At lease-end this is a common heard cry from both tenants and their dilapidation specialists. At commencement of the lease, tenants have a clear intention to limit their repair exposure (often as a result of bitter experience) by recording the prior degradation of the premises in a Schedule of Condition. It sounds easy but there are many pitfalls and our experience is that less than 10% of such schedules provide any real reduction in the tenant’s full repairing liabilities.
Common errors include;
• Lease referring to a schedule but no schedule ever having been carried out or the document is lost or never appended to the lease.
• Poor quality of reproduction of photographs that have been copied in black/white and are excessively dark.
• Limited or no annotation of photographs and poor crossreferencing.
• Repairing clause limited by way of the schedule but no reference within the decoration covenant, which remains fully applicable.
• Defects recorded in the Schedule of Condition that should have more properly been dealt with as part of the leasehold acquisition “deal”, such as a leaking roof.
Unlike a terminal schedule of dilapidations, there is no prescribed format, however at the lease-end the tenant will be best protected by a thorough written schedule which is supported by photographs but not dependent upon them. Such a schedule should be properly appended to the lease and engrossed with the lease package. The tenant should expect an expert Schedule of Condition to cost 70% of the price of a terminal schedule. This will be money well spent in terms of the savings it will provide.
Anthony Lorenz | Dilapidations
