Schedule of Conditions for

Commercial Premises

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INTRODUCTION

We are going to look at Schedule of Conditions and the effect that we find it has on Commercial leases. We will consider in our experience the problems that can arise which we have seen when carrying out Commercial surveys of properties due to new tenants taking up a leases for however many years due to new business plans that a tenant may have be it any kind of business.

SYNOPSIS

We are going to look specifically at the problems and issues we have found with tenants taking up a lease which can vary from any number of years and can change the effect that dilapidations have on tenants during or at the end of a lease. We are also going to speak more widely about experiences we have had with Schedules of conditions reports in tenant leases and its effect on property, and also going to advise you of research if any which has been in this area, i.e. Learned Institutes or Bodies such as Royal Chartered Institution of Surveyors, we may even look at Wikipedia but we will not take it as gospel!

CONSTRUCTION SUMMARY

To give you a flavour of the property that we are going to be considering, here is the construction summary.

External summary

Brick Building with a flat Georgian type of roof not visible from ground level, building was about 5000 square metres large formerly used as a laundry before the last World War.

Internal summary

Tiny commercial premises with double glazed front with PVC panels, set off a corridor of common areas leading to neighbouring commercial suites of offices, all based off a long corridor with natural light and reception upon entrance to building

Ceilings Suspended ceiling tiles

Walls Blockwork and Plasterboard

Floors Carpets and laminate flooring

Staircase Steel leading to tiny 1 st floor space

Kitchen fitted on ground floor

Standard fixtures and fittings to be removed.

As mentioned we are going to look at the Schedules of conditions during tenant leases, we relate it back to a specific example that we have surveyed recently when an educational establishment who provides public sector training for the unemployed took up a lease for this tiny commercial premises described. This will show you just how important we think it is to have a Schedule of condition during a Commercial Survey or as part of a Commercial Survey carried out.

We have used the term assumed' as we have not opened up the structure.

EXECUTIVE SUMMARY

Executive summaries are always dangerous as they try and encapsulate relatively complex problems in a few precise and succinct words. Having said that here is our executive summary and recommendations:

For those short of time, just like we have in our building surveys we have an Executive Summary here which identifies the main issues with a brief explanation.

What is the background to having a Schedule of Condition?

We often find that a lease can involve ongoing dilapidations during the lease, or dilapidations at the end of the lease. This involves a landlord serving notice on a tenant for repairs which can be often exaggerated! Therefore we often advise a tenant has a Schedule of condition that limits the liability they have imposed on them by the Dilapidations Notice.

Our tenant in this circumstance was a manager for an education health provider to the unemployed and had a lease that meant her liability would be for the internal redecoration and repairs of the building. Therefore we offered a Schedule of Conditions for the small office unit which was only about 500 square feet. Although it was a Schedule of Condition this could have saved our tenant thousands of pounds in the future when the liability can be exaggerated by the landlord and a Surveyor that they may employ. Can you imagine what would have happened if a schedule of conditions were not done, at the end of the lease what would the tenant refer to protect her from a notice served by the landlord?

Recently we have found that Landlords have not had any works done for repairs to their commercial buildings and tenants leave, however many tenants do not know that a Dilapidations Notice can be served up to four years after a lease ends under legislation! Without a Surveyors Schedule of Condition they could face problems in finding the money to pay for repairs that may be beyond liability!

For further information regarding dilapidations we refer you to our

dilapidations lectures on www.DilapsHelp.com

Schedule of Condition What does it mean to Commercial buildings?

One of the key implications is that it limits future liability for you as a tenant during or at the end of a lease. It records the exact condition at the time of taking the lease on. Therefore the landlord cannot exaggerate a claim as much as they would like to when they use onerous clauses in the lease to their advantage which are hard for tenants to understand at the start of a lease!

You will get agreement out of your landlord on the condition on the property when you take up the lease because the Schedule of Condition has been carried out by a Chartered Surveyor, who is reputable and experienced on dilapidations. This will persuade them to sign the schedules of condition which your solicitor appends to the lease. There will be no confusion of the kinds of repairs required and therefore no disputes. Any fool can get a lease, but it is the way they are able to exit a lease safely that counts!

The quality of the Schedule of Condition is related to the fact that you are provided photographs, and detailed information on each elevation of the building, each structural element and inside rooms to state the construction condition and action required at time of lease. A quality Surveyor will double check and spend time and give detail on what he sees.

Things we have recorded typically of Properties we make Schedules of Condition for internal repair and redecoration leases

Rising damp entering a building

Marks and stains to walls

Marks and stains to floors

Lack of fire standard doors

We witness properties that have leaks that have not been fixed by repairing roofs leading to dampness entering inside, rising dampness coming in from outside an external wall, marks and stains to walls and floors and we notice fuseboards that need renewing. All of this is recorded accurately with photography!

How to solve these problems

In our experience the problems shown by Schedules of Condition are never severe that we advise clients to not take on a lease. Indeed one Schedules of Condition for the internal repair and redecoration in Lewisham for a small commercial unit meant that we offered to return to the property a week later to inspect the works carried out, our Surveyor arrived at the Commercial unit and hey presto the works were done! Of course the tenant had read the Schedule of Condition and addressed matters that the Chartered Commercial Surveyor felt was important in taking up the lease after he done the Schedule of Conditions a week before.

Time Line A brief history of how not using a Schedule of Conditions could have affected our client taking up the lease

INSPECTION

We would carry out two different types of inspection for Schedules of Condition for a property. Firstly we would do a visual inspection both externally and internally. Secondly, we could check with a damp meter to establish the condition of the walls floors and timbers. We would use humidity metres to check for condensation. For internal repair and redecoration leases such as this lease in Lewisham we would only inspect the internal parts of the property. The Surveyor would check everything twice take photographs notes and return to inspect if works carried out if required a short time later.

SURVEY FINDINGS

The sort of things we have found when looking at Schedules of Condition for internal repair and redecoration leases are

•  Leaks internally, causing dampness to ceilings from the outside.

•  The problem of rising dampness causing problems to walls inside the property from outside.

•  Lack of fire regs being adhered to. For example doors do not have fire seals around perimeters meaning new tenants are left in danger.

SUMMARY UPON REFLECTION

A few final thoughts on Schedules of Condition and

property

If you do not have a Chartered Surveyor who is a Building Surveyor carry out an inspection for Schedule of Condition remember that your liability will not be limited in the lease taken up. In fact having a Commercial Survey without a Schedules of Condition which appends your lease and goes to your Solicitor is useless! You may find yourself in all kinds of disputes and problems later with your landlord which will only cost time and money not to mention litigation with your solicitor! Please be aware it is also virtually impossible to do a Schedules of Condition yourself and have it agreed. Photographs and notes taken by tenants in the past we have found have been established useless. Please use a Chartered Surveyor.

Independent Chartered Surveyors

Commercial Property

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).

The contents of the web site are for general information only and are not intended to be relied upon for specific or general decisions. Appropriate independent professional advice should be paid for before making such a decision.

References

www.1stassociated.co.uk : articles on Schedules of Condition

Building Surveyors account of a Schedules of Condition for a small commercial unit in Lewisham London