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Don’t get caught in a dilapidations disputes

At the end of every commercial lease the landlord will consider pursuing a dilapidations claim against the tenant. Dilapidations are repair works which have not been undertaken by the tenant meaning they are in breach of the terms of the lease.

If a lease contains repairing obligations, then the landlord is entitled to recover the cost of the repairs which the tenant should have carried out plus any loss of rent incurred during the period in which the works are undertaken.

However, there are limits to the amount the landlord can recover.

  • Section 18 (1) of the Landlord and Tenant Act 1927 imposes a cap so that the landlord cannot recover any more than the difference between the value of the premises in its actual condition at the end of the lease and the value of the premises in the condition it would have been in had the tenant complied with the repairing obligations.
  • The tenant is required to return the premises in a good and tenantable repair and condition, with the electrical and mechanical systems in satisfactory working order. The tenant is not obliged to return the premises with new equipment and the standard of repairs is judged by reference to the condition of the premises at the start of the lease.
  • Some of the work required to make the premises fit for re-letting may fall outside of the scope of the repairing obligations in the lease.
  • If any of the work which is required to make the premises fit for re-letting renders any of the repairing obligations in the lease redundant then the landlord cannot recover the costs of that work because the landlord has not suffered any loss.

The outcome of dilapidations disputes will depend upon the wording of the lease and the particular facts of the case. In cases involving substantial claims it’s important to involve specialist surveyors or valuers and to bear in mind that there will be scope for argument about the extent of the works required, the cost of the works and the liability for the works.

For advice on this or more general commercial dispute resolution, contact Craig O’Hara on 01625 531 676 or email craig.ohara@chlsolicitors.co.uk

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