Reclaiming the cost of a schedule of dilapidations

[Bel]

Recently a valuation by RICS surveyor pointed out delaps issues and suggested a schedule of delaps. Now the T wants to assign lease to his partner.

QUESTION Can LL's claim back the cost of the schedule fromT if one is instructed by LL; (please see clause from lease below.)

So even if there are no significant delaps, T must still pay if LL wants one done?

Here is extract from lease:

Expenses of the Landlord

To pay all expeses (including solicitors costs and Surveyors fees) incurred by the Landlord:
a) incidental to or in contemplation of the preparation and service of a Schedule of Dilapidations and/or a notice under 146 and 147 of the Law of Property Act 1925 (nothwithstanding that forfeiture is avoided otherwise than by relief granted by Court); and
b) in connection with every application for any consent or approval made under thi lease whether or not such consent or approval shall be granted or given.

Thanks for any advice

[Lawcruncher]

I think it has to be the case that a schedule of dilapidations should only be prepared when really needed. The landlord cannot charge a tenant for fees he incurs if he instructs a surveyor to make a report on the condition of a property and the surveyor finds nothing.

[Always Problems]

I had a 21 year lease where the person in charge of my tenancy was an official in the surveyors department of a multinational Bank, and nothing was overlooked. When I wanted to assign my lease he refused permission until the 3 page "schedule of dilapidations had been completed" he also sent in an Electrical Contractor for a "Safety Inspection" which also had to be completed first. The fact that the building was over 100 years old was irrelevant and that the wiring had been put in by the previous owner who had the wiring diagram from "Heath Robinson" anyway the moral of the storey is "its the landlords building and when you want a lease assignment you play to his tune" or the assignment wont happen. Thats how I see it.

[jeffrey]

Originally Posted by Bel

Can LL's claim back the cost of the schedule fromT if one is instructed by L? (please see clause from lease below.)

Expenses of the Landlord

To pay all expenses (including solicitors costs and Surveyors fees) incurred by the Landlord:
a) incidental to or in contemplation of the preparation and service of a Schedule of Dilapidations and/or a notice under 146 and 147 of the Law of Property Act 1925 (nothwithstanding that forfeiture is avoided otherwise than by relief granted by Court); and
b) in connection with every application for any consent or approval made under thi lease whether or not such consent or approval shall be granted or given.

The scope of line 1 is limited by sub-clauses a and b. Only in those two situations can L demand reimbursement from T.
Clearly, L can insist on a Schedule only where that is appropriate.

[Lawcruncher]

Originally Posted by Always Problems

I had a 21 year lease where the person in charge of my tenancy was an official in the surveyors department of a multinational Bank, and nothing was overlooked. When I wanted to assign my lease he refused permission until the 3 page "schedule of dilapidations had been completed" he also sent in an Electrical Contractor for a "Safety Inspection" which also had to be completed first. The fact that the building was over 100 years old was irrelevant and that the wiring had been put in by the previous owner who had the wiring diagram from "Heath Robinson" anyway the moral of the storey is "its the landlords building and when you want a lease assignment you play to his tune" or the assignment wont happen. Thats how I see it.

I used to get stuff like that all the time when acting for tenants. Regrettably some agents see assignments as an opportunity to extract cash from tenants. There is a limit to what a landlord can insist on when an assignment is proposed; he cannot for example insist that all minor breaches of the repairing obligations are dealt with. Reminding a landlord or his agent/solicitor of the Landlord and Tenant Act 1988 often goes a long way to making them see reason. You must not stand for any nonsense or let yourself be browbeaten by overbearing surveyors.

[jeffrey]

Originally Posted by Lawcruncher

Reminding a landlord or his agent/solicitor of the Landlord and Tenant Act 1988 often goes a long way to making them see reason.

True. Here's the 1988 Act concerned (re L's consent requirements): http://www.statutelaw.gov.uk/SearchR...Public+General)

[Bel]

Originally Posted by jeffrey

The scope of line 1 is limited by sub-clauses a and b. Only in those two situations can L demand reimbursement from T.
Clearly, L can insist on a Schedule only where that is appropriate.

The clause does not say delapidations need to be in evidence before a schedule is done that can be chargable to the tenant.

Originally Posted by Lawcrucher

I think it has to be the case that a schedule of dilapidations should only be prepared when really needed. The landlord cannot charge a tenant for fees he incurs if he instructs a surveyor to make a report on the condition of a property and the surveyor finds nothing.

Is Lawcruncher saying that other law may dictate whether it is reasonableor not to charge the tenant, or just from a moral standpoint?

Just to be totally clear Where it says "incidental to or in contemplation of the preparation and service of a Schedule of Dilapidations " the language is confusing me. I assume it means that the actual cost of preparation is covered.

[Lawcruncher]

In "incidental to or in contemplation of the preparation and service of a Schedule of Dilapidations" the words "incidental to or in contemplation of" are there just to make it clear that we are not just talking about typing up the schedule, but the work the surveyor does in inspecting and negotiating.

What I am saying is that you cannot charge the tenant for an inspection to see if a schedule needs to be drawn up.

It needs to be borne in mind that keeping a property in repair is a continuous process. No sooner have you done one thing than another may need attending to. It would be unreasonable to send in a surveyor to draw up a schedule of dilapidations every time there was a want of repair.

An interim schedule of dilapidations (defined as one served where the lease was granted for more than seven years and has more than three years unexpired) should really only be served where the want of repair is serious. This is because the tenant has the benefit of the Leasehold Property Repairs Act 1938. Apart from providing that the schedule cannot be enforced without the leave of the court it contains this section relevant to your question:

2. A lessor on whom a counter-notice is served under the preceding section shall not be entitled to the benefit of subsection (3) of section one hundred and forty-six of the Law of Property Act, 1925, (which relates to costs and expenses incurred by a lessor in reference to breaches of covenant), so far as regards any costs or expenses incurred in reference to the breach in question, unless he makes an application for leave for the purposes of the preceding section, and on such an application the court shall have power to direct whether and to what extent the lessor is to be entitled to the benefit thereof.

Apart from the fact that serving an interim schedule is pretty much a waste of time where (as you say) "there are no significant delaps", it is unwise for a landlord to take a request for licence to assign as an opportunity to require the property to be brought up to scratch. If on an open market sale of the lease by the tenant consent is refused on account of the want of repair or made conditional upon the repairs being carried out, a landlord runs the risk of being deemed to have unreasonably refused consent and liable in damages for any loss the tenant incurs as a result. This is unlikely to apply in your case since the proposed assignment is to a spouse, but even so you do not want to be getting into long discussions and you ought to deal with the matter as if it were an open market sale by the tenant.

On the basis of what you have said (and assuming that any schedule would be an interim schedule) the best way forward is simply to draw the attention of the tenant to the repairs that need to be carried out and ask for them to be attended to.

[Bel]

Thank you for such a detailed post, Lawcruncher