Dilapidations

Question 1

What is the difference between express and implied obligations?

Answer 1

Express = specifically agreed within the contract.
Implied = terms not mentioned within the contract but apply to it either by statute or the courts.

Question 2

Defined dilapidations in three words?

Answer 2

Breach of contract

Question 3

What are dilapidations?

Answer 3

The term dilapidations refers to breaches of the lease obligations either expressed or implied and usually relates to: repair, reinstatement, decoration, breaches of statute and other associated costs.

Question 4

What lease clauses would you consider when considering a tenant’s liability?

Answer 4

The demised premises and clauses such as reinstatement, repair, decoration, yield up, statutory obligations, fees.

Question 5

Can fees be claimed?

Answer 5

As a general rule, unless there is an express provision in the lease or pursuant to statutory provisions, the fee incurred by the landlord for preparing and serving a schedule cannot be recovered from the tenant (section 146 of law and property act 1925).

Question 6

What roles can a surveyor have within dilapidations?

Answer 6

Advisor – requires the surveyor to use their expertise to identify and comment on breaches of covenant and appropriate remedies, preparing schedules or response and negotiating with parties to achieve a settlement of the claim.

Expert witness – A surveyor may be called upon to be an expert witness in court proceedings. Their obligation would be to give objective, unbiased evidence within the tribunal to assist in reaching a settlement

Question 7

What documents are required prior to a dilapidations inspection?

Answer 7

Relevant lease, scale plans, licence to alter, agreement to lease, schedules of condition, licence to undersign (where applicable).

Question 8

Describe a dilapidations schedule

Answer 8

Scott schedule with the following columns: Item – clause – breach – remedy – landlords cost.

Question 9

What are the three types of dilapidations schedule?

Answer 9

Interim schedule – claims during the term.

Terminal schedule – claims near or at the end of the term.

Question 10

At what point can you serve an interim dilapidations schedule?

Answer 10

An interim schedule can be served up to 3 years before the end of the lease term.

Question 11

At whatpoint would you serve a terminal schedule of dilapidations?

Answer 11

Terminal schedule of dilapidations is served between three years and the end of the term.

Question 12

What remedy can be sought from claims at the end of the term?

Answer 12

Damages is the only remedy that can be sought at the end of the term.

Question 13

What remedies can be sought during the term?

Answer 13

Damages, forfeiture, entry to carry out the repair followed by a claim for costs and specific performance.

Question 14

What type of clause is often exercised during interim schedules?

Answer 14

Many leases contain a right for the landlord to enter the property without consent of the tenant, to undertake the works the tenant should have carried out and then charge the tenant. This is called a Jervis v Harris 1996 clause.

Question 15

When can the landlord initiate forfeiture proceedings?

Answer 15

If the landlord cannot compel a tenant to carry out the work or using a Jervis and Harris clause is inappropriate, the landlord may choose to initiate forfeiture providing if there is an express right to do so in the lease. If so a section 146 notice of the law of property act 1925 must be served

Question 16

What must a section 146 notice contain?

Answer 16

• It must specify the breach complained of;
• if the breach is capable of remedy require the leaseholder to remedy the breach;
• in any case require the leaseholder to make compensation in money for the breach.
• if the Leasehold Property (repairs) Act 1938 applies the notice must refer to the tenants right to serve a counter notice claiming benefit of the 1938 act.

Question 17

What if the tenant serves counter notice?

Answer 17

If the tenant serves a counter notice within 28 days, the landlord cannot forfeit the lease without leave of court.

Question 18

When does the leasehold property repairs act 1938 apply?

Answer 18

The leasehold property repairs act 1938 applies to the landlords claim for damages during the term, if the lease is granted for 7 or more years and there is 3 or more years remaining.

Question 19

What happens if a tenant doesn’t serve a counter notice within 28 days?

Answer 19

The landlord may progress proceedings without further regard of the 1938 Act’s requirements.

Question 20

Under what grounds would the court consent to the landlords right to enter the property under the leasehold property repairs Act 1938?

Answer 20

– Immediate remedy of the breach will prevent diminution in value of the reversion or if the reversion has already been substantially diminished by the breach.
– Immediate remedy is required in the interest of other occupants in a multi let.
– Immediate remedy is relatively low cost compared with if repairs delayed.
– remedying the breach is required to comply with bylaws.
– Special circumstances at the discretion of the court.

Question 21

Does the leasehold property repairs act 1938 apply to damages?

Answer 21

Yes, if the 1938 act applies the landlord cannot bring an action for damages unless the landlord serves a section 146 notice in the same manner.
If the tenant claims benefit of the act the landlord must seek leave from court, establishing 1/5 grounds in section 1(5).
The amount of damages is limited by section 18 (one) of the landlord and tenant act 1927.

Question 22

How is the assessment of loss calculated?

Answer 22

Losses usually says by the cost of the works.
Where the landlord has carried out the works this is his loss.
If the landlord does not intend to carry out the works the dilapidations cost may not be his loss. In extreme cases the landlord may want to demolish in which case, few or no items will remain.

Question 23

How can you go about limiting a dilapidations claim?

Answer 23

– Firstly review the lease covenants to assess the tenants liability.

– Assess the costs for exaggerated items.

– Determine any possibility of using section 18 arguments.

Question 24

Describe the two limbs of the section 18 of the landlord and tenant act 1927?

Answer 24

Limb 1 - Diminution of the reversion – damages for breach of the repairing covenant shall not exceed the amount by which the value of the premises diminishes owing to the breach.

Limb 2 – Supersession – no damages will be recoverable if the premises are to be significantly altered to an extent that they rendered the repairs valueless.

Question 25

How is diminution assessed?

Answer 25

Diminution is assessed by two hypothetical valuations:

• The value of the property in repair; and
• the value of the property in the condition handed back by the tenant.