Office Dilapidations

Office Dilapidations is often a term misunderstood and used too late in the process when dealing with commercial properties. We at Studio Fourteen want to explain this term and clear all the jargon now before you start your next project.

In brief, the term Office Dilapidations is used to describe a legal obligation of the tenant leasing a commercial or office space to maintain, repair and return the condition of the property back to the original condition when the contract was first agreed between the tenant and landlord. The tenant has obligations to the upkeep of their leased property.

Firstly, taking legal advice prior to engaging in a commercial lease is recommended, as Dilapidations costs can be substantial sums if not understood upfront and how best to approach the inevitable cost from day one within the leasehold.

The official Dilapidations process will commence when the lease is towards the end of term, with the landlord commissioned surveyor inspecting the office/home and issuing a Schedule of Dilapidations, identifying any issues apparent with the property.

Upon receipt of the Schedule of Office Dilapidations, Three options normally exist. 1 – Contest the contents of the schedule. 2 – Undertake the works whilst in occupation of the property. 3 – Agree a financial settlement to cover the cost of repairs after the duration period has ended.

Taking a step-back, option 1 above is perfectly reasonable providing prior to the lease agreement a survey of the property was carried out by a qualified surveyor producing a Schedule of Condition. This can form part of the legal agreement between parties to document the condition of the place prior to taking on the lease, a great reference back in time when considering Dilapidations items.

Option 2 is quite often the most advantageous financially to the tenant, controlling costs and time frame, although it is important to ensure the Schedule of the office Dilapidations is correctly understood and actioned accordingly.

Option 3 a simple option for those wishing the vacate the space without undertaking any works, leaving the landlord to address the issues following tenancy agreement.

On occasion, the Cat-B fitout completed by the tenant may be considered an improvement to the property, the landlord accepting reduced costs from the tenant or even on occasion foregoing any costs as the property may be drastically altered following the lease end.