I am taking a new office lease, do I need a schedule of condition?

When tenants take on a commercial property lease they can become liable not only for paying the rent, but also a number of other costs that are potentially significant – and often unforeseen.

These include repairs and maintenance as well as dilapidations liabilities that arise when the lease ends. It is a sobering fact that paying a landlord’s dilapidations claim can amount to tens of thousands of pounds – sometimes more!

An effective counter-measure is a schedule of condition. This is a professionally prepared document, setting out in words and photographs the exact condition of a building at the moment a tenant signs the lease, thus showing the condition of the property when the lease commenced.

What does a schedule of condition cover?

In simple terms, a schedule of condition is a comprehensive and legally robust examination of all aspects of the building, taking into account factors such as:

  • Construction materials
  • A full account of the internal and external condition of the building, covering even the smallest cases of deterioration or disrepair

How tenants can protect their interests

Schedules of condition are undertaken by a building surveyor in order to identify the exact condition of a property and any problems relating to it before a lease commences. This gives the tenant solid evidence of the property’s condition and any defects before signing the lease, which can be used when it terminates.

As a result, the tenant will not have to foot the bill for restoring the building to a condition better than it was in when they moved in.

Landlords typically prepare a ‘schedule of dilapidations’ which sets out repairs, reinstatement works, redecoration and compliance with statute items for which the tenant may be liable. A schedule of condition can be used to counter this and ensure tenants do not pay any more than they should.

A completed schedule of condition can be formally attached to the lease and referred to in the lease, giving the tenant significant protection when the lease ends.

Why forewarned is forearmed where leases are concerned

A schedule of condition puts tenants on the front foot at the start of any negotiation – or renegotiation – of the lease. In some situations, this can result in a lower rent or a longer lease.

A helpful way of looking at a schedule of condition is as insurance cover that ensures landlords cannot make tenants pay for repairs they are not responsible for.

This answer is a guide only. Jones Melling has a team of specialists which can advise you on a schedule of condition.

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