Timing is everything when it comes to reducing liability as a tenant in a commercial property. Many tenants leave it too late to be able to make a meaningful difference to condition of the property they occupy before being served a Schedule of Dilapidations, which can mean they face a repairs bill that is far larger than they might have anticipated.
Here we provide a useful timeline for tenants on how to best manage their liability when it comes to maintaining their commercial property.
Before the lease commences
Protecting yourself from the costs associated with dilapidations starts before you have even taken occupancy in a building. A well-drafted Schedule of Condition can prove to be a valuable tool for tenants. As the Schedule of Condition provides a thorough record of the property’s condition – crucially before they have started using it – this can be used as evidence of how far repair and decorative obligations extend in any future dilapidations claim.
Mid way through the lease term
Depending on the length of the lease term, a tenant may need to start to consider dilapidations around half way through the term of the lease. At the very least, a tenant should start to take action when they have 12 months remaining. By doing this at an early stage, they can gain an understanding of the required exit works and costs they will face. This allows them to exercise more control over repair costs, also being able to manage these over a longer period for cashflow.
It is worth remembering that many leases have a clause that allows the landlord to serve a dilapidations notice on a tenant at any point during the term. Therefore, regardless of whether the plan is to exit a commercial property at the end of the lease or an extension to the term will be sought, a proactive approach to repair and redecoration is likely to be in the tenant’s favour.
At the end of the lease
If you have taken the above steps, the path to exiting your property from a dilapidations perspective is likely to be relatively smooth.
However, if no proactive actions have been taken at an earlier stage, a tenant’s options will become severely limited.
By the time a Schedule of Dilapidations has been served, opportunities to reduce liability and control costs will be greatly diminished. This is even more the case if the lease has expired and the tenant no longer has access to the property to undertake works.
Where tenants contact us for the first time having being served a dilapidations schedule, we will look to enter into negotiations by inspecting the property and compiling a formal response to the claim. In the majority of instances, we are still able to achieve a better outcome for the tenant than they would otherwise have faced as a dilapidations schedule often accounts for the ‘worst case scenario’ – meaning there is often room to negotiate costs down.
To reiterate – timing is key when it comes to dilapidations – so be sure to act early! Contact us for advice at any stage.
