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 of the 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.
One way a tenant can seek to limit their repairing obligations and remove the risk of finding themselves in disputes over paying for repairs that were needed before moving in is by reaching a documented agreement with the landlord known as 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 does a tenant need a Schedule of Condition?
One reason is to limit repairing obligations, which we’ve briefly mentioned above. By documenting the condition of the property before taking occupation, the tenant 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.
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.
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. Thirdly, 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.
How we can help?
At Trinity Rose, we can help you because we have a team of experienced Chartered Surveyors, who assist both landlords and tenants in preparing and negotiating Schedules of Condition.
Our team of experts will carry out a thorough inspection of the property and provide a detailed report on its condition. 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.
Thus, a Schedule of Condition can be a valuable tool for tenants of commercial properties, particularly in FRI leases. By documenting the condition of the property before taking occupation, tenants can limit their repairing obligations, avoid disputes, and protect their interests.
If you are a tenant or landlord of a commercial property and require assistance with a Schedule of Condition, contact us anytime. We are here to help!