Entering into a lease can be one of the most high risk and potentially costly processes a business undertakes. Signing a lease on a property and becoming a Tenant – often for a lengthy period of five years or longer – not only encumbers a business with the obligation of paying the rent, but also often with several other costs – such as ongoing repairs and maintenance and particularly dilapidations liabilities at the end of the lease term. Many Tenants are often unaware of the potential associated costs of such dilapidations claims, which can run into tens of thousands of pounds.
One way of protecting your position at the outset and therefore reducing your dilapidations liability is to have a Schedule of Condition conducted on the property you are looking to lease.
A Schedule of Condition is a professionally prepared document that includes both detailed written descriptions and extensive photographs to give a clear record of the condition of a building when a Tenant takes possession.
Prepared by a Chartered Building Surveyor after a thorough inspection of the property, a Schedule of Condition identifies any pre-existing disrepair present in the property, providing a Tenant with evidence that the damage already existed before they took occupancy.
The purpose is to ensure that the Tenant is not required to put the building back into any better condition than that in which they found it. This will then help to counteract elements of repair work and dilapidations that the Tenant would otherwise become responsible for when a Schedule of Dilapidations is prepared by a Landlord at a later date.
A Schedule of Condition can also include floor plan layouts to show the existing arrangement at the time of occupancy – so that incoming tenants cannot later be accused of making – and therefore incurring the liability for removing – alterations that already exist.
After a Schedule of Condition has been prepared, this should be appended to, and referred to, in the Lease, to give the Tenant protection.
Considering the onerous nature of commercial property leases, it is surprising how many Tenants do not undertake a Schedule of Condition. Unfortunately, at the end of the lease, they can then find themselves being responsible for hefty dilapidations claims for repairs in relation to damage that was already present when they took possession of the building.
Lea Hough’s team of Chartered Building Surveyors regularly undertake Schedules of Condition on behalf of Tenants who are entering into leases on commercial properties across Lancashire, Cumbria, Greater Manchester and the wider North West. To speak to a member of our team and obtain a quote for our services, please contact us.