Resolving property disrepair issues
When a tenant enters into a commercial lease, disputes can often arise over who is to be liable for the cost of putting the property back into a suitable state of repair. This is referred to as ‘dilapidations’ and can become an issue both during the lease term and towards the end. In the latter context, this is known as ‘terminal’ dilapidations.
In essence, dilapidations are items of damage or disrepair caused to commercial premises by a breach of a tenant’s repairing covenants. The starting point will be the wording of the repairing covenant itself, which will set out the tenant’s obligations.
There are both statutory safeguards in favour of the tenant and a number of ‘self-help’ remedies to assist the landlord.
UK laws regarding dilapidations
In terms of tenant protections, Section 1 of the Leasehold Property (Repairs) Act 1938 (where it applies) may preclude a landlord from seeking damages from a tenant during the term where they have been served a counter-notice to a Section 146 Notice (Notice) within 28 days of the tenant receiving it.
At the end of the term, Section 18(1) of the Landlord and Tenant Act 1927 can sometimes limit the landlord’s damages claim to the diminution in value (if any) of the landlord’s reversion caused by the tenant’s breach of repairing covenant. This is sometimes referred to as the ‘Section 18 cap’.
In terms of landlord ‘self-help’ remedies, the threat of forfeiture (provided the lease contains a suitable re-entry clause) after the service of a Section 146 Notice can often be a useful tool to persuade the tenant to comply with their repairing obligations.
In addition, most modern commercial leases contain an express right to allow the landlord to enter the premises to carry out works themselves and recover the cost of doing so from the tenant as a debt. This right arises where a commercial lease has a Jervis v Harris clause (named after the case of Jervis v Harris [1995] EWCA Civ 9).
Dilapidations claims and disputes can often involve complex contractual obligations and valuation and surveying issues, so it is vital that legal advice is sought at the earliest point, regardless of whether you are the landlord or tenant in the dispute.
How we can help with dilapidations claims
At Nelsons, our property dispute solicitors advise commercial landlords and tenants regarding dilapidations claims.
For landlords, our aim to get the property in the best possible condition and minimise the costs for the landlord to put right the disrepairs. Whilst for tenants, we will look to minimise their costs as much as possible. We have a proven track record of getting the best possible outcome for our clients.
Not all dilapidations claims need to become long, drawn-out legal disputes. Our team manages risks, anticipates issues and look to resolve each dispute in the most time efficient way possible. With Alternative Dispute Resolution at the forefront of the way in which we work, only the most rooted disputes make their way to Court. When they do, our solicitors’ strategic expertise counts for everything.
Our expert team is recommended by the independently-researched Legal 500 as one of the top teams of specialists in the country.