Results of Survey

[herstonbell]

Hi Everyone

have psoted before about buying a business that currently leases the building out of which the business operates.

We now have the results of the survey - a whopping £59,000 worth of repairs are recommended!!

I know that surveyors are cautious and the place is not falling down it just needs work done to it.

What is interesting in the report is that the surveyor states " ..... there appers to be no Schedule of Condition attached which would give the state of repair in the 1999 lease and thereby limits the liabilities of the lessee...."

What I understand by this statement is that the current owner of the business (also the lessee) may not have to put right the isuues raised in the report as there is no benchmark.

We are fortunate as a partnership that one of us is in the building trade and therefore this would obviously reduce the costs to us for repairs etc.

However, what we would like to know is how far can we insist that the current business owner put right some of the points raised (bearing in mind that the lease is not between us and the freeholder at the moment and thereore none of our business so to speak) and how much should we negotiate with the freeholder in getting a reduction in the rent due to the points raised in the report.

Hope this makes sense!

[Editor]

A lot here depends upon the repairing obligations under the lease (eg is this a full repairing and insuring obligation on the tenant or is the landlord responsible for external repairs etc?) and the attitude of the landlord.
The last thing you want is to take on a lease with onerous dilapidation claims built into it, but you seem to be aware of this.
Although there was no schedule of condition, this does not necessarily prevent a determined landlord pursuing a claim for re-instatement to "good tenantable condition".
Seems to me you need to determine the exact tenant's obligations and the attitude of the landlord before taking on the present lease.
Some negotiation is perhaps needed either to bring the existing lease repair obligations to and end by having the landlord end the existing lease or have the tenant effect repairs, or to agree compensation from landlord or tenant to yourself, either to leave things as they are, or for you to carry out the work at your expense. In any event, whether you take on the existing lease, or a new lease, I suggest you should use your survey as your agreed new schedule of condition.

[yeahbutno]

I agree with Ed - you need to take a very close look at the existing lease. The landlord may not be willing to enter into a new lease at this stage, and nor is he obliged to. Even without a schedule of condition in 1999, a "normal" commercial FRI lease makes it very clear that the tenant is responsible for upkeep and repairs, and I would have thought that you *probably* need to look to the existing tenant first.

[herstonbell]

Thanks for the comments.

When we initally spoke to the tenant he made it clear that the property wasn't in a very good state when he took on the lease. He does have a FRI lease and having read it, it clearly states that he is responsible for the outside stuff etc.

I therefore assume that the state that it is then passed on to us is to be determined between the current tenant and landlord - that's my concern - in that they may come to an arrangment themselves - that then leaves us with a bigger repairs bill than we would want to take on perhaps, unless of course we can get a reduction on the rent.

It's very complicated buying a business that operates from leasehold premises!!

What makes it more so is that it comes in 3 bits. The shop on the ground floor and 2 flats above which the tenant can then sub-let on shorthold tenancy agreements as agreed in the lease. The major work needs to carried out on the 2 flats - one is just used as a store for the shop and one is occupied. Therefore the offer we have made for the business does include the 2 flats - and therefore based on the survey should be reduced to reflect the amount of work that needs to be carried out. In fact the business is costing us £58k and the work comes to £59k - so do we get it for free!!

[yeahbutno]

Sounds like they owe you a grand! :D

I'd suggest that you get a written agreement from the landlord about the current condition of the property, and future expectations. IMO the onus is on the current tenant to get this organised, as he's the one trying to sell the business with a big Q mark over it at the moment.