23rd November 2020
Roger Hannah
When a commercial lease is coming to an end, there are often many different things that both a tenant and landlord need to consider. The end of a commercial lease can be more complicated and costly than taking the lease out, so ensuring that you are in the know is hugely important.
Two things which are often brought up at the end of a commercial lease are building dilapidations and end of lease repairs. Landlords want to ensure that their properties are well maintained for the duration of a lease, which is why these two clauses are so important. For most landlords, building dilapidations and repairs only come into focus towards the end of a lease, when they want to make sure that their property is in the same condition as it was when it was first leased out and so that, given the state of repair, it can be re-let as soon as possible.
There is often conflicting information and advice when it comes to end of lease repairs and building dilapidations, so here is a quick guide.
Building Dilapidations and Commercial Leases
Dilapidations form a specific area of commercial law and relate to any breaches in the tenant’s lease obligations and/or covenants. Building dilapidation claims can be made by landlords against tenants during or near the end of a commercial lease, or even after the lease has ended. If a landlord does make a claim, then there will be a claim document issued – usually referred to as a Schedule of Dilapidations – which contains references to any breaches in the lease obligations. Often, these relate to physical alterations made during the lease and the cost of reinstatement, repair or redecoration.
Ideally, tenants should keep records of the property from the start of a lease so that any disputes can be easily resolved when it comes to the end of a lease, or if a landlord makes a building dilapidations claim. Proper maintenance and management of the facilities fall into the hands of the tenant during the occupancy of the commercial property, so if they wish to change, alter or fit the property, then the correct tenancy procedures should be followed by both tenant and landlord as outlined in the lease agreement.
End Of Lease Repairs
Commercial leases tend to usually include obligations which both the tenant and landlord need to meet when it comes to building dilapidations and end of lease repairs. It is crucial that both parties are aware from the outset of who is responsible for these, especially when it comes to end of lease repairs. Tenants are usually responsible for maintaining and repairing a rented property and ensuring that it is in the same condition at the end of the lease as it was when the commercial lease started. Any repairs which need to carried out by the landlord because the premises is not up to the same standards are called dilapidations, or end of lease repairs.
Landlords are usually responsible for any repairs to the structure of the building which are needed to maintain commercial properties. This can include foundations, flooring, exterior walls and the roof. Issues such as plumbing and electrical need to be addressed by the tenant.
Avoiding Disputes
When it comes to end of lease repairs, having an in-depth and comprehensive commercial lease is key if you are looking to prevent disputes which are relating to dilapidations. In a commercial lease, it should be clearly stated as to who is responsible for repairing certain or various parts of the premises – either the landlord, tenant or a third party.
If there are any unusual repair or maintenance obligations, then these must be outlined and contained within the commercial lease agreement. If you are unsure of something mentioned within your lease agreement relating to building dilapidations or end of lease repairs, either as a landlord or tenant, then please contact us today.