design and planning housing

Do I need a Schedule of Condition?

A commercial property lease is often drawn on a full repairing and insuring (an “FRI lease”), meaning the tenant takes on the full costs of repairing and insuring the whole property, including the structural parts such as the foundations, walls, and roof. Other leases are “internal repair only,” where the tenant is only obliged to look after the internal parts of the property such as the floor, wall, and ceiling surfaces.

Whichever lease is in place, it is important to agree between the landlord and tenant on what condition the property was in at the outset to avoid disputes and to ensure clarity around responsibility for repairs. This documented agreement is called a Schedule of Condition.

What is a Schedule of Condition?

A Schedule of Condition is a written and photographic report identifying the exact state of repair and property condition at that particular point in time. It is often annexed to a lease as an appendix or schedule and forms part of the contractual agreement between the landlord and tenant. The purpose of a Schedule of Condition is to provide a detailed record of any existing defects or damages before the tenant moves in. This applies to all tenants, regardless of the purpose of the space.

Trinity Rose Chartered Surveyors produce thorough Schedules of Condition ensuring there is no ambiguity over the condition of the property at the outset of the lease. Our reports contain detailed descriptions and full colour photographs, too. Everything is documented.

Why do you need detailed photographs and text?

The only way to comprehensively document any issues is to include both photographs and text. While the photographs provide an excellent visual reference, the text can elaborate, describe, and explain anything that does not show in the picture. Sometimes an annotated plan showing the location of each photograph can be a very useful addition to a Schedule of Condition.

Who is responsible for creating a Schedule of Condition?

A qualified surveyor such as the team at Trinity Rose will draw up a Schedule of Condition. While the landlord and tenant are both welcome to hire their own surveyors, it is usually the tenant who pays for the Schedule of Condition Survey and it mostly benefits them. Both the landlord and tenant must sign to say they agree the report is accurate.

Why does a tenant need a Schedule of Condition?

One reason is to limit repair obligations, which we have briefly mentioned above. By documenting the condition of the property before taking occupation, the tenant’s repairing obligation under the lease is limited to only those repairs necessary to maintain the property in the same condition as when they took it on. This can be particularly useful in FRI leases, where the tenant is responsible for all repairs, including those to the structure of the building.

How does a Schedule of Condition protect both landlord and tenant?

The Schedule of Condition is an essential reference document in the event of a dispute. It can be used as valuable evidence to support a claim for damages or compensation, for example in the end-of-lease dilapidations claim scenario, if the landlord alleges that the tenant has caused damage to the property, the Schedule of Condition can be used to show that the damage was already present at the start of the lease.

Equally, if the tenant refuses to pay for repairs, claiming the damage occurred before they moved in, a clear, well prepared Schedule of Condition will clearly show whether this is true and therefore help to determine who should foot the bill.

Robert Barnes, a commercial property lawyer, highlights the importance of a Schedule of Condition in this regard, “In my experience, a well-drafted Schedule of Condition can significantly reduce disputes between landlords and tenants, providing clarity and evidence regarding the condition of the property at the lease’s commencement.”

What does the Schedule of Condition usually include?

First, we start with a detailed description of the property including the location, boundaries, and access points. Next, we include the condition of the property. This includes any existing defects or damages. To accompany this, you will see the photographs supporting the written description included. Then, the last step is a signed declaration by both the landlord and tenant, confirming that the Schedule of Condition accurately reflects the property’s condition at the time of inspection, and their agreement to its incorporation into the lease.

Can a tenant make changes to a Schedule of Condition?

Both the tenant and landlord are welcome to suggest changes to the Schedule of Condition document however, both parties must sign to agree the changes are an accurate representation of the property’s condition.

How does the Schedule of Condition relate to dilapidations?

A Schedule of Dilapidations is drawn up at the end of a lease, outlining any damage to the property that happened during the tenancy. A Schedule of Condition is important at this point as it can be referenced to see whether damage is new or predated the tenancy (and therefore who is responsible for repairing it).

How is a Schedule of Condition used during the lease?

A Schedule of Condition is mostly important at the end of a lease, if the landlord wants the tenant to make any repairs as part of dilapidations claim, these may be circumstances in the currency of the lease where it may be necessary to consult the schedule of condition, particularly in longer lease terms.

Following the same principle, the Schedule of Condition in the key reference document that enables responsibility for repairs to be determined by the parties.

When is the Schedule of Condition typically prepared?

There are different times a Scheule of Condition may be prepared:

  • Before a new lease begins
  • During property transactions such as assignment or sub-letting of a lease.
  • Before construction work/renovations, for example as part of a Party Wall agreement.

For the highest level of accuracy, the report should be prepared before, but as close to these events as possible.

Schedule of Condition in relation to Party Wall matters

A specific Schedule of Conditions are typically prepared in connection with Party Wall matters, prior to the commencement of the works subject of the formal Award.

This helps to prevent any disputes that may arise and keep neighbours on good terms. The Schedule of Condition is specifically referenced in the Party Wall Award documentation and is typically revisited following completion of the work as part of the ‘sign-off’ process.

How long is a Schedule of Condition valid?

A Schedule of Condition is simply a snapshot in time. It is valid as long as the agreement (lease, Party Wall Award etc) remains in force.

Do I legally need a Schedule of Condition?

The short answer is no: there is no legal obligation to have a Schedule of Condition survey and/or report. However, it is unwise for either the tenant or landlord to enter a contract without one as later disputes will be much harder to resolve.

Normally, in a lease scenario, the landlord and tenant will reach an agreement in allowing a Schedule of Condition to be appended to the lease in their preliminary negotiations to draw up Heads of Terms.

How we can help?

At Trinity Rose, our team of experienced Chartered Surveyors assist both landlords and tenants in preparing and negotiating Schedules of Condition.

Our experts will carry out a thorough inspection of the property and provide a detailed and thorough Schedule of Condition specific to the purpose. We can also advise on the terms of the lease and assist in negotiations between the parties to ensure that our client’s interests are protected.

If you are a tenant or landlord of a commercial property and require assistance with a Schedule of Condition, please get in touch. We are here to help.