Dilapidations - 20 March 2018

Dilapidations

What is a claim for dilapidations? What legal options will a landlord usually have:

Recovering losses arising from breaches of tenant covenants for repairing, reinstating and redecorating and complying with statute contained in a lease.

 Forfeiture or termination - This is only where the disrepair is very serious and the tenant has not complied with a s146 statutory warning notice.  Specific Performance – This will compel the tenant to carry out repairs but is usually only appropriate if serious repairs are required, if they are easily identified and managed, and if the tenant has the resources to undertake them.  Self-help – Modern leases generally include a provision entitling a landlord to enter the premises to carry out repairs and recover the cost of doing so from the tenant, known as a Jervis v Harris clause. In practice effecting works to the tenant’s property can be difficult to manage, but if works are undertaken the costs are often treated as a debt rather than a claim for damages and therefore are not limited by the diminution in value of the reversion ( See “Damages” below ).  Damages – They are limited however to the diminution in value of the landlord’s reversionary interest in the premises. This is however the only remedy once the lease has ended.  Using the LTA 1954 - Disrepair caused by a tenant is one of the limited number of grounds for objecting to the grant of a new lease to an existing tenant. So is carrying out unauthorised alterations.  Would the landlord prefer to recover possession of the property? - If so good evidence of breaches (e.g. of substantial disrepair) should be acquired, particularly by way of detailed inspection. A landlord should consider on what grounds the landlord is entitled to inspect.  Tenant’s ability to remedy – A tenant has a reasonable time to remedy a breach before a landlord can proceed to forfeit.  Compliance with Court pre-action protocols – In the case of a dilapidations claim at the end of the lease there is a prescribed procedure and timetable for dealing with disputes.  Reinstatement notices – The lease may require a landlord to serve notice of its requirements which requires advanced planning.  Timing – A landlord should obtain evidence of dilapidations as early as possible because dealing with dilapidations after the end of the term may delay a landlord in reletting premises.  Notices – A tenant should check the validity of any notices served by the landlord.  Evidence of condition – The tenant is not going to want to rely upon the landlord’s evidence of disrepair and should get its own report.  Who carries out the works – It would generally be better for a tenant if they carry out the works as they have control over timings and cost.

Landlord considerations:

Tenant considerations:

The law stated is current as at March 2018.

This note does not provide full details of the applicable law but is a summary aide-mémoir. For further information or advice please get in touch with your usual contact at Russell-Cooke LLP.

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