Dilaps Cases and Legal Framework
Dilapidations Protocol set up by The Royal Institution of Chartered Surveyors (RICS) has regular updates and gives guidelines for good practice with Dilaps cases.
Dilaps Legal Framework
The majority of Dilaps claims are resolved without legal action and often with little or limited legal advice. They are agreed within a legal framework by Chartered Surveyors specializing in dilaps work.
Five ways the landlord can serve the following schedules
- Repairs Notice (may be served by a Surveyor).
- Interim Schedule of Repairs
- Terminal Schedule of Repairs
- Final Schedule of Repairs
- Further Final Schedules of Repair
2-5 must be served by a solicitor (s.146 L&TA 1925)
The Notice will specify by which date the repairs must be completed but sufficient time must be given.
Repairs Notice defined
A Repairs Notice states the work needed. There is no limit to the number of Repairs Notices.
Interim Schedule defined
An Interim Schedule must satisfy the five points in the 1938 Act and relate to a major disrepair. There is no limit to the number of Interim Schedules.
Terminal Schedule defined
A Terminal Schedule can only be served during the last three years of a lease of seven years or more. A Terminal Schedule will be a detailed schedule.
Final Schedule defined
A Final Schedule can be served only on determination of the lease. More than one schedule can be served up to six years after determination – if a further action is brought can be served up to twelve years.
The Effect of S.5.1, Leasehold Property (Repairs) Act 1938
A tenant may counterclaim within 28 days against an Interim Schedule. The court will only give a landlord leave to proceed if he can prove that the repairs come under one of the five specified grounds:-
- To prevent substantial diminution in value of the reversion.
- That repairs are required for the purpose of an Act/By-Law
- Where the lessee is in occupation of part and repairs are required in the interests of another occupier.
- The cost of immediate repair would be small compared with the cost of delayed repairs.
- Special circumstances render it just and equitable.
Terminal and Final Schedules tend to be the main notices served.
Procedure at the Terminal Stage
The purpose of a Terminal Schedule of Dilapidations is to ensure the property is put in as good an order as possible prior to termination of the lease. Not for the landlord to ‘fleece’ the tenant.
The sum of damages claimed may not exceed “the diminution in value of the remainder man’s interest”.
This involves complicated before and after valuations.
Damages cannot be claimed if the tenant carries out the repairs or if the landlord takes the property back while the lease is still current.
The 1938 Act does not apply at Terminal Stage.
Read the Lease
Remember Surveyors are Surveyors, not a lawyers and whilst reference to case law can be made when negotiating with another Surveyor it is ultimately the lawyer’s job to examine case law and decide which case best suites the case in hand – but that stage should not be reached!
Full Repairing and Insuring Lease (FRI) is Usual
FRI Leases are standard in the UK in our experience.
A FRI leases are great for the landlord – rent and no repairs.
We always advise tenants when renting a property should double check their type of lease and read the lease again and again.
Most leases are “Repair” leases but make sure that you know which type of lease you have.
Repair – to a standard suitable for age, character and locality of the building
The 4 R’s and Yield Up
Repairs - define elements that are in disrepair
Redecoration – frequency and standard of redecoration
Reinstatement – put back to how detailed in the lease subject to any licences
Statutory Regulation – usually a requirement to meet Statutory Regulation such as Health and Safety at Work Act
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Our Top Ten Repair Classic Dilapidations Cases
In a few words
Proudfoot v Hart
“Repair” - it is required to a standard suitable for age, character and locality of the building
Calthorpe v McOscar
Whatever words the parties use they plainly express the intention that the premises are to be repaired, kept in repair and yielded up in repair
Belcher v McIntosh
Better than originally
There may be a duty to put a property into better condition than it was found in at the commencement of the lease, fit to be occupied for the purpose for which they were let.
For example: If four radiators leak and two do not yet leak only the leaking ones count as a disrepair.
Hatfield v Moss
The interior, exterior and roof are included unless specifically excluded
Dobson v Canterbury City Council
The likely fate of the property must be taken into account (i.e. is it to be demolished at the end of the lease?)
