Uncertain of Occupying need to handle dilipidations.

‘‘It has recently been the subject of the RICS that the process of handling dilapidations is becoming more complex’

In November 2005 Charles Edward Scouller wrote about the theory of repair and practise for property owners of the dilapidations forum. In effect the standard of repair required by a lease covenant leads to a dispute between two party’s surveyors. The problem lies with the fact that they do not have a benchmark to base a view on how the property should be provided to the new leasee, and this leads to dilapidations.

At firstassociated.co.uk the senior chartered surveyor can interpret lease covenants competently. Charles Edward has over 11 years experience in dilapidations and stated in the forum how important it is for a surveyor to have the relevant case law knowledge to be able to interpret. For purposes of this article I am referring to some research on cases I have read about in the history of dilapidations.

Scenarios of dilapidations

A lengthy dilapidation

The survey of Grays Inn at Castle Thorpe Street shows how the standard of repair could vary from time to time meaning interpretation is difficult for a surveyor. This can lead to the question of whether it should be assessed at the beginning, or the end of the lease in settling a dispute. This proved difficult The main reason was that when the property was built ninety three years before, it was worth much more than at the end of the lease. So how should it be restored? An Arbitrator who is a third party assessing repair said that at the end of the tenancy the rent was worth much less, so would repairs be worth less? The arbitrator assessed sums according to two different standards. The comparison was between a higher standard at the start of the lease and a lower at the end. The outcome was that repairs were to be enforced to the owner or occupier depending on the age and the character of the property and its use at the time. This can mean the process of claiming and dilapidations can be lengthy. At Leamingon Spa the new buyers of the unit had nine months of their old lease to go before moving in and said they weren’t in any rush! At first associates the chartered surveyor could in this case liaise with a valuer or evaluate costs on behalf for the client.

Dilapidations of reasonable repair.

Originally constructed in 1977 The case of Perfest Repair: Riverside Property Investments v Blackhawk Automotive [2004) concerned a roof and a covering of asbestos sheet for an Industrial Unit. In the lease the tenant was asked to undertake some reasonable repairs once the lease expired. They agreed at the end and repaired 18.5% of the roof with new sheets. When they were claimed against not replacing 100% of the sheets they didn’t lose the case. This is because they were only needed to rebuild where necessary. It didn’t really matter as the roof was not leaking after they had completed the work.

Dilapidations of not upkeep

One kind of dilapidations can occur if the lessee does not maintain the upkeep of the building as outlined in the lease. In other words if they do maintain the repair during the tenancy. Day v Harland & Wolff concerned the injury of a worker while painting premises. This was given the conclusion that it fell within the meanings of repair so they lost a claim. This was based on ship building regulations of 1931.

Dilipidations of no deterioration of former state.

This is necessary for proof of disrepair to claim in dilapidations. Take for example a unit being leased to a new tenant and a certificate not being issued for a leak in the roof. This wasn’t repaired at the start, so the tenant cannot try and relocate or break out of the agreement due to this. This was illustrated in the case of Credit Suisse (1944). However as it was necessary for a tenant to be able to take occupation of it in a reasonable state the judge ordered the landlord to pay to repair the leak.

What kind of surveyor should deal with dilapidations?

The RICS recommends a surveyor up to date with legal standards. At first associates a chartered surveyor would research the age location and premises at the start of the lease to investigate how it has changed. Perfection is not a subject matter unless strictly expressed in a lease. He can advise whether any defects need work prior to lease expiry. The most important thing is to be able to interpret whether a defect of some sort constitutes a breach.

The surveyors will liase with a valuer and your legal advisor. A valuer will help value the old and new condition of the property and adjust it for cost estimates of repair. They can then build a format of dilapidations to make a formal claim in accordance with the RICS.

Most dilapidations are settled without a third party arbitrator after a solicitor it is best to consult a commercial surveyor.

Bibliography.

Dilapidations: Repair - theory and practice - 18 November 2005 - Charles Edward Scouller MSc BA (Hons) FRICS FBEng MEWI IRRV for the Dilapidations Forum

Peter Beckett, Senior Partner, Beckett & Kay, Joint Author, “RICS Guidance Note on Dilapidations – 4th Edition”, and Member, RICS Dilapidations Working Group

RICS Dilapidations Forum conference 2007