A terminal schedule of dilapidations is prepared towards the end of a commercial lease to identify breaches of the tenant’s repairing, reinstatement and other relevant lease obligations.
It is commonly prepared by a building surveyor acting for the landlord.
What does a terminal schedule cover?
The surveyor will review the property and the relevant lease obligations before identifying items that may require attention.
Depending on the lease, this can include:
- Repairs and maintenance.
- Redecoration.
- Replacement of damaged or defective elements.
- Reinstatement of alterations carried out by the tenant.
- Removal of tenant’s fixtures, fittings or installations.
- External works and grounds maintenance.
- Other specific obligations contained within the lease.
The schedule should relate the identified items to the tenant’s contractual obligations rather than simply listing everything that appears imperfect at the property.
When is it prepared?
A terminal schedule is generally prepared towards the end of the lease, usually when the tenant is approaching expiry or has already vacated.
The timing can be important because the condition of the property and the tenant’s remaining obligations need to be considered in the context of the lease.
Does the schedule mean the tenant has to carry out all the works?
Not necessarily.
A schedule identifies alleged breaches and the works or costs associated with remedying them. It does not, by itself, determine the final amount payable by the tenant.
The lease terms, the nature of the breach and the circumstances surrounding the claim all need to be considered.
There may also be statutory limitations on the landlord’s recovery, including the provisions of Section 18 of the Landlord and Tenant Act 1927.
Can a tenant challenge a schedule?
Yes.
A tenant can review the schedule against the lease and the condition of the property and may dispute individual items where, for example:
- The lease does not require the work.
- The item does not constitute a breach.
- The scope of the proposed works is excessive.
- The tenant has already complied with the relevant obligation.
- The landlord’s proposed loss is not properly supported.
This is why an independent dilapidations assessment can be useful for tenants as well as landlords.
Stokemont’s advice
A terminal schedule should be evidence-based and tied closely to the lease.
If you are a landlord preparing a dilapidations claim, or a tenant who has received one, a commercial building surveyor can review the property’s condition and the relevant repairing obligations to help establish what works are actually required.
