Interim Schedule Of Dilapidations; Definition, Types and Cost of Schedule Of Dilapidations
Interim Schedule Of Dilapidations; Definition, Types and Cost of Schedule Of Dilapidations
What is Interim Schedule of Dilapidations?
An interim schedule of dilapidations is a document prepared and served by a landlord on a tenant during the course of a lease, before it expires. It outlines disrepair or lack of maintenance that the landlord believes the tenant is responsible for under the terms of the lease.
The purpose is to give the tenant notice of their obligations and a chance to remedy any issues before the end of the lease term. Landlords will often serve an interim schedule if they are concerned about the condition of the property or want to remind the tenant of their repairing responsibilities.
The interim schedule should specifically list the breaches of covenant and disrepair identified, referencing any relevant clauses in the lease. It may just highlight more serious defects initially.
The landlord can request access to inspect and document the full condition and any further deterioration near the end of the lease when serving a terminal schedule.
Tenants are advised to review the claims carefully, consult their advisors, and complete any valid repairs within a reasonable timeframe to mitigate potential future dilapidations liability.
If repairs are not carried out, the landlord may serve additional interim schedules and ultimately a terminal schedule detailing all breaches of covenant. They can also potentially claim damages or forfeit the lease, depending on the provisions.
Tenants can negotiate and contest unclear or unreasonable claims. Settlement is often reached via negotiation and landlords may waive some costs to avoid delays re-leasing. If not settled, dilapidations claims ultimately go through the courts or independent dispute resolution.
Schedule Of Dilapidations Cost
A schedule of dilapidations will usually include cost estimates for all the identified works required to bring the property back to the condition required under the lease.
This can involve significant sums depending on the size, age and use of the premises. Costs claimed often relate to repairs, maintenance, reinstatement of alterations, redecorations, cleaning and more.
The actual expenditures incurred will depend on the specific issues, local contractors’ rates and the landlord’s requirements.
Costs are estimated by quantity surveyors or building surveyors with experience in dilapidations. They will account for local material and labor expenses, contractors’ profit margins, ancillary fees, VAT, etc. For large dilapidations claims, costs can easily run into tens or hundreds of thousands of pounds.
Landlords have a duty to mitigate losses, so cannot include excessive or unreasonable costs. Tenants should scrutinize the figures and get their own surveyor’s assessment of the likely expenditures.
There are also professional fees to consider in preparing, negotiating and potentially litigating dilapidations claims.
Landlords face surveyors’ fees for establishing the schedule. Tenants also require advice responding to claims.
If not settled, legal fees arise during the court process. Overall dilapidations costs therefore include physical works costed in the schedule plus professional fees, which can also be substantial.
Tenants sometimes provide for dilapidations in their accounts via an accrual or provision over the lease term. This aims to spread the expense.
However, estimates years in advance often prove inaccurate. Tenants should be sure to regularly inspect, maintain and repair the property to minimize their exposure. Reasonable expenditure on upkeep is usually far less than the terminal dilapidations claim.
Settlement of claims post-lease often involves negotiation between the parties to find a mutually acceptable discounted figure to avoid protracted disputes.
Tenants may offer a lump sum or undertake some repairs themselves to reduce costs. Landlords weigh the certain recovery against potential void periods and legal expenses.
Types Of Schedule Of Dilapidations
The type of schedule has implications for the level of detail provided, remedies required, and process of agreeing or settling the claim. Tenants should determine if they are required to comply with an interim schedule or can defer works until the terminal schedule.
Understanding the different schedules can help both parties handle dilapidations appropriately.
Here are the main types of schedules of dilapidations:
- Interim Schedule – This is served during the lease term before expiration, usually to highlight disrepair or breaches of covenant requiring remedy. It acts as a warning to the tenant to carry out repairs.
- Terminal Schedule – Served in the last 6-12 months of the lease term, identifying all breaches of covenant. This documents the full dilapidations liability to be remedied before lease end.
- Final Schedule – If repairs from the terminal schedule are not completed, the landlord can serve a final schedule after the lease expires. This may include further deterioration.
- Open Schedule – Lists dilapidations without cost estimates. The landlord can request access to fully inspect condition and quantify costs near lease end.
- Specific Schedule – Identifies individual breaches of covenant, specific repairs required and associated costs.
- Global Schedule – Claims a single all-inclusive sum for remedying dilapidations, without detailing works.
- Scott Schedule – Sets out the landlord’s and tenant’s alternative claims and proposals side by side for negotiation.
