Interim Dilapidations

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Dilapidations are as certain as death and taxes but always come as a surprise to the tenant

Dilapidations always seem to come as a surprise. This is certainly the case with interim dilapidations, which, as the name implies, are during the course of the lease. They are not as common as terminal dilapidations, which are served at the end of the lease, but nevertheless often rear their head.

Dilapidations defined

First, let us define what dilapidations are. Where a lease has been taken between a landlord and a tenant the lease will have stated the condition the property has to be returned in. It will usually be divided into:

1.  repairing covenants

2.  decoration covenants

3.  reinstatement covenants

3.  statutory covenants

 

where a covenant is a legal requirement.

Repairing covenant

The lease will set the required standard the property has to be returned in. This may use single words, such as repair or to put and keep or it may use what is known as the torrential form of drafting, which some solicitors tended to use and has a whole raft of very similar words, e.g. repair, maintain, replace, etc, which have all been used to ensure that there is no ambiguity and that there is absolute clarity, but ironically due to the case laws that may or may not exist on these terms it can be more unclear than a single word. Nevertheless, it will be a legal interpretation of how the tenant has to return the leasehold property.

Schedule of Condition

Unless the tenant has a schedule of condition, in which case the standard of repair/reinstatement may be that set out within the schedule of condition. Just to clarify, a schedule of condition is a schedule identifying the condition of the property at the time the lease was taken on and is usually only appended to the lease where it is accepted by the landlord that this is the condition the property will return in.

Reasons why interim schedules of dilaps are used

We would describe the uses of interim schedules of dilapidations as either being tactical or firmly advising.

Tactical

A tactically served interim schedule of dilaps may be served where a break clause is coming up. This is where the tenant could actually leave the property and it may persuade him not to if the interim dilapidations schedule shows that he will be encumbered with a large repair bill when he leaves. Equally the interim dilapidations may be served tactically because a rent review is due and again this may persuade the tenant to renegotiate staying in the same property and therefore not incurring any immediate repair bills he has in mind that he has already about to have a rent increase, which will no doubt affect his bottom line figures.

Firmly advising

The other time when we have found interim dilapidations to be served is when a tenant is abusing the use of the leasehold property. We have heard this to be termed policing, which can be done also by visits from a surveyor and discussions on any problems or it can be done more formally and firmly by the serving of an interim dilapidations identifying the breaches the landlord believes there to be in the lease contract between the two parties.

Format of an interim schedule of dilapidations

In our experience this takes the same format as a dilapidations schedule, which follows the guidance set out by The Royal Institution of Chartered Surveyors.

Dilapidations Protocol

This is the landlord's view of the breach and may not stand up in court. The Property Litigation Association has been concerned in the past with exaggerations from the landlord that there is now a pre-action protocol in place with heavy penalties for those that exaggerate and also the remedy that the landlord's surveyor recommends is not necessarily what you have to do it is his interpretation of what should be done to remedy a breach.

As mentioned, these interim dilapidations are used tactically so the landlord is aware that it is unlikely they will ever go to court on an interim dilapidations (if they are going to go to court and it is relatively rare it will be on a terminal dilapidations). If one is served upon you it is worth having a specialist commercial surveyor inspect the interim dilapidations and advise upon what your true repair liability is likely to be. This may give you a completely different view of how you negotiate your break clause or your rent.

How do I deal with an interim dilapidations clause as a tenant?

If you do wish to investigate a break clause then it is worth having specialist advice as the interim dilapidations will no doubt be followed shortly by terminal dilapidations and with break clauses you do have to make sure you completely comply with its requirements (please see our article on break clauses). If the interim dilapidations has been served for practical reasons for a rent negotiation then you may well find once you have appointed a specialist commercial surveyor that the alleged breaches are not breaches and may be what we would term as a heavy handed approach (previously known as a exaggeration by exaggerating) with the landlord knowing that the interim dilapidations is very unlikely to ever go to court. If, however, the interim dilaps has been served as a firm warning against the tenant, due to his lack of compliance with the lease clauses and the landlord may well have a good case for future repairs and simply be positioning himself for when the terminal dilapidations are served. You will need to take specialist advice on how to deal both with the interim dilapidations and the property problems that you no doubt have, as we have found in the past that often landlords are repairing the effects of a problem, i.e. damp stains in a suspended ceiling, rather than the actual cause of the problem, which may be the trees overhanging the gutter outside.

Is an interim dilapidations a good way of dealing with a bad tenant?

As a landlord you may feel relatively powerless in dealing with a bad tenant. One of the remedies you do have is an interim dilapidation, which can serve to advise them of their present and future repair liability. We have also found that visits from a commercial surveyor would possibly help this situation and enable the tenant to see that he does have a responsibility to keep the property as he agreed to within the lease.

Interim dilapidations, a toothless (for both parties) weapon

It can equally be argued that interim dilaps are relatively useless for really having work carried out. We would comment that it is more a formal process and negotiation that can lead to results than a formal serving of a dilapidations schedule.

We have produced a number of articles and book reviews on dilapidations, for more information go to:

Information on Dilapidations

If you need help and advice with regard to leases, dilapidations, schedules of condition, dilaps claims, Scotts Schedules or any other matters please call 0800 298 5424 for a friendly chat. Please note we are independent surveyors.

If you would like Dilaps Help then please visit our www.DilapsHelp.com website 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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