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In an earlier article we mentioned the issue of dilapidations claims arising on termination of a lease. That was in the context of the exercising of a break clause.
On a more general point, perhaps we should consider what we mean when we refer to dilapidations. Claims for dilapidations are usually brought at the end of the lease term and relate primarily to items of disrepair/lack of decoration covered by tenant covenants in the lease (which the Landlord requires to be performed) and are as follows:-
The law relating to dilapidations has a long history, but there are some relatively new considerations and approaches which have been suggested in a relatively recent English High Court decision Blue Manchester Limited -v- North West Ground Rents Limited  EWHC 142 (TCC).
In that decision, the Judge drew attention to certain matters perhaps for the first time and which had not been fully considered previously:-
As against that, there will no doubt be cases where it would be unreasonable for a landlord to insist on contractual obligations reflecting solely aesthetic consideration being performed;
There are certain practical steps that have to be fully considered by both landlord and tenant.
In the context of serving a break notice, a tenant should already be considering his dilapidations strategy and upon receipt of same, the landlord should also be giving consideration to this.
The parties also need to have a clear view as to what they are seeking to achieve, i.e. does the landlord want the works to be done or is a financial settlement likely to be reached between the parties. Be sure to take clear advices as regards the provisions in the lease which together form the basis for a dilapidations claim. It is essential to ascertain from the terms of the lease what precisely are the parties’ obligations and that should always be the starting point in any discussions.
As always preparedness is the key to a successful outcome.
If you are a landlord or tenant and need advice on your rights and obligations on termination of a lease, please get in touch with our Commercial Real Estate team – we can advise on which course of action to take and ensure that whatever processes have to be taken, are taken properly, to ensure the effectiveness of your approach.
This article has been produced for general information purposes and further advice should be sought from a professional adviser. Please contact our Commercial Real Estate team at Cleaver Fulton for further advice or information