Schedules of Condition
Reasons for having a Schedule of Condition carried out
A Schedule of Condition identifies where any changes have been carried out already by the present owner when compared against the agreed alterations (often known as 'licenses').
Schedules of Condition
In years to come you will remember (with a smile, hopefully) what the business was like on day one
In our experience most lessees / tenants / businessmen carry out lots of repairs to enable their business to be as profitable as possible (or that is the original aim, until they meet a builder that runs over time and over budget, but that is another story!). These ‘improvements' should have had agreement from the landlord (in the case of most leases that we have been involved with) and a license should be issued.
Over the years we often find that as the relationship between the landlord and the lessee develops, an informal approval may be given in the form of a verbal agreement on the phone, for example, which can be dangerous for both parties when a lease comes to an end, and this is one of the advantages of having management companies who will generally stick more rigidly to issuing licenses (as they often gain fees from them).
Problems can arise
The problem arises where perhaps the original landlord retires or sells the property investment to another company who are much stricter with regard to their dilapidations claims. This may be because when they purchase the property it is purchased at a premium with the incentive by the landlord being that they will be able to serve an Interim Dilapidations Schedule or a Final Dilapidations Schedule to the present lessee / tenant / business owner and get him to bring the property up to modern standards (and we can assure you that this happens). This can be of great benefit before you take on the lease, as it allows you to negotiate for alterations and repairs that have been carried out by the present tenant/lessee that you do not wish to take on responsibility for.
Reasons for having a Schedule of Condition carried out
It identifies where any changes have been carried out already by the present owner when compared against the agreed alterations (often known as ‘licenses')
This can be of great benefit before you take on the lease, as it allows you to negotiate for alterations and repairs that have been carried out by the present tenant/lessee that you do not wish to take on responsibility for.
This can also be of great benefit in years to come if the landlord, via an interim Schedule of Dilapidations or a Schedule of Dilapidations, tries to make you reinstate the property to that which is recorded within the lease documentation. Remember, it is irrelevant what the property was like when you took it on, it is the lease documentation that is the overriding legal requirement.
SCHEDULES OF CONDITION
In years to come you will remember (with a smile, hopefully) what the business was like on day oneIn our experience most lessees / tenants / businessmen carry out lots of repairs to enable their business to be as profitable as possible (or that is the original aim, until they meet a builder that runs over time and over budget, but that is another story!). These ‘improvements' should have had agreement from the landlord (in the case of most leases that we have been involved with) and a license should be issued.
Over the years we often find that as the relationship between the landlord and the lessee develops, an informal approval may be given in the form of a verbal agreement on the phone, for example, which can be dangerous for both parties when a lease comes to an end, and this is one of the advantages of having management companies who will generally stick more rigidly to issuing licenses (as they often gain fees from them).
The problem arises where perhaps the original landlord retires or sells the property investment to another company who are much stricter with regard to their dilapidations claims. This may be because when they purchase the property it is purchased at a premium with the incentive by the landlord being that they will be able to serve an Interim Dilapidations Schedule or a Final Dilapidations Schedule to the present lessee / tenant / business owner and get him to bring the property up to modern standards (and we can assure you that this happens).
This can be of great benefit before you take on the lease, as it allows you to negotiate for alterations and repairs that have been carried out by the present tenant/lessee that you do not wish to take on responsibility for.
This can also be of great benefit in years to come if the landlord, via an interim Schedule of Dilapidations or a Schedule of Dilapidations, tries to make you reinstate the property to that which is recorded within the lease documentation. Remember, it is irrelevant what the property was like when you took it on, it is the lease documentation that is the overriding legal requirement.
A record of how the last tenant ‘yielded-up' the property (gave back)
A Schedule of Condition is a very good independent record of the condition of the property when you occupied it / signed the lease.
Although, in theory, you, as the lessee / tenant / business owner, could, on day one of your occupation, carry out a very similar exercise to the Schedule of Condition produced by a Chartered Surveyor, in our experience this rarely happens and / or the photos get lost or misplaced (and with the case of computer files the computer crashes never to recover them again) and no proper record is formulated simply because the business owner has too many other things to do when he moves into a new property. Also, we would argue, that when you have moved into the new property it is far too late to negotiate on who should have carried out repairs and certainly too late to negotiate on the premium and the rent.
A Chartered Surveyor that specialises in dilapidations will set out the document in a standardised format and in our case we provide both a paper document and a word processed pdf file together with, in most cases, a CD of the photos taken, which of course all of which can still be lost, but you could always free phone us to see what we have on record (no guarantees, so look after your copy) we generally have a huge database of clients schedules and photographs which we keep for 10 years plus.
Useful for Negotiating your way out of a LeaseLessees / tenants / business owners wish to leave a lease for many reasons, for example your company may be getting bigger or downsizing or could be going bankrupt or you simply could have decided that the area is not where they want to be based or (the Holy Grail!) you may be retiring rich to your holiday home, and then receive a dilapidations claim against you. What does this mean?
First of all we need to explain what ‘yielding-up' is. This is when you come to the end of your requirement to have the lease property and then the landlord expects you to return it in the manner as set out within the lease.
Note this is not as you received the property but as set out within the lease and various case law that define the terms used within the lease; this can be a surprise / shock to the leaseholder / tenant / businessman. Having a Schedule of Condition showing what the property looked like at the start of the lease will help.
Having a Schedule of Condition Appended to the Lease
This is the ideal situation where the landlord has agreed the Schedule of Condition is a fair and accurate representation of what the property looks like and this is appropriately allowed for within the lease, and most importantly the landlord has accepted within the lease that you will return the property in only as good a condition as that which you received it.
Lease where the Landlord Refuses to Append a Schedule of Condition
This type of lease is becoming more common and should instantly have any potential tenant / lessee / businessman cautious of the lease; although it has to be said in some prime locations there is nothing else available but a full repairing and insuring lease without the Schedule of Condition attached and it is very much a catch 22 situation.
We believe that whilst the Schedule of Condition may not be appended to the lease if your solicitor forwards this to the landlord it will put you in a far better position when you do come to yield-up (give back) the lease, and it will give a good realistic picture of what the property looked like at the start of the lease. Whilst we do not know the legalities behind it, we feel that most reasonable landlords would prefer to be negotiating on the basis of a Schedule of Condition, albeit that it wasn't appended to the lease than nothing at all and they are prepared to be fair.
