Dilapidations L3

Question 1

What are the four D’ of dilapidations, and what literal rule explains them?

Answer 1

Decorations - The process of adding a finish
Defect - A lack of something necessary for completeness
Disrepair - The condition of it being worn out (one state moving to another state)
Dilapidation - Caused or fallen into ruin (legal obligation to prevent ruin)

Question 2

What are dilapidations?

Answer 2

items of disrepair resulting from breach of the tenant’s obligations during the term of the Lease

Question 3

When may you submit a schedule of dilapidations?

Answer 3

Interim Schedule (7+ years and before 3 years end)
Terminal Schedule (3 years before lease or after)

Question 4

What are the Tenant’s landlord letter of intentions?

Answer 4

Where they may note what they are planning on taking out, or leaving in (air conditioning units)

Question 5

What should you do if your role changes during a dilapidations process from landlords surveyor to expert witness?

Answer 5

• Impartial and not contingency based fee.
• Can be sued for negligence.
• Provide different set of terms of engagement.

Question 6

What role may you take of as a surveyor on a dilapidations claim?

Answer 6

• Advisor / negotiator
• Expert Witness
• Dispute resolver (takes seat of arbitrator)

Question 7

When acting as a surveyor on a dispute, what should you do?

Answer 7

• Act reasonable in information exchange
• Avoid litigation where possible, setting out ADR
• Set out in writing respective positions
• Be honest and state intentions (endorsement)
• Confirm fee procedure

Question 8

When may the repairs of the building fall solely to the landlord where external , services and common parts?

Answer 8

Under the Landlord and Tenancy Act S11, if the lease term was granted for less then 7 years.

Question 9

What is a covenant?

Answer 9

An agreement by lease, deed or legal contract.

Question 10

What covenants may you find likely in a lease?

Answer 10

Repair 
Reinstatement
Redecoration 
Yielding Up (defines what is expected of the tenant at end of term for giving back)
Compliance with Statute 
Obligation to pay landlord costs

Question 11

What documents may you review as part of a dilapidations claim?

Answer 11

• Head lease
• Plans
• License to alter
• Reinstatement notice
• Lease side letters
• Schedule of condition
• Statement of landlords intentions.

Question 12

Where does the onus of a dilapidations claim sit?

Answer 12

Landlord, where they must prove loss.

Question 13

What is the process you would proceed with a dilapidations claim? (5 steps)

Answer 13

• Confirm instruction
• Examine documents
• Carry out inspection on site identifying breaches (inspect, record and reflect)
• Produce the report (inc. QD)
• Negotiate and settle claim.

Question 14

Why would you serve a interim schedule?

Answer 14

For the tenant to carry out the disrepair during the lease. Either forfeiture (S146), or Repair Notice leading to potential Jervis v Harris

Question 15

What external rules can you review alongside your lease?

Answer 15

• State of market at time of lease granted

- What was nature of property and area it sat when signed.

Question 16

What is the Proudfoot v Hart case law purpose?

Answer 16

Reference external rules and clauses required to be reviewed. All words typically mean same thing.

Question 17

What process of repair should you go through?

Answer 17

Is the tenant liable?
Can the tenant repair (physically get parts)?
If not able to repair, can the tenant replace like for like (discontinued)?
Tenant has to repair but does this to same function.

Question 18

What is the purpose of the interim schedule?

Answer 18

• Not an obligation to yield up like at lease expiry.
• It is an obligation to do repairs has been breached.
• Do not force the tenant to do the works, but issued as been a breach of covenant.

Question 19

What options are available for an interim schedule?

Answer 19

• Invitation letter, not a threat of tenancy but requests works done (sent in anticipation of s146).
• Repair Notice
• Forfeiture of the lease through s146. (not really wanted as tenant out of the building may be at loss)
• Tenant suing landlord for breach

Question 20

What is the purpose of the interim schedule?

Answer 20

• Yielding up to or after lease expiry.

Question 21

When is the terminal of dilapidations classes as a deed?

Answer 21

• 3 years of lease minimum to make a deed
• 12 year deed claim can be made for claims if settlement is not made in writing (not a fan so do dilapidations protocol)

Question 22

Talk me through interim schedule of dilapidations S146?

Answer 22

• Issue a S146 Notice in compliance with Law and Property Act 1925 with relevant breach, monetary compensation, statutory rights, and reasonable time.
• Service in compliance with S196 Law of Property Act
• Tenant can request relief in 28 days with counter notice making the landlord go to court proceedings.
• If damages are not complete, the property may be repossessed and claim compensation.
• Forfeiture can be waived if seen continuing existence of lease through rent claim.

Question 23

What is included in a schedule of dilapidations?

Answer 23

Detail of documents relied on, itemised reference, relevant breached clause, alleged breach, remedy required, cost of the remedy.

Question 24

What is a Scott schedule?

Answer 24

Adds further columns to the schedule to allow comments from opposing party with remedy and cost, then further column for tribunal to allow.

Question 25

When can you claim a loss of rent?

Answer 25

When the property could be let straight away but the landlord has been delayed of this through works commencing.

Question 26

How do you work out the VAT?

Answer 26

Typically if managing agent paying VAT it is VAT registered but I would speak with client.

Question 27

What is section 18 claim?

Answer 27

Limb 1: Assesses property in its location, condition. Uses a comparative approach or looks at the property compliant or not. Uses this information to see property at loss. This is in reversion of the property. Limb 2: Supersession

Question 28

What should you be careful with a license to alter claim?

