Dilapidations claims can be complex and time-consuming, but need handling with care to minimise the risk of ending up in court or exposing either party to unfounded liability or unnecessary costs.
While the tools needed to gather evidence for a claim have evolved considerably in the past few years, they will of course vary depending on the specific situation.
There are nonetheless a number of tools I regularly use when preparing for a claim, which can be considered the essentials.
It is important for you to collect evidence of any breaches of covenant, not only with the building fabric but also aspects of the property such as its mechanical and electrical systems, fixtures and chattels. Armed with the evidence, you can then call in any specialist testing you may need.
Examples of additional evidence you should try and obtain include the following.
There is frequent debate as to whether the tenant is obliged to provide this information; however, without it there is often ambiguity. Gathering the best records will allow greater certainty and quicker settlements.
When presenting a dilapidations claim, it is important to ensure that it is clear, comprehensive and well organised. You may collect a lot of data, but you don't need to present it all.
In one case I worked on, for example, I took over from a landlord's surveyor who had spent 36 hours taking tens of thousands of photographs, and who had produced a claim of 4,000 items. I managed to get that down to fewer than 100 items that couldn't be argued, which led to a quick settlement just ahead of trial.
A coherent claim that clearly outlines what you are requesting should include the following.
In particular, take care with your use of terminology. The terms 'without prejudice' and 'subject to contract' have specific legal meanings and should be used correctly to avoid misunderstandings, facilitating negotiation and protecting both parties until a final agreement is reached and a formal contract is signed.
'Without prejudice' is used to indicate that any communication or offer relating to a claim is being made in a way that is non-binding. That communication or offer cannot therefore be referred to in court or in any other legal proceedings. However, although this does promote open discussions, it can be overused by surveyors.
'Subject to contract' meanwhile is a term used to indicate that any agreement reached between the parties during the negotiation process is not legally binding until a formal contract is signed.
Negotiations can take time and the longer the process, the more expensive it can be for both parties.
Some claims can run on for years, but as a general rule if you haven't settled within six months when acting for a landlord then you need to change your approach. That might entail a referral to RICS Dispute Resolution Service for resolution, mediation or legal escalation.
VAT is another common bone of contention in dilapidations cases. The settled position is that if the landlord can recover VAT then they can't also claim it back from the tenant. If a landlord isn't VAT-registered but their tenant is, the latter may be better off procuring the works themselves before lease expiry to reduce their cost exposure.
Finally, works to improve energy performance certificate ratings and meet the Minimum Energy Efficiency Standards remain a key area for dispute. As a profession we therefore need to do our part, whether that's switching out old fluorescent lightbulbs for LEDs or reusing part of a fit-out.
When it comes to major improvements, running a successful dilapidations claim will be much harder. A landlord will need to prove that a need to replace an element is within the repairing covenant, and they are seeking to do so because of its condition.
If there is clear evidence that a building will need to be significantly upgraded to meet legislation regardless of its condition, then the argument for recovery will be compromised.
'If you haven't settled a claim within six months when acting for a landlord then you need to change your approach'
Coherent dilapidations claims ensure clarity and transparency for all parties involved. Whether you are representing the landlord or the tenant, a clear and concise approach will ensure that there are no misunderstandings or disputes, which can lead to unnecessary costs and delays.
A coherent claim demonstrates a surveyor's professionalism and expertise, helping to build trust with the client and ensuring a smooth and efficient resolution of any disputes relating to a property's condition.