commercialproperty

Dilapidations and demised premises: Where’s the rest of it?

Ben Sercombe makes the case for all parties to better document the contents of Demised Premises in their leases, to help reduce the expense, time and frustration which can result from dilapidations negotiations.

Demised premises - landlords and tenants
The question of Demised Premises can be sticking point between landlords and tenants at lease end.

Read more

The decision in the case of Capitol Park Leeds PLC v Global Radio Services has generated interest as one of few recent cases in the world of dilapidations.

For those who missed it, the decision involved a lease break and the usual understanding of Vacant Possession was somewhat side-stepped. The provision of Vacant Possession allows the landlord to use the building without being impeded by the previous tenant’s occupants, chattels (and possibly tenant’s fixtures). However, in this case the tenant stripped out too much, so the Demised Premises was not all physically returned to the landlord. Unfortunately for the tenant, their lease break was therefore found to be invalid.

This begs the question: why not routinely document the constituent parts of the demise at the outset of a lease?

This is a formality for Assured Shorthold Tenancies, and many of us recall from early renting days – often as students – the ominous checking of the inventory by the landlord and pursuit of our rental deposit. In commercial leases there is usually a property definition, prepared by the solicitors. However, this is often generic and refers to ‘land and buildings’ or, in the case of internal repairing leases, sufficient detail to define the internal extents of the demise. It will be full of legal phrases such as ‘walls severed medially’.

It is almost unheard of for a solicitor to inspect the property for this purpose, let alone to find a detailed description, inventory, or photos within a lease for the purpose of identifying the elements in a building. A photographic schedule of condition can pick up on this to a degree, but it is prepared specifically to limit repairing liability by recording condition.

The very nature of dilapidations is a negotiation, and landlords and tenants who have been through the dilapidations process will know that it can be expensive, time consuming, and frustrating. This is particularly true when parties cannot agree on the definition of the Demised Premises or when they demand evidence from lease commencement.

Let us take carpets as an example. Were they demised? Do they belong to landlord or tenant? Are they chattels or fixtures? Who installed them? Who paid for them?

Providing evidence to answer these questions is difficult, particularly at the end of a 10-year lease term. This will inevitably lead to dispute. The significant work carried out by the RICS on their Dilapidations Guidance Note, and the creation of the Dilapidations Pre-Action Protocol have made great progress to reduce expensive litigation and court cases, as shown by the scarcity of recent dilapidations case law.

It makes sense, in further pursuit of concord at lease end, to fully document at lease commencement the elements that comprise the Demised Premises.

How should you document the Demised Premises?

Call a Dilapidations surveyor! They have the perfect combination of technical building knowledge and an understanding of the subtleties of dilapidations.

When should you compile a Demised Premises document?

For a new build:  A detailed description can be prepared by the landlord when construction is complete, ready to attach to a future lease.

For an occupied premises:  Once the existing tenant vacates, and after any dilapidations works are carried out (by either party), but prior to the new tenant’s occupation/fit-out works. A quick turn-around on the document may be required, but inspection timing is most critical.

Clarify funding responsibilities

The other issue would be where the landlord is funding repairs or alterations that the tenant carries out. The tenant may well do these concurrently with their fit-out making the distinction between landlord and tenant works complex. In a usual lease these works would be separately documented, so as long as this was clear, the same ends are achieved. (i.e. The lease would have a document attached showing who did and paid for what works).

If you have further questions on dilapidations for commercial property, including how you can get started with documenting your Demised Premises, contact us to find out more.

TFT Brightwell Triple team raise £4k for Bristol MS therapy centre

Paul Spaven (far left), TFT Partner and Chair of the Brightwell, at the cheque presentation last week with the Brightwell Triple team and staff from the centre.

In August, three of TFT Bristol’s most enthusiastic and keen ‘sports’ decided to raise money for one of the Bristol office’s local charities: The Brightwell, a local therapy centre with a state of the art oxygen tank for people with multiple sclerosis and other neurological conditions.

The trio – Vanessa Rothon, Mark Day and Simon Parker – felt that the charity deserved their support due to its small-scale network and the life-changing work it does, having learned that so many people depend on the centre’s help and support, both physically and psychologically.  To help raise much-needed funds for a new cafe in the centre, the trio designed the Brightwell Triple: a 2-day fundraiser which saw them cycling and hiking 70km from Bristol to Swindon with a daring 10,000ft skydive to finish!

With Gift Aid, the team raised just shy of £4k in the end and we are so proud of their efforts.

Simon Parker, an M&E engineer who during the working day you’ll find inspecting infrastructure, plant and machinery, heating and ventilation and so forth, has reflected on the experience as one he and the team are proud to have taken on:

This was certainly one of the tougher charity fundraisers I have taken part in, but it was one I will remember with a big smile with the knowledge of how valuable donations like these are to the Centre. Without businesses supporting our communities, they would not be able to help people who have such complex needs that, if not assisted appropriately, prevent them doing so many basic things in their daily lives that I know we all take for granted.

The challenge was given even more meaning when we were able to see these facilities put into action. I think having a charity that you can maintain regular contact with by visiting, calling and emailing helps drive you and bring you a better understanding of how you can help them! We are lucky at TFT that we can do that every year with our local communities.

Cycle
Distance: 28.57mi/46km
Duration: 3hrs:13mins
Average speed: 8.9mph

Hike
Distance: 13.67mi/22km
Elevation: 29,586 steps
Duration: 4hrs:32mins
Average speed: 3.03mph

Skydive
Exit altitude: 9,640 ft
Freefall time: 35 secs
Max speed: 147mph
Max G force: 4.06 G
Canopy time: 4 min:52 secs
Average speed: 10mph

If you would like to find out more about what The Brightwell does and how you can support the centre, or you think you may benefit from its services, click here.