The Court of Appeal has held that a tenant’s covenant to pay “all costs and expenses which might be incurred” entitled the landlord in a dilapidations claim to have his costs assessed on an indemnity basis.
So in the euphoria of taking brand new premises a standard FRI lease is signed. The building is pristine and seemingly has little maintenance and decorative liabilities. Wrong! Do not forget with the passage of time and weathering and possibly aggressive inland coastal environment, protected metal coatings and factory applied finishes to cladding and steelwork will deteriorate. The decorations covenant will also likely require periodic redecoration and redecoration in the last 3,6,12 months of the lease.
Always seek advice from an experienced Chartered Building Surveyor FRICS or Chartered Building Engineer FCABE who can advise as to not only present condition, but also future liabilities as building and component materials weather and degrade.
WOW Words of Wisdom
DO NOT sign a standard FRI lease without understanding the implications for costly repair and decorations liabilities and costs as the lease term diminishes and the building asset deteriorates. Expert advice is priceless and will save you ££££
Not a cheap building to repaint, so a 10 year minimum life high performance paint system is essential to save the horrendous repeat costs of access and protection!
Useful reminder of how the value of actual loss in a dilapidations claim is established by the courts.
I have come across an interesting article by an accountancy firm about the tax aspects of making suitable provisions for dilapidations liabilities and offsetting against taxable profits. Read it and see your accountant about how this may be of advantage.
Dilapidations and Taxation
Dear Andy, just a short note of gratitude for your incredibly helpful advice regarding building dilapidations. It is a privilege to deal with someone who is at the top of their game and also retains the traditional values of being a decent and honest chap Thanks again.
Deputy Managing Director, DJ Murphy (Publishers) Ltd