For example: Landlord has Planning Permission to redevelop as a housing site and is out to tender
Maddoc v Davis
Final Stage Schedule – the only remedy is damages. Damages will be the actual cost of putting the building into the state of repair required by the lease.
The Schedule will include:
Cost of works + VAT including securing the building
And may include (if the wording of the lease permits):
Costs of preparing schedule/inspections/negotiations
Supervision of works
Loss of rent
Legal costs/valuation fees/specialist testing etc
Perry v Chotzner
No tiny defects
Avoid putting in every tiny defect. Generally the courts will not allow minor items such as pin pricks in the plaster and general decorative wear and tear.
The tenant is not bound to fill cracks in the plaster made by nails Perry v Chotzner (1893). Keep is satisfied by substantial repair. Trival matters will not amount to a breach: Plough Investments I v Manchester C.C. (1989)
Regis v Dudley
The tenant is required to prevent consequential damage ‘fair wear and tear’ would not produce
Brown v Davis
Fair wear tenant to prove
Leases may say “fair wear and tear excepted” but the onus of proof lies with the tenant.
Norwich Union v BR Board
A covenant may require something beyond repair, and when necessary, to rebuild, reconstruct or replace the same and in such condition and repair yield up.
A few more classic cases
In a few words
Cornish v Cleife
A covenant to repair includes buildings erected subsequently to the demise and also fixtures, even without express mention
Brew Bros v Snaz (Ross)
Design or inherent defect
If repairs go beyond what was substantially contemplated by the parties to the lease – inherent or design defects the case to look at is Brew Bros v Snaz (Ross) In this case Philimore L J said “The tenant is not liable for costly repairs arising from a long term defect to the drains” So, you can find case law to show your side of things – it’s only a deep read that will show the difference.
Low v Innes
A rebuilt property is not required to be similar in construction or elevations
Post Office v Aquarius Properties
Attend to damage done
Example: The basement of a property floods due to a rise in the water table, how might this be disrepair?
In the Post Office v Aquarius Properties (1978 “There is no want of repair but the tenant is liable to attend to the damage done by water ingress”.
Quick v Taff Ely BC
In repair liabilities the courts take the view of the good sense of the agreement. Thus the repair of a cold bridge behind a concrete lintel was not a want of repair.
Plough Investments v Manchester City Council
Minimum and Maximum
A tenant covenanting to repair at his expense is free to adopt the minimum standard (or maximum).
A landlord is entitled to rebuild at a tenant’s expense is not obliged to adopt minimum standards of repair but must be reasonable if a higher standard is required.
The world of Dilaps is ever changing
Whatever we tell you today about the legal side of dilaps could be out of date tomorrow, or next week or in a years time.
We have a basic framework of classic case history and new and specific cases relevant to your dilaps case.
Good habits regarding Dilaps
To keep up to date with latest Dilaps cases
Yearly Dilaps Conference
Damages (your claim)
Royal Institution of Chartered Surveyors (RICS) Guidance Note and Property Litigation Association (PLA) Protocol
“Old” does not mean “Disrepair”
Because something is old it does not mean it is in disrepair.
For example: A lift, or a boiler, may be elderly. If documentation shows it is serviced regularly and it works even if it is old it is not in disrepair dilapidation.
Reger International Ltd v Tiree Ltd 2006
A patch repair can do the job – the landlord cannot force a replacement.
Carmel Southend Ltd v Henshaw Ltd 2007
Court has the final say
Court has discretion – although a party has “won’ the litigation the court has discretion.
Johnsey Estates Ltd v Secretary of Environment Transport and Regions 2001
If you are acting for the landlord remember
Before 1st January 1996
The head/original tenant is responsible throughout the term of the lease. So the landlord can accept an assigned from the original tenant A to new tenant B. If tenant B does not pay, the rent can come back to the original tenant A.
Now that is unfair particularly if it is tenant D, E or F11
Why can’t the tenant just walk away?
The tenant can walk away but usually commercial leases have a personal guarantee.
If you are acting for the tenant remember?
Remember, Schedules of Conditions are great for tenants. A landlord’s Surveyor should make the tenant’s Surveyor be as precise as possible i.e. 22 slates are cracked. A tenant’s Surveyor should be general, some may say vague i.e. overhaul roof.
