but it was still not to the standard set out within their lease.
This can be a very interesting one to have to keep up to date with. Such things as asbestos are well known. The requirements to have a Type II survey, which is fairly typical within a repairing lease, is not that well known and often we come across leases coming at the end where the existing tenant has to have this carried out at the last minute. Equally, there are other statutory requirements, such as the Equality Act that may require ramps, toilet facilities and a policy for how best to look after people with disabilities.
This can be a painful one to bring up to standard. We have recently come across a case where the fire regulations were not to standard and before they can vacate the lease they have had to put in a fire exit and fire staircase, together with various fire doors. Luckily for them the property wasn't Listed so they didn't have major planning problems. You can see, for example, how this could be a deal breaker.
Break clauses and yield up clauses
We thought we'd just mention break clauses and yield up clauses. Break clauses can be negotiated into a lease, which allows the leaseholder to break the lease at a certain point in time, perhaps half way through the lease. This is for when things aren't going as well as they'd planned, they can leave. However, it's also very important to ensure that the property is yielded up (given back) in the condition required within the break clause. There have been several legal cases where this has not happened and, unfortunately for the tenants, they've had to carry on paying the rent.
Building surveys and schedules of conditions
If you are taking on a lease we would recommend that you have a survey and schedule of condition, regardless of who it's with, it does protect you, to some extent, when you purchase the lease and when you come to extract yourself from the lease. There's a saying that any fool can get a lease, which is true, it's getting out of a lease that's the hard bit.
We have produced a number of articles and book reviews on dilapidations, for more information go to:
If you truly do want an independent expert opinion from a surveyor with regard to commercial properties, structural surveys, building surveys, structural reports, engineers reports, specific defects report, thermal imaging reports, dilapidations, schedules of dilapidations, schedules of work, schedules of condition, or any other property matters please contact 0800 298 5424 for a surveyor to give you a call back.
If you have a commercial property, be it leasehold or freehold, then you may wish to look at our Dilapidations Website at www.DilapsHelp.com and for Disputes go to our Disputes Help site www.DisputesHelp.com .
We hope you found the article of use and if you have any experiences that you feel should be added to this article that would benefit others, or you feel that some of the information that we have put is wrong then please do not hesitate to contact us (we are only human).
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