FEATURE
WHO’S TO BLAME AND WHO’S TO CLAIM?
FMs of tenant companies are often tasked with maintaining buildings at minimal cost. But how does this sit with the legal responsibilities a tenant company may owe to its landlord when considering issues as to disrepair? Richard Robinson, Associate at Shulmans LLP discusses the risks and how they can be managed?
A “dilapidations” claim is a claim for damages for the alleged failure on the part of the tenant to comply with the repair (and other) obligations in
a lease. A tenant is normally obliged to keep the rented property in a certain standard of repair and condition. If that standard or condition deteriorates during the tenant’s occupation of the property, the landlord may have an actionable claim.
Dilapidations claims are often brought by a landlord at the end of the lease when a “schedule of dilapidations” is prepared by a building surveyor and sent to the tenant. Often this schedule will suggest certain remedial works are required at a certain cost and the landlord will then request a sum of money in lieu of these works having been carried out.
However, a tenant should be wary of this approach and consider whether what the landlord is seeking actually represents the damages properly recoverable at law as a consequence of an alleged breach of contract (the lease and other lease documentation). In many instances a costed schedule sent by a landlord will have little bearing on the actual damages at law that they are entitled to recover.
In order to properly defend a dilapidations claim it is best that a team of professionals is brought together to analyse the tenant’s actual liability.
Issues relating to
dilapidations should not be left until the end of the lease but regularly
60 | TOMORROW’S FM
provision for the landlord to bring an interim repair claim. Such provisions will usually require the tenant to remedy any breaches of the repair obligations within a certain period of time failing which the landlord will be entitled to enter the premises, carry out the works and claim the costs back as a debt.
Determining that such a clause exists in the company’s lease may assist an FM when negotiating maintenance budgets with their financial controllers. If there is such a clause, there is a risk that if the property is not properly maintained, the landlord could enforce an interim claim against the company.
“ISSUES RELATING TO DILAPIDATIONS SHOULD NOT BE LEFT
UNTIL THE END OF THE LEASE BUT REGULARLY REVIEWED.”
reviewed. While many FMs will, of course, regularly review maintenance issues for their properties it does not necessarily follow that their company’s repairing liabilities are being met.
Although many landlords only bring dilapidations claims against a tenant at the end of a lease it is possible for interim claims to be brought by a landlord during the term of a lease. The tenant’s lease should be checked to determine whether it includes
Most leases of office space will include obligations to repair on both the landlord and tenant. Maintenance of shared services, communal areas and the exterior of the building are likely to be the responsibility of the landlord under a lease's "service charge" provisions.
Here the landlord may be obliged to carry out certain works to maintain the building but will likely have the ability to charge that cost back to the tenant pursuant to the service charge provisions in the lease. It is important therefore to determine whose responsibility it is to maintain specific parts of the building before any works are commenced. The landlord should not carry out works and claim them back under the service charge provision if those works are the tenant’s responsibility. It is normally in both the landlord’s and tenant's interests to maintain a property to a high standard.
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