Member Article

The importance of surveying lease agreements

SMALL business owners and commercial property owners are taking a huge risk by failing to commission a Schedule of Condition when they sign leases on office space, retail units and other types of commercial property according to a warning from Dacres Commercial.

Following the recession the company has seen a big increase in the number of disputes between landlords and tenants when lease agreements, that contain specific conditions relating to repairs and maintenance, come to an end.

However, many of these could be avoided by commissioning a Schedule of Condition to be referenced and appended in the lease, detailing the exact condition of the property when the tenant moves in.

At lease termination this would assist any Schedule of Dilapidations to be prepared and would clarify the tenants’ responsibilities under the repairing, redecorating and re-instating covenants of the lease.

Rob Harper, a Chartered Building Surveyor at Dacres Commercial, explains: “Disputes between landlords and tenants about repairs and maintenance are nothing new but their numbers appeared to soar during the economic downturn when lease renewals and extensions were not completed and landlords pursued redress for their property repairs. Consequently the upturn in the property market is resulting in growing numbers of small businesses renting buildings and existing tenants relocating to new and larger premises, so there are a lot of lease agreements starting and terminating at the moment.

“Lots of leases include conditions about repairs and maintenance. Landlords need to ensure their property is properly maintained and is returned to them in its original condition at the end of the lease, but problems arise when landlords and tenants disagree on the work required and end in dispute which can end up in court.

“A Schedule of Condition is a detailed report, complete with relevant photographs, about the exact condition of the property at the start of the lease which makes life easier for everyone concerned when the lease ends.”

Rob adds: “In addition, as an extra level of security, tenants renting older buildings should also consider a Commercial Building Condition Survey, that highlights potential repairs and maintenance that could be required at their expense during the lease.

“When you consider that a property is usually one of the biggest expenses for any business, not having a survey done is often false economy. Plus, where the survey highlights potential expenses, it can act as a tool for both landlords and tenants to negotiate or justify rental prices, as well as giving both parties peace of mind.”

This was posted in Bdaily's Members' News section by Steven Wright .