What is an interim schedule of dilapidations?
An interim schedule of dilapidations records alleged breaches of a tenant’s lease obligations during the contractual term. It usually identifies defects relating to repair, maintenance, decoration or statutory compliance. It also sets out the remedial works that the landlord considers necessary.
A terminal schedule is generally prepared towards, or following, the end of a lease. In contrast, a landlord serves an interimdilapidations schedule while the lease continues. The landlord normally uses it to encourage the tenant to comply with its obligations. Early action can prevent defects from worsening or causing further damage to the building. It can also protect the landlord’s reversionary interest.
Why might a landlord serve an interim schedule?
A landlord may serve an interim schedule of dilapidations when the condition of a property starts to deteriorate. It may also act where a tenant does not appear to be undertaking the required repair and maintenance.
Addressing defects at an early stage can prevent further deterioration. It can also reduce the extent of the works ultimately required and help protect the landlord’s investment.
The interim schedule also formally brings the alleged breaches to the tenant’s attention. It also creates a record of the property’s condition at that stage of the lease.
If the tenant does not respond or undertake the required works, the landlord should review the lease terms. The landlord should also obtain appropriate professional advice before considering further action.
Depending on the lease wording, the landlord may have the right to enter the property. It may also undertake certain works and seek to recover its reasonable costs from the tenant. However, the lease terms and relevant legal requirements govern these rights and remedies. The landlord should not assume that they apply automatically.
What should a tenant do?
A tenant should not ignore an interim dilapidations schedule. On receipt, the tenant should review it with its building surveyor and legal adviser. The tenant should also review the lease, any licences for alterations and any schedule of condition. It should consider any other relevant information that records the property’s original condition.
Not every item within a dilapidations schedule during a lease will necessarily fall within the tenant’s responsibility. The precise wording of the lease will depend on the tenant’s obligations. Other relevant factors include the extent of the demise and the required standard of repair. An agreed schedule of condition may also limit those obligations.
The tenant’s surveyor should inspect the property and assess each item in the interim schedule of dilapidations. The surveyor should then prepare a reasoned response.
Where the tenant accepts breaches, it will often make sense to agree a programme of works with the landlord. Early engagement in the interim dilapidations process can help control costs and reduce disruption. It can also prevent the matter from escalating.
Conclusion
An interim schedule should therefore be treated as both a warning and an opportunity: a warning that the landlord considers the lease obligations are not being met, and an opportunity to address genuine defects in a planned and proportionate manner before they become more serious or contribute to a significant dilapidations claim at the end of the lease.
Whether you are a landlord considering serving an interim schedule or a tenant responding to one, early professional advice can help protect your position and control costs. Contact our surveying team for expert dilapidations advice.
