Are you struggling to understand the terms used in your Schedule of Dilapidations? We have explained the most commonly used terms for you:
Absolute Compliance
Absolute compliance requires that the party, as agreed by lease, complies with the requirements of the covenant in full. Where found in a break clause, absolute compliance of certain conditions is the prerequisite of successfully satisfying the break clause.
Alterations
Alterations are works undertaken by the tenant which alter, cut, divide, relocate or modify the demise, which can include the building, partitions, mechanical and electrical services, or finishes.
Break Clause
A break clause is a clause in a lease which provides the landlord or tenant with a right to terminate the lease before its contractual expiry date, if certain criteria are met.
Break Notice
A break notice is the formal notification that one party wishes to exercise its right to terminate the lease. Break notices must be served correctly and require a degree of care to ensure the right is successfully exercised.
Demise
The demise defines the property being let to the tenant under the lease either descriptively, or more usually by demarcation of a floor plan clearly showing the boundaries of the tenant’s occupation and limit of lease obligations.
Diminution Valuation
A Diminution Valuation is a specialist’s report prepared by an experienced Valuer. It takes into account Section 18 of the Landlord and Tenant Act 1927. Section 18(1) provides that the damages for breach of the repairing covenant may not exceed the diminution in value of the landlord’s reversion caused by breaches of repair. The common law practice is now to produce a single diminution valuation reflecting all breaches of covenant, including reinstatement.
Disrepair
Many tenants will have obligations to repair their premises. An assessment of the condition of property is carried out which highlights areas where repair is required. Failure to repair in accordance with the lease is commonly referred to as disrepair.
Final Schedule of Dilapidations
The final schedule of dilapidations is served after the lease has ended.
Licence for Alterations
Licence for alterations will define the works which have been agreed by the landlord for the tenant to undertake. It will include additional covenants for the tenant to comply with, in undertaking the works and may include reinstating the works at lease expiry. It may also include provisions for the landlord to notify the tenant to reinstate such works including a timescale before lease expiry.
Loss of Rent
Loss of rent is the term given to the rent a landlord has lost due to the tenant’s breaches of the lease.
Quantified Demand
The Quantified Demand sets out all aspects of the dispute and quantifies the monetary sum sought for damages in respect of the breach detailed in the schedule, as well as any other items of loss for which damages are sought. It should also set out whether VAT applies or not.
Reinstatement
Reinstatement is the term used to describe the works required to return the demise back to its original layout or condition at the time of lease commencement, which can include the building, partitions, mechanical.
Repair Covenants
Repair covenants are the contractual obligations in a lease which identify the landlord and the tenant’s liabilities to repair. The wording of the repairing covenant will provide the standard to which the tenant or landlord will be required to keep the various elements of the property whether demised to the tenants or not in repair.
Repair Notice
A repair’ notice usually takes the form of an interim schedule of dilapidations. The intention of the repair notice is to highlight to the landlord or tenant breaches of the lease during the term.
Schedule of Condition
A schedule of condition is a record of the condition of the premises at the commencement of a lease.
Schedule of Dilapidations
This is a list of outstanding repair and maintenance items (that a landlord has assessed) that have accrued under the terms of a tenant’s repair and maintenance obligations.
Scott Schedule
The Scott Schedule is a document enabling parties to compare their respective positions in relation to the landlord’s original schedule of dilapidations. It allows each party to set out its response to the opposing party’s contentions.
Supersession
Supersession is the process by which a landlord’s actual or intended future works to a property render a tenant’s repairs to have no value. This is used as a defence to the landlord’s claim.
Terminal Schedule of Dilapidations
The terminal Schedule of Dilapidations, served at lease end, is intended to address all breaches of lease, prepared following the recommended format in the Dilapidations’ Protocol.
Vacant Possession
Vacant possession is a legal term denoting the empty state of a property on hand back to the landlord. Usually required in a lease, the extent of compliance will be determined by the factual position at the date the premises are handed back.
Yielding Up
The yield up clause sets out the conditions on which the property is to be handed back to the landlord, e.g. in accordance with the lease.
If you still have concerns relating to the complexities of dilapidations, call Aspire for expert, no obligation advice on 020 3627 2555