Dilapidations claims are claims by landlords resulting from breaches of leases due to the condition of the property being leased, either during or at the end of the lease. Dilapidations may result from mistreatment of the property or poor or absent maintenance or repairs that are required by the lease. Further work may also be required at the end of a lease to reinstate alterations that have been made to the property by the tenant.
These claims are intended to allow the landlord to recover their losses as a result of dilapidations, but they cannot profit from them. So if for example the landlord does not intent to reinstate the property, perhaps if the property is to be demolished or refurbished, this must be taken into account, that is, works that might otherwise have been claimed for have been superseded and are removed from the claim.
In the case of Sunlife Europe Ltd v Tiger Aspect Holdings Ltd (2013) Mr Justice Edwards Stuart stated, ‘…additional work may make worthless some of the work that would have been necessary to put the building into repair with the result that, if such work has not been done, the landlord has suffered no loss and accordingly cannot recover any damages in respect of that breach. This is known as ‘supersession’’.
If the landlord were able to claim for this work, they would in effect profit from it, as the tenant would be contributing to works that the landlord would have carried out anyway irrespective of the dilapidations.
This is complicated by the fact that the landlord can only claim for their loss as a result of the property not being in the condition it was at the beginning of the lease. This is not necessarily the same as the condition the property would have to be in for it to be marketable at the end of the lease, as market conditions may have changed. The tenant is only obliged to make like-for-like replacements, repairs or reinstatements.
If a landlord carrying out works to repair dilapidations takes the opportunity to upgrade the property, but would otherwise not have done so, they are entitled to claim the value of the work that would have reasonably been necessary to return the property to its condition at the time the lease was agreed. Similarly, if the landlord carries out the repairs in a way that is more expensive than is necessary then they may not be able to claim the full cost of the works.
The parties should attempt to agree a figure that fairly represents the landlord’s actual loss as a result of the dilapidations. This must be based on the landlord’s intentions at the time the lease ends. Subsequent decisions by the landlord are separate from the claim and cannot be taken into account, even if they do not go on to carry out the repairs.
 Related articles on Designing Buildings Wiki
- Lease Negotiations - Tenants Checklist.
- Quantified demand.
- Schedule of condition.
- Schedule of dilapidations.
- Scott schedule.
 External references
- PGF v Royal Sun Alliance.
- BAILII Sunlife Europe Ltd v Tiger Aspect Holdings Ltd (2013).
- Landlord and tenant act.
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