In a nutshell, dilapidations are when an office or commercial unit needs to be repaired through general wear and tear. As part of a lease, the tenant will have agreed to keep the premises in a good state of repair, so will be liable for the costs of these repairs.
Also, as part of the lease the tenant will normally have agreed to return the unit to it's original configuration when leaving the premises. This means a tenant will also be liable for the cost of removing additions to the property, such as partitioning or suspended ceilings.
Look for the Dilapidation Schedule When Signing a Lease
It is important that both tenant and landlord agree to what is often called a 'Schedule of Works' when negotiating a lease. This is the detail of what repairs the tenant is liable for during their tenancy. It will also highlight in what state of repair the landlord expects the property to be in when the tenancy comes to an end.
Adding structural items such as partitions or external buildings might be considered as adding value to the property, but the landlord will often need them to be removed before they're able to rent the property to a new tenant to avoid any possible insurance liabilities should the work be of a sub standard quality.
The Schedule of Works should be very clear about the liability when it comes to repairs and redecorations. The tenant might want the opportunity to negotiate a Schedule of Works, which allow them to make minor repairs during the lease term and complete the dilapidation work when vacating the property, or agree to a timescale of dilapidation during the lease to avoid any major works when trying to relocate.
It's a good idea to employ the services of a good Chartered Surveyor who will be able to produce a 'Schedule of Condition'. This will record the current state of repair and décor and document any potential issues when agreeing the dilapidations schedule. These could also be repairs not carried out by a previous tenant, for which the new tenant will become liable. The surveyor will also be able to advise the tenant on the dilapidation schedule and whether or not it is unreasonable.
The Dilapidations Schedule
The tenant will be expected to keep up with the repairs on the building, either at agreed intervals during the tenancy, or when they vacate the property at the end of the lease. Commercial dilapidation specialists will ensure the work is of the expected quality, both for the landlord who will be wanting to keep the property in a good state of repair, and for the tenant who will want to try and keep on going dilapidation costs to minimum.
Dilapidations and Planning Your Office Space
The implications of dilapidations are important when considering moving offices or rationalizing office space. Making effective use of a space will often need a commercial refurbishment specialist to help plan the space and fit out furniture or equipment. They will need to be made aware of any stipulations within the lease that could limit the construction of structural elements such as mezzanine floors, external buildings or partitioning. They will also need to know if there is any restriction with regards the internal power, communications or data cabling.
Tim_Webster
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