09 March 2017

Dilapidation claims: choose your expert carefully

If you’re a landlord or a tenant, you might one day be faced with a dilapidations claim.

A dilapidations claim is a claim for damages brought by a landlord at the expiry of the lease against a tenant who has failed to comply with their repairing obligations. Should a claim be successful, damages can amount to a significant sum of money.

It is crucial that landlords or tenants faced with such claims seek advice from professionals who are genuinely experts in the field. Many advisers hold themselves out as being very experienced in these types of claims, but are they?

Michael Watson, partner and Head of Property Litigation at Shulmans LLP, has conducted a survey via the Shulmans LinkedIn Dilapidations Discussion Forum and interest Group, which he runs, asking two simple questions to its members (nearly 2000 of them), who comprise predominantly professionals offering their services in the field of dilapidations:

Question 1:

It is thought that the approach of the court in Proudfoot v Hart (age, character, locality, etc.) represents the proper standard of repair under a "general" covenant to repair.  In a dilapidations claim is the standard of repair defined by reference to:

    1. Circumstances at the date of the lease
    2. Circumstances throughout the term
    3. Circumstances at the date the lease ends

Only 60% of those answering the question knew the correct answer (which is 1).

Question 2:

A covenant in a lease requires the tenant: "To keep in good and substantial repair PROVIDED THAT the obligation to keep the Demised Premises in good and substantial repair shall not under any circumstances require the Tenant to repair maintain or otherwise yield up the Demised Premises in any greater state of repair or condition than at the date hereof as evidenced by the attached Schedule of Condition dated xx."

The lease was completed by the landlord and the tenant but the schedule of condition was never prepared and attached. In the absence of the Schedule of Condition the tenant's repairing obligation is effectively FRI and unlimited. Is this statement:

    1. Correct
    2. Incorrect

Only 51% of respondents chose the right answer to this question (which is 2).

Pie charts with the details of the responses can be seen here.

Anyone involved in a dilapidations claim needs to be careful about who they appoint to assist with the management of the risks associated with such a claim for damages. Understanding the contractual standard of repair is just one of many issues that need to be considered and the results of this survey suggest that many professionals specialising in this field may not understand this. 

If you would like to discuss this topic further, please contact Michael Watson at mwatson@shulmans.co.uk or 0113 297 1850. Further information about dilapidations can also be found on our website. Michael and the Shulmans property litigation team have published a variety of articles on this subject, including in relation to the retail sector.

Our team can assist commercial landlords and tenants in relation to a wide range of property management and litigation issues, including the renewal of business tenancies, rent reviews, property notices, party walls and telecommunications masts.