A Schedule of Condition can look like an unnecessary expense when a commercial property is being leased.
After all, why spend money documenting defects that are already visible?
Because those defects could become important when the lease ends.
What is a Schedule of Condition?
A Schedule of Condition records the condition of a property at a particular point in time, usually at the beginning of a lease.
It can document existing defects, deterioration and other relevant condition issues.
The report provides a record against which the property’s condition can later be compared.
Why does this matter to a tenant?
Commercial leases often contain repairing obligations.
Without a reliable record of the property’s condition at the start of the tenancy, it may become more difficult to establish what deterioration occurred during the tenant’s occupation.
A Schedule of Condition can therefore help protect a tenant from being held responsible for pre-existing defects, subject to the precise wording of the lease.
What can it record?
Depending on the scope, the surveyor may record matters such as:
- Cracking.
- Dampness.
- Defective finishes.
- Roof defects.
- Deteriorated external elements.
- Damaged doors and windows.
- Defective drainage or rainwater goods.
- Existing repairs and alterations.
The report should reflect what is reasonably apparent during the inspection.
Does it guarantee you won’t have a dilapidations claim?
No.
A Schedule of Condition does not remove the tenant’s contractual obligations.
It is evidence of the property’s condition at the date of inspection. The lease must still be considered to establish what the tenant is required to repair, maintain, decorate or reinstate.
What happens if the landlord disputes it?
The quality and detail of the original Schedule can become important.
A properly prepared report, supported by clear descriptions and photographs, can provide useful evidence when comparing the property’s condition at lease expiry.
Is it worth doing for a short lease?
Potentially.
The appropriate level of professional input depends on the property, lease terms, condition and potential repair exposure.
A relatively short lease does not automatically mean that a Schedule of Condition is unnecessary.
Stokemont’s advice
The cost of preparing a Schedule of Condition is generally small compared with the potential cost of a substantial dilapidations claim.
For tenants taking on significant commercial repair obligations, documenting the starting condition of the property can be a sensible form of risk management.
