SPOTLIGHT ON DILAPIDATIONS
- AuthorRobert Clark
Landlords and tenants of commercial property need to keep a close eye on repairing obligations under a lease.
Claims for breach of a repairing obligation are known as “dilapidations claims”. The subject of dilapidations claims never goes away: in times of boom or bust landlords need to maintain the value of their investment and tenants need to restrict the impact of claims to ensure the landlord recovers no more than is properly due.
The process of commencing a claim begins when the landlord’s Surveyor inspects the property and compiles a “Schedule of Dilapidations” which is a detailed itemised list of the disrepair to the property. Typically but not necessarily, this will be towards the end of a lease.
In 2012 a Pre-Action Protocol for claims for damages in relation to the physical state of commercial property at the termination of a tenancy (the “Dilapidations Protocol”) was officially adopted by the Civil Procedure Rules Committee. Parties to dilapidations claims who fail to observe its terms can expect to be exposed to the risk of costs sanctions.
The Protocol sets out requirements that the parties would do well to adhere to. Once the landlord has sent a Schedule of Dilapidations to the tenant, together with a “quantified demand” which details the amount and breakdown of the landlord's monetary claim, the tenant should respond within a reasonable time (generally 56 days).
The parties are encouraged to meet to narrow the issues and agree the claim if possible, normally before service of the tenant's response, but at any rate within 28 days thereafter.
The parties are also encouraged to consider forms of alternative dispute resolution.
Litigation, that is the commencement of Court Proceedings, should be a last resort, in circumstances where it has not been possible for the claim to be resolved by other means.
If you would like further advice about dilapidations claims, or any other commercial property disputes, please contact the Dispute Resolution Partner at the Grantham office, Robert Clark.