The Dilapidations discussion between

Mark Hurst, Chartered Surveyor and Dilapidations Surveyor Vivien King

Dilapidations Help Course Book and Comments and Thoughts

by Vivien King of Hatherleigh Training  

The following are comments by Vivien King on the Dilaps Help guidance notes that we have produced.

Dilaps process

•  Client rings for advice and/or quote.

•  Talk to client.

•  Confirm instruction.

•  Gather information. Vivien King emphasised in particular to look at the lease.

•  View property

•  Prepare a Schedule of Condition or Dilapidations Report

•  Advise the way forward with your client

•  Meet other surveyor

•  Negotiate and agree

•  Negotiate and disagree and go to court.

Leasehold Property

The four phrases are:

•  Leases are contracts between a landlord and a tenant.

•  Statutory legislation gives rise to contractual obligations

•  Breaking these contractual obligations gives dilapidations claims.

•  A Schedule of Condition can protect the tenant against the dilapidations claims.

Site notes

•  Develop a clear, concise way of recording your findings.

•  Use sketches for floor plans, roof plans and details that are important.

•  Other photographic records. Vivien King advised that videos are increasingly being used; first appearing in the early 2000's. The benefits of the video for the surveyor representing the landlord is that it gives a better overall picture of the property. The advantage of using photography for a surveyor representing the tenant is that it gives very specific guidance as to the condition of the property.

Legal framework and commercial property

Law of Property Act 1925

Landlord and Tenant Act 1927 and 1954 (the 1954 Act gives a right to renew the tenancy)

Leasehold Property (Repairs) Act 1938

Occupiers Liability Act 1957 and 1984

Reading Leases fast

Ask the solicitor to only send you the relevant parts. Vivien King advised that this isn't necessarily a good idea, as often they will only send you the four R's covenants, when the actual definition of what the demised premises is can be very important, as this gives the limits to which covenants apply. We agree that solicitors should confirm the right clause has been used and serve the Dilapidations.

You will be looking for the four R's, the yield up clause and the demise clause.

What is a Schedule of Dilapidations?

•  It is a list of breaches the landlord believes the tenant has made in the lease.

•  It should read dilapidations may be (rather than are) served under Section 146 of the 1925 Law of Property Act when the Lease has come to an end and it is of greater than seven years, with three years left to run, i.e. a 20 year full repairing lease.

•  Limited by Section 18 of the Landlord and Tenant Act 1927. However, not widely known is that it is also limited by common law and damages cannot be greater than the losses.

Landlords remedies during the lease

•  Forfeiture

•  Damages

•  Specific performance

•  Jarvis -v- Harris

•  Nothing

Schedule of Dilapidations can be served at different times

•  Repair Notice (served any time).

•  Interim Notice (any time before the end of the lease, we originally said three years plus). Vivien King recommends that an Interim Notice is served at least at the beginning of the last year.

•  Terminal Schedule (at or after the end of the lease). Vivien King argues that this is an Interim Schedule, as all Schedules are interim until the lease has ended.

•  Final Schedule (after the lease has ended).

Landlord's remedy to a tenant defaulting on the lease

•  Claims for damages most common

This is where the Landlord seeks monetary compensation after the tenant has left the property without carrying out repairs.

•  Jarvis -v- Harris (missing heading)

This is where the Landlords re-entered to repair. Vivien King advised that it can be good to use as a threat, but you do have to be 100 percent correct when you use it, as tenant could counter claim for trespass and damages for loss of profit if not 100 percent, and she gave a Marks & Spencer's example.

•  Forfeiture rare

Other than in a very active market, when the landlord may wish to get the property back to rent at a higher level, and our words were the landlord exercises the right to take back the property.

•  Specific Performance

Very rare. This is where the landlord exercises the right to have specific work carried out. Vivien King advises that it is very unlikely you would get this.

Classic law cases

Vivien King referred to an article about surveyors getting hooked on case law called Why surveyors should not get hooked on case law in the Journal of Building Appraisal, October 2005.

She also recommended the following book: Dilapidations: The Modern Law and Practice by Nick Dowding QC and Kirk Reynolds QC, published by Sweet & Maxwell Limited and retails at £211!

Some additional ones that Vivien King mentioned in her dilapidations briefing notes:

Johnsey Estates 1990 Limited -v- The Secretary of State for the Environment Transport and the Regions. In this case the winning party doesn't necessarily get the costs; known as follow the event.

Business Environment Bow Lane Limited -v- Deanwater Estates Limited, formerly known as Gooch Webster Limited - exaggerated claims.

 

Surveyors Endorsement

The Dilapidations Protocol requires a surveyors endorsement for a Schedule of Dilapidations, that the works are reasonably required in order to put the premises in a physical state, as required by the Lease.

The next case she mentions is Hatfield -v- Moss 1988, in relation to the demise. It was a multi-occupied responsibility whose responsibility was the roof.

Ravensgate Estates -v- Horizon Housing Group Limited is a similar case and shows how each will turn on its own facts.

Elite Investments Limited -v- T I Bainbridge Silencers Limited 1986 looked at the lease clause to put and keep in good order. The word keep means that there is immediate requirement to put the premises into repair.

Post Office -v- Aquarius Properties 1985. However, the put and keep clause doesn't require improvements, such as a damp proof course in this case.

Credit Suisse -v- Veegas Nominees Limited 1994. The lease clause was to maintain, renew, cleanse, repaint, redecorate and otherwise keep the building in good and tenantable condition. The Court of Appeal considered this phrase to be beyond the normal repair clause.

Other cases were:

Rainbow Estates Limited v- Token Hold Limited and Another 1998. This was a very special, specific case, but it does show that is everything is right there can be a mandatory Injunction, also often known as Specific Performance from the Tenant.

Valuing for Section 18 valuations

The difference between a property in the condition as stated in the Lease, compared with the property that you have got at the end of the Lease.

Estimating Building Costs

Accurate quotes at the best evidence (watch out for use and abuse of provisional and prime cost sums).

Section 18 Dilapidations only relate to repair issues. Vivien King advised that common law protects you more than Section 18. Common law states you cannot claim more than your losses and she referred us to Denham -v- Reynolds, and she also advised that they may have a speaker (Peter Biscot) talk in more detail about Section 18.

Vivien King would recommend, for any of those wanting to know a lot more about dilapidations, the book Dilapidations: Modern Law and Practice by Nick Dowding QC and Kirk Reynolds QC.

Vivien King has lectures available on:

•  The demise in relation to multi-occupied properties

•  Statutory requirements.

•  Don't get hooked on case law.

•  Jarvis -v- Harris.

 

You may be interested in these RICS Dilapidation Guidance Note papers:

The RICS Dilapidations Guidance Note by Vivien King

Comment on RICS Dilapidations Guidance Note as Précised by Vivien King

Few Thoughts from Vivien King on RICS Guidance Note and Dilapidations