Terminal dilapidations settlement for shop tenant: Case Study

Brief: Our client had been served a terminal schedule of dilapidations and instructed us to negotiate a full and final settlement.

Property: High street store in London.

Instructed by: National high street firm.

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We were instructed to consider the content of the terminal schedule of dilapidations prepared on behalf of the landlord. We then negotiated with the landlord’s surveyor over the content of the schedule, with the aim of agreeing a cash settlement in lieu of the dilapidations liability.
First, we inspected the full extent of the site, while having full regard to the requirements of the terminal schedule of dilapidations prepared on behalf of the landlord.
Next, based upon our review of the schedule of dilapidations issued by the landlord, relevant lease documents and an inspection of the premises, we provided a response in accordance with the current RICS Dilapidations Guidance Note, with comment against the dilapidations items.
- This took the form of a Scott Schedule, which provided our detailed assessment of the breaches, remedies and quantum claim by the landlord.
We then provided our recommendations regarding the anticipated dilapidations liability, based upon our assessment of the contractual claim, and mitigating arguments.

Landlord served terminal schedule of dilapidations with a claim of approx. £57,000 at the end of the lease. We negotiated the settlement down to £15,000, a reduction of almost 75%.
We successfully negotiated on many of the landlords claims, setting our responses out in a Scott Schedule.
- We successfully disputed claims that ceilings needed re-plastering, referring to the tenant’s agreed liability in the lease to defend their position.
- We rejected a request to remove and replace floor coverings, noting that the finishes pre-dated the lease and were not out of repair.
- The landlord’s claim that the water systems needed cleaning and servicing was rejected based on that fact that it was not a breach of the lease terms.
- Similarly, we avoided costs associated with carrying out a new fire safety risk assessment, because the tenant was not the duty holder.
- The most significant item was a £6.5K repair claim from the landlord for providing new finishes, floor coverings and floor joists in a damaged WC. We found that the damage was associated with damp penetration from an element that the Landlord had a responsibility to keep in good repair and had neglected, resulting in damage to the tenanted area. The liability for repair and maintenance of these areas therefore fell on the Landlord.

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