The Business Legal Services Blog

Schedule of Condition in Commercial Leases – an effective protection not to be overlooked

Tenants entering a new lease should pay careful attention to the extent of the repairing liability imposed on them. Most leases will expect the tenant to keep the Property in good repair and failure to abide with this obligation could result in then making significant dilapidation payments.

When negotiating the terms of the tenant’s repair obligation, it is possible to limit this liability by getting a qualified surveyor to produce a Schedule of Condition before entering into the lease.

What is a schedule of condition?

  A Schedule of Condition acts as photographic and written evidence of the state of the property at the time the lease is granted.  It consists of a list of photographs and additional descriptions of the property and is annexed to the lease. As your solicitor, we will limit the wording of tenant’s repair obligations in the lease by referring to the schedule so that the tenant does not gave to keep the property in any better state of repair, condition and decoration than as evidenced by the schedule.

Who can prepare a Schedule of Condition?

Either party of the lease is able to instruct a Chartered Surveyor to produce a Schedule of Condition. It is important to note that any photographs must be of a good quality and presented in full colour when annexed to the lease.

How does a Schedule of Condition protect the tenant?

 The effect of a Schedule of Condition is that the tenant is not expected to put the property in any better state of repair and condition than it was at the outset of the lease.

At the end of the lease, the landlord can serve on the tenant a schedule of dilapidations, which will list the repairs to be carried out on the property. It is usually an obligation for the tenant to undertake the restorative work, or failing that, to make dilapidations payments to the landlord for carrying out the works.

We would recommend that where the tenant is proposing to take a lease of a property which is in a poor condition or old premises, serious consideration is given to limiting the repairing liability by reference to a schedule of condition so as to ensure the tenant is not liable to remedy wants of repair caused by a previous tenant.

Landlords may wish to annex a Schedule of Condition when granting a lease of property that is in good condition so that at the end of the lease term, the tenant is obliged to return the property in the same state in which it was acquired.

Leave a Reply

Your email address will not be published. Required fields are marked *