Legal & Regulatory - Dilapidations

Question 1

Can you define Dilapidations?

Answer 1

Dilapidations’ refers to breaches of lease obligations

Question 2

What guidance are you aware off?

Answer 2

RICS Dilapidations Guidance Note (2016)

Question 3

What are the types of Dilapidations?

Answer 3

1. Interim: Served during the lease term
2. Terminal: Served around the end of the term
3. Final dilapidations: Served after the term (but relating to breaches prior to termination.

Question 4

What is an interim dilapidations?

Answer 4

• Can be served at any time from lease commencement.
• Not usually costed – intended for Tenants to remedy breach
• Not included internal decorative disrepair.
• Served under Section 146 of Law and Property act?

Question 5

What is a Terminal Dilapidations?

Answer 5

• Generally served in the last 18 months of the lease
• Addresses all alleged breaches, stipulating the required remedies
• Typically costed

Question 6

What is a Final Dilapidations?

Answer 6

• Served after the lease has ended
• Action for damages can be brought up to 12 YEARS after the lease (contact underseal) and 6 YEARS (contract under hand).
• Schedule should be priced

Question 7

Can you walk me though the process in producing a SoD?

Answer 7

1. Review Lease documentation (lease, plans, licences, schedule of condition)
2. Attention on breaches relating to reinstatement, repairing, decorating, statutory and yielding up covenants.
3. Inspect
4. Write up the schedule in accordance with the RICS Dilapidations Guidance Note 2016
   5 Breach, location, remedy
5. Consider VAT, Loss of rent, consultancy fees.

Question 8

What is the Pre-action Protocol 2012?

Answer 8

• Describes the conduct expected by the court before litigation.
• For claims of damages in relation of the physical state of the commercial lease at termination of tenancy.
• Time limit of 56 days after lease for LL to serve Schedule. 56 days for tenant to respond.

Question 9

What is required to be included within a Schedule of Dilapidations under the Pre Action Protocol?

Answer 9

Surveyors Endorsement:

Stating that the works are reasonably required, costs are reasonable and landlords intention is made.

Question 10

Can you name any Dilapidations Case Law?

Answer 10

1. Proudfoot V Hart 1890
   Limits repair - Restricts the standard of repair to that appropriate to the nature of the property rather than as new condition.
2. Twinmar V Klarius 2013
   Rooflight condition – Klarius was liable to ‘ keep the premised in good and substantial repair’. The court held Klarius responsible for the repair to the GRP rooflights so they were capable of letting the same amount of light in than at the start of the lease.

3.Riverside Park V NHS 2016
Break was invalid due to vacant possession not being achieved (remaining fit out).

Question 11

What is the Section 146?

Answer 11

A notice given by the landlord to the tenant and requires the tenant to remedy breach of covenant.

Question 12

What is Section 18 under the Landlord and Tenant Act 1927

Answer 12

Where a building is in disrepair, Section 18 (1) limits the landlords claim for damages for breach of the repairing covenant.

It can be defined under two separate limbs.

Limb 1 – Diminution in Value
The landlord cannot recover more than it has cost, in terms of the loss caused to the property value by the disrepair.

Limb 2 – Supersession
No damages are recoverable, if it is to be demolished, redeveloped, altered which would make repairs valueless.

Question 13

What are the three Roles of the Surveyor for Dilapidations?

Answer 13

1. Advisor
2. Expert Witness
3. Dispute resolver