Remember it is difficult for a landlord’s Surveyor to argue against quality of repair carried out by a tenant unless really bad.
Improvements not required but…
No tenant has to improve a landlord’s property but it may be the only reasonable option.
For example: If the heating has come to the end of its life – it would be hard to replace it like for like, unlike damaged brickwork which even if 100 years old can usually get a good match – is this true?
Surveyor’s Role in Dilaps
Knowing the rules
Dilaps only work because both Surveyors know the rules (the legal framework) the Dilaps Game is played under.
Dilaps – it’s partly a game but a costly, stressful and time consuming time for your clients.
Dilaps Surveyors are knowledgeable as they know:-
The RICS Guidance notes
Confirmation of instruction – your client needs to know what you are doing for him in writing
The lease which they have read
Gather all the information
Know the latest case law
Prepare a good reasoned argument
What Dilaps Surveyors need from their clients:-
A copy of the signed lease
Schedule of Condition if applicable
Local Authority Approvals if required
Schedule of Dilapidations or Condition
A Schedule of Dilapidations or Condition is prepared by a Surveyor based on the 4 R’s and terms within, which in turn are defined by case law.
For example: Repair covenants using the term “repair” are based on Proudfoot v Hart case which showed the “repair” should be appropriate for the age, type and style of property.
Dilaps Surveyors always take good notes that will be readable in a few years time. Not just dilapidations but for all types of surveying work.
Directions and measurements are also important with compass points or left and rights noted as well as a walk around the building to pace it to gauge its size, which helps with pricing.
Landlord’s Surveyor’s Role
The Landlord’s Surveyor’s role is to prepare a Schedule of Dilapidations. The main aim is to identify the breach/defects/disrepair and not give a remedy.
Landlord’s Surveyors can’t guess at Dilaps if you can’t see it you can’t put it in.
The Landlord’s Surveyor does not want a Schedule of Condition but if he has to have one the Schedule of Condition will need to be specific. The only way to do this is for the Landlord’s Surveyor to agree every item with a tenant’s Surveyor. It can be said it is a case of who gets bored first!!!
Dilaps – priced or unpriced?
The choice is yours.
Some dilaps do not put the clauses breached in either, which is wrong, but deal with it kindly or it may come back and bite you!
What is reasonable time with dilaps?
The Landlord must give the tenant reasonable time to carry out the work – this does depend upon the work required.
The Landlord does not have to serve a Dilaps before the end of the lease legally, but is it required by the protocol?
Tenant’s Fixtures and Fittings
Make sure the tenant’s fixtures and fittings leave the property when the tenant leaves! Unless the Landlord likes them!
If the tenant installs a heating system is this a fixture and fitting?
The Landlord and Tenant Act 1985 states regarding all short leases (of less than seven years) and periodic tenancies that with regard to heating the Landlord is responsible “to keep in repair and proper working order the installation in the dwelling for space heating and heating water.”
If the Tenant has received a Schedule of Dilapidations from the Landlord’s Surveyor asking the tenant to carry out investigation can this be ignored? It is up to the Landlord to find and detail the breaches.
A Schedule of Dilapidations with the phrase “a cherry picker to be hired and joint investigation take place” may be acceptable.
Dilapidations Planning is key
If a Schedule of Dilapidations is served and you the tenant agree the items also agree a programme of work and timetable to minimise any misunderstanding.
Know and understand Dilaps terms
Lease being taken back.
Courts seem to hold back on forfeiture against the leaseholder / tenant.
Giving the lease back as the lease terms
This is often easier said than done.
Out of Possession
Tenant not in property (subject to a Section 18 Limitation).
Tenant is liable for:
- Solicitors and Surveyors fees if in the lease and
The lease does not give a requirement on a matter.
It does not mean the tenant or landlord are liable.
The lawyers would look to case law for the answer here.
A “without prejudice” letter.
This is too close to being in court or Alternative Dispute Resolution (ADR)
For more information on Dilaps terms take a look at our A to Z of Dilaps read more...