Dilapidations Essentials

Session 1: Thursday 16th May, 10.00am to 10.50am

Pre-Lease Considerations

This session sets out the practical steps to take to ensure that dilapidations is considered at pre-lease or investment purchase so that you have the fullest possible picture of the financial responsibilities assumed. Covering: pitfalls to avoid in the contractual leasing arrangements; understanding when and how dilapidations assessments and schedules of condition can be helpful; and how to take into account any pre-lease ESG considerations.

Leasehold Acquisition – as a tenant

• The legal implications of taking an assignment vs new lease vs sub-lease.
   
• Applying the legal implications to the property.
  - Dilapidations assessments – when they are useful.
  - Schedules of condition – when they are helpful.
  - Tenant fit outs and licences to alter.

Investment acquisition

• Dilapidations as part of the due diligence process.
  - What liability are you buying?
  - What liability sits with the tenant/s?
  - Is there a foreseeable shortfall in what is recoverable from the tenant/s?
  - Changes of tenancy implications.
  - Landlord’s intentions – implications of future asset management/redevelopment plans.

M&A transactions

• Implications of buying a business that has leasehold assets and dilapidations liabilities.
  - Use and occupation obligations.
  - Potential future business interruption.

Session 2: 

Part I - Thursday 16th May, 10.55am to 11.45am

Mid-Lease Considerations

This session focuses on understanding the nuance of the key dilapidations obligations and what you should do during the lease in order to deliver on your lease obligations and/or enforce your rights. It discusses how to budget for dilapidations obligations, how to deal with listed buildings and what to do mid-lease if the tenant is in breach of its obligations to the extent that the landlord wants to seek forfeiture, and how to take into account any mid-lease ESG considerations.

Understanding your contractual obligations and rights under the lease and other tenure documents

• The key dilapidations obligations.
  - Repair.
  - Alterations.
  - Decorations.
  - Statutory compliance.
   
• Ensuring licences are in place and when it is appropriate to alter them.

Part II - Thursday 23rd May, 10.00am to 10.50am

Managing your contractual obligations and exercising your rights

• What do you need to know in order to deliver on your lease obligations and enforce your rights?
  - As a landlord.
  - As a tenant.
  - As an investment owner.
   
• Accruing for dilapidations.
   
• Listed buildings.
  - Age, character, and locality implications.
   -Costs and other implications.
   
• Interim dilapidations – when and how to enforce rights.
  ​- Jervis v Harris [1996) Ch. 195.

Session 3: Thursday 23rd May, 10.55am to 11.45am

Lease Exit Considerations

This session focuses on the main practical and strategic steps to take to prepare for the end of the lease from the perspectives of the tenant, the landlord and any superior landlord, including consideration of any lease exit ESG considerations.

Practicalities

• The legal requirements.
  - The damages claim.
  - Section 18.
  - Supersession.
   
• Break clauses.
  - Interpretation.
  - Break vs end of term.
  - Conditional breaks.
  - Notice periods.

Strategic considerations

• Timings and process.
  - Dilapidations protocol and surveyor endorsements.
  - Serving the claim.
  - Response.
   
• Market conditions, loss of rent, Section 18.
   
• Operational constraints.
  - Do the works or not?
  - Business interruption considerations.
   
• Tips for an investment owner.
• Tips for a portfolio manager.

​Negotiations and Dispute Resolution

• Key tips for ensuring successful negotiations.
• Alternative dispute resolution.