Dilapidation Claims  

A dilapidations claim functions as a legal procedure that emerges between commercial landlords and tenants who fail to agree on property conditions during lease termination.  The claim examines whether tenants honour their repair requirements along with responsibilities regarding reinstatement work and decoration duties.  Circumstances, where the landlord does not receive proper maintenance, will allow them to recover the costs necessary to return the property to its original condition.  

The knowledge of legal foundations that regulate dilapidation claims serves as essential information for landlords and tenants because conflicts often grow rapidly, which leads to expensive settlement talks or court proceedings.  Both parties understand their legal obligations which prevents legal disputes and financial expenses and secures fair resolutions of their matters.  According to the Civil Procedure Rule (CPR), this kind of legal claim must follow the dilapidation protocol.  

Protect your commercial property interests. Get expert advice on dilapidation claims from Sunrise Solicitors. Call us now for a free consultation.

Types of Dilapidation Claims  

There are two types of dilapidation claims:   

• Interim Dilapidation   
• Terminal Dilapidation   

Interim Dilapidation    

Interim dilapidation is a legal process which a landlord uses to address a tenant’s failure to meet repair obligations during the term of the lease. It guarantees ongoing compliance and property maintenance. Usually, landlords issue an Interim Schedule of Dilapidations in which they outline any damages or maintenance problems that require prompt remedy. This is a careful approach to prevent any further property damage. Besides, it helps prevent bigger disputes at the end of the lease agreement. 

It is advised to tenants to respond swiftly to an interim dilapidation to maintain good relations with their landlord and to avoid any potential legal consequences.  This systematic process makes sure that commercial properties stay in good condition throughout the lease period, benefiting both landlords and tenants.  

Terminal Dilapidation   

As suggested by the name, a terminal dilapidation claim is a legal process that is initiated at the end of a lease term. The landlord proceeds with the terminal dilapidations claim to recover the expenses of repairing damage or neglect to the leased property. By the end of the lease agreement, if the property is not returned in the condition specified in their lease agreement (beyond normal wear and tear), the landlord can opt for this legal process.  The purpose of this claim is to make sure that the property is restored to its original condition, as stated by the terms of the lease agreement.  

Schedule of Dilapidations – What Landlords Must Prepare  

To schedule dilapidations claim, preparing and serving a schedule of the dilapidations on the tenant is necessary. The landlord should ask a professional surveyor to survey their property and prepare the dilapidation schedule.  The schedule includes a list of the commercial lease obligations which the tenant failed to comply with. Also, it should clearly mention the estimated cost of any repairs or reinstatement work that needs to be done. A “Quantified Demand” is also included in the schedule to provide additional backing to the claim. A dilapidation claim can be served within 56 days of the end of the lease agreement.  

There are two types of dilapidation schedules. 

• Interim Schedule    
• Terminal Schedule  

Process for Making a Commercial Property Dilapidations Claim  

The process of making dilapidation claims involves certain steps. For commercial dilapidation claims solicitor you can contact Sunrise Solcitors and book a free advice on your claims. 

 Step 1   

Once the tenant is given the schedule of dilapidations, they must respond within 56 days. They can either accept or reject the breaches and remedial works listed.   

Step 2   

Both parties, along with their professional advisors (e.g., solicitors and surveyors), are invited to attend on a ‘without prejudice‘ basis within 28 days of the tenant’s response. The purpose of this meeting is to resolve the dilapidations matter. If they fail to do so, they can at least reduce the number of issues in dispute. This meeting is typically called within 28 days after receiving the response. However, it may be called before the tenant’s response if agreed by both parties. 

 Step 3   

The parties are also urge to consider alternative dispute resolution, such as mediation, expert determination, or early neutral evaluation. 

Step 4   

In case they do not reach a mutual agreement, the landlord must provide a more detailed breakdown of the losses. This can be done either by way of formal diminution valuation or by pinpointing the actual or expected costs and expenses incurred. 

Step 5    

In case the tenant intends to bring a section 18 defence or any other diminution in value defence, they must give notice to the landlord within 56 days from the time when the detailed quantification of the loss has been received. Technically, as a breach of contract claim, legal action can be taken within 6 years. This could extend to 12 years if the lease also happens to be a deed. 

 Step 6   

Section 18 of the Landlord and Tenant Act 1927 sets up a statutory valuation to assess the diminution in value of the landlord’s interest due to the tenant’s default in undertaking the repairs.    

Step 7   

Both tenant and landlord should then go into a ‘stocktake‘ phase before the landlord can proceed to put forward the claim for ruling by the court.  

 How much time does it take to resolve a Dilapidations Claim?

The time of resolving a dilapidations claim can vary from case to case since there are multiple factors influencing it. 

Preparing the Dilapidations Schedule   

The process of preparing the dilapidation schedule usually takes a few weeks. However, this period might be lengthier if the property in question is large. 

Negotiation Period   

Following the issuance of the schedule to the tenant and after consulting with their solicitor and surveyor, the negotiation phase starts. This period may range from a few weeks to a few months, depending on the pace at which both sides can negotiate to reach an agreement. 

Alternative Dispute Resolution (ADR)   

If negotiations remain unsuccessful, other means can be used to resolve the dispute, for instance, arbitration or mediation. Alternative dispute resolution (ADR) may take a few weeks to several months to complete, depending on the willingness of both parties to work and agree. For further information on ADR, you can visit RICS. 

Court Proceedings   

The court may require action as a last resort.. Court action can take from a few months to over one year, depending on how complex the case is. The more complex cases will take longer since they will entail sophisticated legal arguments and expert proof.  

How to Respond to Dilapidation Claim?  

Responding to dilapidations claim requires a robust approach. The tenant should seek help from a chartered building surveyor to survey the property and prepare a formal Response.  This typically involves providing a rebuttal to the alleged breaches, suggesting alternative solutions, and proposing lower charges. To strengthen their negotiating position, the tenant may raise the ‘statutory cap’ defence. Through this, they can put forth their argument that damages based on the impact of breaches on the freehold value (the ‘Diminution Valuation’) are less than the cost of repairs. Experts call this a diminution valuation.

A chartered valuation surveyor prepares a Diminution Valuation. Often, the ‘statutory cap’ reduces the settlement below the lowest assessed Cost of Works. Furthermore, if the landlord has not performed, or does not intend to perform, remedial works, paragraph 9.4 of the Dilapidations Protocol necessitates them to provide their own Diminution Valuation to support their claimed loss.  

How to Reduce Dilapidation Costs & Defend Against Claims  

The tenant has the right to defend themselves against the dilapidation claim. They can challenge these claims if their efforts to settle the matter with the landlord are not successful. In that scenario, the tenant has two choices:     

• They should submit a formal response within 56 days of receiving the dilapidations claim. This response should cover every item mentioned in the schedule. It should also clearly explain any disagreements and detail the tenant’s position.  
• Dispute high repair costs immediately. Compare them to the property’s reduced value. Hire a surveyor. They can inspect the property. They can also provide a valuation.  

Why Choose Sunrise Solicitors?  

Sunrise Solicitors UK boasts a record of success in both defending and initiating commercial property dilapidation claims. We offer cost-effective legal strategies perfectly tailored to our client’s particular requirements. Benefit from a free initial consultation, available to both tenants and landlords.  Get an expert advice from our experience dilapidation solicitors and lawyers today.