Commercial Lease: Do I need a Schedule of Condition?
A lease of a commercial property is often a full repairing and insuring lease (an “FRI lease”), meaning the tenant takes on the full costs of repairing and insuring the whole of the property, including the structural parts – such as the foundations, walls and roof.
Other leases are “internal repair only” where the Tenant is only obliged to look after the internal parts of the property, such as the floor, wall and ceiling surfaces.
Regardless of whether the lease is FRI or Internal-Repair, the repairing obligations can place a considerable financial burden on tenants, so it is important that the tenant is clear about the extent of the property they will be required to repair, and which elements of repair they will be responsible for, either directly or by reimbursing the landlord via a service charge.
Many people mistakenly believe that they only need to hand back a commercial property in a similar state of repair and condition to what it was in when they first took the lease. However, this is usually not the case.
The repairing obligations in a lease typically require a tenant to put and keep the property in a good and substantial state of repair and condition. This can mean putting the premises into a better state of repair and condition than they are in when the tenant first takes occupation. This can be particularly onerous, especially when the property is in a poor state of repair to begin with. It is therefore important to ensure you properly assess the current state and condition of a property and check what your repairing liabilities are going to be before committing to a commercial lease.
One way that a tenant can seek to limit their repairing obligations is by reaching an agreement with the landlord to annex a Schedule of Condition to the lease.
What is a Schedule of Condition?
A Schedule of Condition is (usually) a series of photographs that evidence the state of repair and condition of the property and highlight any areas of disrepair at a certain point in time – usually immediately before the lease commences. The repairing clause in the lease is then caveated so that the tenant is not required to put the property into any better state of repair and condition than as evidenced in the photographic Schedule of Condition.
Why use a Schedule of Condition?
Schedules of Condition can be useful in helping safeguard against future dilapidations claims from the landlord, so the more detailed the photographic Schedule of Condition the better protection it can afford a tenant.
Ideally, any agreement for the inclusion of a Schedule of Condition should be reached during initial negotiations between a landlord and tenant and be included within the agreed Heads of Terms.
How can we help?
For more advice on this subject or any other Landlord and Tenant matters please contact Kerry Roshier at Herrington Carmichael LLP at kerry.roshier@herrington-carmichael.com.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
Sign up
Enter your email address for legal updates on Property & Construction Law.
Latest News & Insights
Discrimination in the UK Construction Industry
Breaking Through the Concrete Ceiling The construction industry is often perceived as being...
Typical Amendments to a JCT
The Joint Contracts Tribunal (JCT) publishes standard forms of building contracts that are used...
Building the Future – The Long-Term Plan for Construction
At the end of January 2023, Building Magazine published the Building the Future Commission’s...
Top Legal Insights
Contract Law
Material Breach of Contract
What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?
Property Law
Commercial Lease: The Financial impact on Landlord and Tenant
Coronavirus (COVID-19) and the restrictions now in place to control its spread, are having a significant effect on many business sectors.
Divorce and Family Law
Divorce in Lockdown: Can I get some discreet legal advice?
We have spoken to clients who are unfortunately experiencing some family issues, and would like to obtain expert legal advice, yet don’t know how...
Land & Property Dispute
Restrictive Covenants – The Price of Modification
Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?
Award winning legal advice
Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.
Email: info@herrington-carmichael.com
Farnborough
Brennan House, Farnborough Aerospace Centre Business Park, Farnborough, GU14 6XR
Reading (Appointment only)
The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA
Ascot (Appointment only)
102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY
London (Appointment only)
60 St Martins Lane, Covent Garden, London WC2N 4JS
Privacy Policy | Legal Notices, T&Cs, Complaints Resolution | Cookies | Client Feedback | Diversity Data
Our Services
Corporate Lawyers
Commercial Lawyers
Commercial Property Lawyers
Conveyancing Solicitors
Dispute Resolution Lawyers
Divorce & Family Lawyers
Employment Lawyers
Immigration Law Services
Private Wealth & Inheritance Lawyers
Startups & New Business Lawyers
Please be aware that we have no plans to change our bank details. If you receive any indication that any of our bank details have changed please contact us before sending us any funds. We take no responsibility for monies you transfer into the wrong bank account.
© 2024 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.
Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.