Dilapidations

“Dilapidations” claims are claims for damages recoverable at law in respect of alleged breach of contract. They arise from various promises made by tenants in lease contracts. Usually, they include allegations of breaches of contract in relation to the repair of the property, redecoration and reinstatement of alterations. In addition, they may include claims for contractual damages by way of loss of rent and claims for costs associated with pursuing the claim for damages.

They are complex contractual claims for damages which in many cases involve law and legal principles developed by the courts over many years. Often, they involve specialist expert witness evidence in relation to matters such as building surveying, mechanical and electrical services, valuation and property letting.

For Landlords or Tenants faced with a “Dilapidations” claim it is important that they retain professional advisers who are genuinely experts in the field, and they do so from very early in the process.

The start point whether bringing a dilapidations claim or responding to one should be careful analysis and consideration of the contractual obligations that the parties have entered into. It is only once that analysis of the legal obligations has been carried out that is possible to consider whether the terms of the contract have been breached and if so to what extent and what loss has been suffered. This involves reviewing the terms of the contract (lease) to identify the standard of repair that the parties have agreed, and then going on to survey the property to identify those instances where the condition of the property has fallen below the contractually agreed standard of repair.

Once the breaches of contract have been identified then the works to remedy them can be specified along with the cost of carrying out that work. Add to this the professional fees for carrying out the works and loss of rent for the period of undertaking the remedial works and this gives the “common law” measure of loss – and often landlords stop there.

Damages properly recoverable for dilapidations are however subject to a potential cap based on the amount by which the value of the property has been reduced as a consequence of the breaches of contract.

As with many contentious issues relating to property and which are based on contracts it is vital to undertake the proper legal due diligence before launching into any claim or responding to one.

For both Landlords and Tenants, it is important that their professional advisers understand this process and apply the proper legal principles in establishing just what the standard of repair is under the specific lease in any dilapidations claim.

Concorde Solicitors Limited solicitor Michael Watson established and manages the Linkedin Dilapidations Discussion Forum and interest Group.

This is a group of over 2000 members comprising predominantly professionals offering their services in the field of Dilapidations. A survey of the forum was conducted asking a some basic questions about dilapidations and the results suggest that landlords and tenants involved in dilapidations claims should consider undertaking some due diligence before appointing advisers to assist them.

The first question posed was:

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:

a) Circumstances at the date of the lease

b) Circumstances throughout the term

c) Circumstances at the date the lease ends.

The results indicated that only 60% of those answering the question knew the correct answer.

The second question posed was:

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 landlord and 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;

a) Correct

b) Incorrect

In this case only 51% of respondents chose the right answer.

This illustrates for anyone involved in a dilapidations claim the importance of being diligent in the choice of professional advisers to assist with the management of such a claim for damages. The start point should be the legal basis of the claim and understanding the contractual standard of repair is just one of many issues that need to be considered. The results of this survey suggest that many professionals specialising in this field may not understand this.

We have experience of many claims acting for landlords and tenants ranging from relatively modest claims to claims in excess of £7m. We have experience of pursuing and defending dilapidations claims in a variety of courts and also of resolving such claims by way of alternative dispute resolution such as mediation. We regularly work with specialist expert witnesses in the field of building surveying, valuation and other disciplines and can assist with selecting and instructing the appropriate experts for any case.

There is a general misconception that “dilapidations” is something that happens at the end of a lease but repairing and other contractual obligations exist from the moment a lease comes into being. For landlords we advocate a proactive hands-on approach to making sure that tenants comply with their contractual promises during the whole of the lease term rather than just waiting until the end of the term. Where leases also have the protection of the Landlord and Tenant Act 1954 we are pleased to work with landlords and tenants well in advance of the end of the lease to identify their objectives and to develop a strategy to deliver them and minimize risk.

For advice on any issues relating to “dilapidations” or to discuss any property disrepair related issue please contact us.

Dilapidations

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