Tenant protection not to be overlooked
Commercial businesses thinking of negotiating for commercial premises and entering into new lease should give serious consideration to employing the services of a professional Chartered Surveyor at an early stage of the process.
A Chartered Surveyor can assist to ensure the right building in the right location is secured for the business’s purpose whilst also helping to secure correct market rental and lease terms. One of those lease terms in which careful attention is required is the extent of the repairing liability.
The majority of commercial property leases will want the tenant in occupation to keep the property in good repair and failure to abide with such an obligation could result in the tenant making significant failure to repair or dilapidation payments to the landlord at the end of the Lease.
When negotiating the terms of the repair obligation to be written into the Lease, it is possible to limit this liability by instructing a Chartered Surveyor with experience in the type of building to be acquired, the surveyor will produce a Schedule of Condition of the property before the Tenant enters into the lease.
A Schedule of Condition Report
A Schedule of Condition Report is a snapshot of time, it is a photographic and written report which acts as evidence of the state of the property at the time the lease is granted. It usually consists of a list of photographs and descriptions of the property and state of repair and condition and is annexed to the lease with specific legal wording within the repairing clauses within the lease by referring to the schedule so that the tenant does not have to keep the property in any better state of repair, condition and decoration than as evidenced by the schedule complied professionally by the Surveyor.
Protection to the Tenant
The legal requirement within the repairing obligation of the lease is that a Schedule of Condition requires the tenant is not to put the property in any better state of repair and condition than it was at the commencement of the lease.
At the end of the lease, the landlord will usually desire the property to be handed back in good repair, decoration and condition. Usually, this is done by the landlord advisors inspecting the property and then serving on the tenant a schedule of dilapidation, a list the repairs to be carried out on the property by the tenant before the property is handed back to the landlord. If the tenants fail to complete the remedial works then the landlord may want to claim wants of repair payments from the outgoing tenant. This is when the Schedule of Condition compiled at the beginning of the Lease is vital because without one, the tenant can fall into legal and often very expensive difficulties
The whole process can be stressful, distracting and very expensive for the tenant which is why it recommended that where the tenant is planning to take a lease of a property which may in a poor condition or premises are older, perhaps previously occupied, serious consideration should be given to limiting the repairing liability by employing a Surveyor to assist on a tenants behalf in order to save money, stress and distraction from business.