What is a Schedule of Condition?
We market the services of independent Surveyors. Surveyors pride themselves on a high standard of work. We can offer Schedules of Condition with regard to leases, Property Reports, Schedules of Dilapidations, Section 18 Valuations, Scott Schedules, Commercial Building Surveys, Structural Reports, Specific Defects Reports. Note these are not for bank lending but are to advise you how much we feel the property is really worth. If you have a property problem we may even already have written an article on it and we would refer you to the many articles we have on our home page 1stAssociated.co.uk. use independent surveyors who are more than happy to chat. Please Free phone us on 0800 298 5424 and surveyor will call you back.
What is a Schedule of Condition?
A Schedule of Condition is a Record of what the property looked like when you purchased it.
We have recently been involved with an experienced business owner who was taking on a new shop lease and had been advised by her solicitor that she did not need a Schedule of Condition a record of what the property looked like when she took it over. We really don't understand why this advice was given. Whilst we are sure the solicitor had his reasons, and every lease should be considered on its merits, we do feel that, wherever possible, a Schedule of Condition should be prepared, and sitting here now we cannot think of an instance when a Schedule of Condition would not be of benefit to the lessee / tenant / businessman.
Reasons for having a Schedule of Condition Carried out
Real Life Examples
Learning from other people's misfortune
We were involved with a client of ours who was purchasing the freehold of a lease property which enabled him and us to sit back and watch the negotiations take place between a national tenant / leaseholder and a local developer. The landlord did not have any records of the condition that the property was in originally whilst the national tenant had kept good records and was therefore able to negotiate from a position of strength and reduce the original dilapidations claims considerably.
Unfortunately this had a secondary affect on the landlord selling the property to our client as we too were able to negotiate that the property had not been yielded-up (given back) in the condition set out within their own lease document, which they'd had to carry out negotiations on and therefore the price was reduced further. The lesson to learn from this is that the landlord benefits from keeping good accurate records.
Having a Lease for a Short Time can be a very Expensive Mistake
A tenant that we were asked to represent recently had moved into a public house on a full repairing and insuring lease without having a Schedule of Condition carried out or indeed a Structural Survey. After only a few months they realised that the business wasn't suitable for what they required and wished to yield-up (give up) the lease. Much to their surprise and horror they were served with a Dilapidations Notice. They argued that the property was in a far better condition than it had been originally when they had taken it on only a few months ago, but the landlord argued that it was irrelevant what the condition of the property was a few months ago as he wished the property to be brought up to the standard set out within the lease, which had a put and keep' clause within it.
The landlord's claim was over £100,000 which, whilst being bullish, was very difficult for us to negotiate against as the owner did not have an original Schedule of Condition. In the end we put together an argument based on builders' invoices (although we were advised that a lot of the work had been carried out for cash) and negotiated / argued that many of the items being identified could not have possibly occurred within the last three to six months, although we knew legally, due to the type of lease, that we did not have a leg to stand on', so to speak.
The result was a reduced dilapidations claim from the landlord but we believe this could have been reduced further if a Schedule of Condition had existed. Whilst this lease did not allow a Schedule of Condition to be appended to it if the tenant / leaseholder / businessman had had a Schedule of Condition carried out it would then have allowed them to negotiate from this.
The lesson of this is to always have a Schedule of Condition carried out and ours are included with a Structural Survey, whereas many companies charge for both.
Negotiating a Schedule of Condition to be Appended to the Lease is Hard Work for the Solicitor
We say this tongue in cheek, but we find that many solicitors accept the leases as they are presented to them or negotiate mainly on the legal niceties / nasties of the lease document, as this is their specialist area; they leave the Schedule of Condition because the Dilapidations Notice is so far away. However, we feel, that a good Schedule of Condition, from day one, particularly if it is appended to the lease, can be a negotiating tool to reduce the rent and the premium and will also be an excellent negotiating tool when you come to yield-up (give back) the lease. We would comment that you will not appreciate just how expensive and time consuming building work can be until you have had a Dilapidations Notice served upon you.
It is relatively common for many leases to have a break clause' where the lessee / tenant / business owner can break the lease contract. This is particularly useful if a business is expanding or contracting or the markets that it works in are changing or the general overall market is changing. Nevertheless it is still best to protect yourself by having a Schedule of Condition carried out. In our experience many break clauses' still allow the serving of a Dilapidations Notice.
If you truly do want an independent expert opinion from a surveyor with regard to valuations, mortgages, mortgage companies, surveys, building surveys, structural reports, engineers reports, specific defects report, structural surveys, home buyers reports or any other property matters please contact 0800 298 5424 for a surveyor to give you a call back.
If you have a commercial property, whether it is freehold or leasehold then sooner or later you may get involved with dilapidation claims. You may wish to look at our Dilapidations Website at www.DilapsHelp.com and for Disputes go to our Disputes Help site www.DisputesHelp.com
We hope you found the article of use and if you have any experiences that you feel should be added to this article that would benefit others, or you feel that some of the information that we have put is wrong then please do not hesitate to contact us (we are only human).
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