Dilapidations Claims
What it means
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Dilapidations generally refer to a tenant’s breach of repair clauses in the leases. These breaches can arise during the lease term but are more commonly dealt with when the lease ends (referred to as terminal dilapidations)
Breaches of the following types of covenants are generally relevant to the tenant’s liability for dilapidations:
- A repairing or decorating covenant;
- A covenant that specifies the state in which the tenant is required to leave the premises at the end of the lease;
- A covenant to reinstate the premises if the tenant has carried out alterations.
These types of covenants are normally contained in the lease but additional obligations might also be found in a supplemental document such as a licence for alterations or deed of variation.
At the end of the lease, a landlord or a landlord’s surveyor will usually inspect the premises and serve a schedule of dilapidations on the tenant identifying each breach of the tenant’s covenants.
If the tenant refuses to make the repairs or pay for the costs of the repairs, or if the tenant disputes the schedule, the landlord may need to claim damages.
What remedies does a landlord have?
The remedies available to the landlord depend on the specific terms of the lease and whether or not the lease has ended. They may include:
- Damages to compensate the landlord for the disrepair;
- Forfeiture to terminate the lease;
- The right to enter the property during the term of the lease, to carry out any repair works and then recover the cost of doing so from the tenant (if there is an express right to do so under the lease);
- Specific performance to compel the tenant to carry out the works but this is rarely appropriate.
If the lease has ended, the measure of damages is the reasonable cost of doing the works plus loss of rent for the period until the works have been completed, where appropriate. However, damages are generally limited to the loss in value to the landlord’s property.
We can act for landlords faced with a tenant’s breach of repair obligations, including advising on the appropriate remedy and ensuring you are compensated for your losses.
How can a tenant dispute dilapidations?
Unless the tenant disputes the alleged breach, it will generally be better for the tenant to carry out the works itself and avoid additional costs arising from litigation.
This also allows the tenant to choose the timing and the method of repair and to use its own contractors, which may reduce costs.
In any event, where there is a choice of method of repairing, as long as the standard of repair is appropriate, it would be for the tenant to choose the method anyway.
We can represent tenants seeking to dispute dilapidations through negotiations and, if necessary, by defending a damages claim.
What is the procedure for a damages claim concerning terminal dilapidations?
The Dilapidations Protocol sets out a framework for landlords and tenants to follow in dilapidations disputes. There are strict procedures and time limits to follow which are designed to encourage an early and amicable settlement of disputes without going to court.
This will involve:
- Determining the extent of the landlord and tenant’s rights and responsibilities under the lease;
- Determining what is recoverable in terms of costs and damages;
- Serving a schedule of dilapidations within a reasonable time (usually within 56 days after the end of the lease);
- Negotiating a settlement and pursuing alternative forms of dispute resolution before taking the matter to court.
We can act for a landlord or a tenant in a damages claim, including providing expert legal advice for your particular case.
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