Dilapidations

Dilapidations

A breach of the repairing obligations in a lease, either by the landlord, or more commonly the tenant, gives rise to dilapidations.
 
Claims for the remedy of disrepair and reinstatement of the physical state of a property or for financial damages relating to dilapidations can be made during the lease period – often referred to as ‘interim’ - or after lease end; terminal dilapidations. This is a complex area of property law, with a number of related Statutes and a wealth of case law. The procedures and timescales relating to this are often crucial in successfully pursuing or defending claims.
 
As a landlord you will want to preserve the value of your asset and not allow it suffer damage, waste or deterioration. You will want to be compensated for any losses that you incur as a result of your tenant failing to comply with their lease obligations, including your surveyor’s, engineer’s and lawyer’s fees. If you are the tenant you will need advice on the validity and quantum of your landlord’s claim. You will also want to be advised of any statutory protection.
 
In either situation you need a surveyor and M+E engineer with knowledge of the legislation, the procedures, remedial work specifications and costs. And you need a trained negotiator beside you to achieve settlement of the claim and the resolution of any dispute.
 
Our dilapidations team can act for you, whether landlord or tenant, and advise upon how to deal with the matter in the most effective way. We provide lectures and training courses in dilapidations on behalf of the RICS, a number of commercial conference companies and for client organisations wishing to learn more about the subject.

A recent development has been the RICS Dilapidations Dispute Resolution Scheme.

Not all dilapidations negotiations run smoothly. Not all landlords and tenants see eye to eye. From time to time a dilapidations negotiation may stall, as parties become entrenched in a dispute over one of a number of matters, such as the costs being claimed or whether a breach of the lease has occurred. Alternative Dispute Resolution (ADR) methods have been in place for some time, that can settle disputes before these reach the courts.

Traditionally Mediation has worked well for dilapidations disputes, but now a better system is in place, that allows a binding decision to be reached quickly and at less cost to the parties: Independent Expert Determination.

RICS launched their Dilapidations Dispute Resolution Scheme (The ‘Dilapidations Scheme’) in 2015.

The Dilapidations Scheme sets out a clear framework for parties to follow, from the appointment of an expert (either privately or by recommendation from the President of the RICS) through to the issue of their reasoned binding Determination.

Furthermore, the Scheme cannot be considered until at least 9 months have elapsed since lease end, a period that will hopefully encourage both parties to agree the claim before the scheme being enforceable. This is one of the main objectives of the Scheme. The others comprise:

  • To ensure both parties are on an equal footing irrespective of their financial standing, experience of property disputes or access to advisers.
  • To discourage exaggeration by either party at any stage of the dispute.
  • To avoid lengthy disputes
  • To keep the costs of following the Dilapidations Scheme limited and proportionate.
  • To assist the parties in their compliance with the Dilapidations Protocols

After successfully completing the 'Dilapidations Scheme' training course run by the RICS, Neil Gilbert, Head of TFT's Dilapidations Consultancy team, is now an RICS Accredited Independent Expert for dilapidations disputes.

Related Case Studies

Related People

Mat Lown MRICS

Mat is Partner in charge of TFT’s building consultancy team in London and is TFT’s Sustainability Partner.

Neil Gilbert MRICS

Neil is a Partner in the Bristol office and heads TFT’s Dilapidations Working Group.

James Bent MRICS

James is based in TFT’s Birmingham office and is responsible for the management of the building consultancy team.

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