Most commercial and industrial properties are leased on a relatively short term of years and many are full repairing and insuring leases, where the lessee takes responsibility for the complete building for a term of years. Some leases are internal repairing and decorating only with the landlord taking responsibility for the exterior and main structure of the block. In all cases before taking a new lease or an assignment or under letting on premises it is vital that the condition of the premises is determined.
In all cases, before a survey of leasehold premises is undertaken a copy of the lease will be needed to determine the landlord’s and lessee’s repairing and redecorating covenants.
If a new lease is taken, there is an opportunity to negotiate and reach an agreement with the landlord to limit the lessee’s obligations to maintain the building to no better condition than the condition of the building at the commencement of the lease. This can be done by taking a schedule of condition of the premises and including this as part of the lease with suitable reference in the lease to ensure this condition is binding.
Should this not be possible, a survey of the premises will still highlight any serious defects with an opportunity to determine the financial implications. A survey would aid in the decision whether to proceed and if so, whether to negotiate a rent free period or reduced rent period to allow for the dilapidations to be dealt with.
If an assignment is being considered, ie where the existing lessee decides to assign (sell) the lease, a survey of the premises will highlight any serious defects or non compliance of covenants by the lessee or landlord. Negotiation will then be direct with the existing lessee. Bear in mind that if the premises are dilapidated ie the lessee has not complied with the repairing and decorating covenants of the lease then the landlord can serve an INTERIM SCHEDULE of dilapidations on the lessee, the day after the new lessee takes the assignment and require the lessee to carry out the repairs. If you are taking an assignment of the last remaining years of a lease, there is normally provision for the landlord to enter the premises in the final year and determine any dilapidations and serve a TERMINAL SCHEDULE OF DILAPIDATIONS on the lessee which is a priced schedule of works. As dilapidations can mount up over the years, costs of remedial works and repairs can be very high and the building should still be surveyed to determine the lessee’s liabilities for repairs and decorations.
My practice carries out surveys on all types of commercial and industrial premises, both leasehold and freehold and can provide Schedules of Condition and advise on and provide Schedules of Dilapidations.
If you own or are taking on a lease of commercial or industrial buildings and
need to discuss the condition of the property and implications of any lease or
require a survey or schedule, please Contact Me.