Answer 28

Ensure correct notice procedures are made to if they are left or to remain.

Question 29

For an interim schedule, what is a repair notice?

Answer 29

Also known as Jervis v Harris clause. - Landlord needs right to carry out repairs notice. - Landlord thinks if disrepair they serve notice to enter. - Serves a repairs notice with 'wants of repairs schedule'. - If tenant doesn't do works landlord can do works and claim costs, fees and interest.

Question 30

What risks are possible issuing a repairs notice?

Answer 30

- Overstate works, means tenant challenges it. - Failure to recoup costs (tenant doesn't have the money as no s18 cap as debt) - If on site too long breaching quiet enjoyment and trespass. - If notice wrong, claim possible.

Question 31

What is endorsement?

Answer 31

Surveyor expected to endorse, stating works are reasonable, intentions to be carried out (may be excluded if before lease end), and costs are reasonable.

Question 32

What is Quantified Demand?

Answer 32

Forms part of the dilapidations pre-action protocol which shows landlords likely loss. Typically issued with Schedule of Dilapidations in the 56 days. Costs included may be holding costs, loss of rent, rates liability, insurance/security/energy/cleaning, lack of service charge, finance costs, other surveyor fees Any unknown costs ‘To be advised’.

Question 33

What offers for settlement can you make?

Answer 33

Both offers encourage settlement. Calderbank offer – Contractual. Genuine offer made ‘without prejudice save as to costs’. This allows set time frames of acceptance. Not governed so allows flexibility in time frames, cost and payment terms. Part 36 Offer – Follows Civil Procedure Rules. Remains open unless withdrawn. Claimant makes min. 21 day window for acceptance, otherwise interest may be added.

Question 34

What is the term stocktake?

Answer 34

Done at the end of procedure, if not resolved parties try again to resolve dispute instead of going down court proceedings.

Question 35

What is a break clause?

Answer 35

Break clauses require all lease conditions to be met: payment, vacant possession, service of notice, compliance with lease obligations.

Question 36

How should the agreement of a lease be settled?

Answer 36

Be in writing (identifying parties, lease, SoD/QD), not to be marked without prejudice, full settlement stated, state payment terms or works inspected & signed off, dated and signed.

Question 37

What is Quantification of Loss?

Answer 37

Detailed breakdown of the loss incurred by the Landlord through diminution valuation or actual expenditure work carried out.

Question 38

What is shared responsibility?

Answer 38

Tenant doesn't need to notify LL for repairs they are carrying out, but if Tenant notifies a LL for repairs that is within their remit and if LL ignores then they liable for costs.

Question 39

What is the standard of repair expected?

Answer 39

That of which is reasonable and expected of a building during the time the lease started (not modernising it or comparing it to a property in area) Diminution in value protects cap of repairs in the area if poor.

Question 40

What is fair wear and tear?

Answer 40

That property is expected to have wind/rain against it, but not the likes hurricanes or not using the property for its actual use and if that occurs then tenant to repair.

Question 41

What is specific performance?

Answer 41

A specialized remedy used by courts when no other remedy (such as money) will adequately compensate the other party.

Question 42

What must a Landlord prove to issue a Section 146 if the tenant seeks statutory release?

Answer 42

- Substantial diminution of the property. - Meet the requirements statute - Protect the occupier that isn't the tenant - Enable work to be done cheaper now, if left more expensive.

Question 43

You read an ambiguity phrase in a lease, what should you do?

Answer 43

I would consult a senior colleague and also review any relevant case law.

Question 44

What type of leases are available?

Answer 44

- Full Repair and Insuring (Full site typically, and insure it) - Internal Repair Lease (only internal repairs and decorations and landlord responsible external and structure).

Question 45

What is the landlord and tenancy act?

Answer 45

Protects tenants and the business and the relationship with the landlord. This ensures that tenant not removed from property after lease end under Section 25-27.

Question 46

How would you proceed in reviewing a repair with 5 point test?

Answer 46

1. What is the physical matter? (Falls into the demise) 2. Is it damaged or deteriorated? (Review if maintained) 3. How much damage/deterioration, is it below covenant? (Fair wear and tear, or is a repair needed) 4. What work is required? (Take appropriate steps in identifying repair) 5. Is the work of nature responsibility of the covenant party and anticipated? (Understand lease terminology, maybe good condition / fair wear and tear / keep in repair)

Question 47

What is a chattel and what is a fixture?

Answer 47

- Chattel is removable. | - Fixture is fixed to the structure.

Question 48

In a lease, what is an implied obligation?

Answer 48

Anticipated obligations that are reasonable, not required to be stated as it would be obvious to include and does not contradict any expressed terms of the contract. S11 L&T act

Question 49

What is the Law of Property Act 1925?

Answer 49

Deals with transfer of freehold/leasehold of land by deed.

Question 50

What is the Leasehold Property Repairs Act 1938?

Answer 50

Restricts landlords right to damages, in particular with interim schedule.

Question 51

With the MEES being changed 2023, how may this impact properties in terms of dilapidations?

Answer 51

I understand properties are to be changed to minimum of E rating for leasehold properties, this means that statutes in the lease may require tenant fit outs to be done. However, with the Energy Efficiency Regulations the guidance puts the onerous on the landlord. Supersession may occur with elements of lighting etc.