Virtually all leases contain a dilapidations clause to the effect that at the end of the lease the tenant will leave the property in a reasonably good state of repair. However, what constitutes a reasonably good state of repair is often a matter of opinion which can lead to dispute.
Recently, a case came to court involving just such a dispute. The tenants of a property had experienced problems with the roof, which was of the corrugated asbestos sheet type. The tenants had the roof surveyed and were advised that it could be put into a good enough state of repair to last for a further decade by undertaking works to patch it and to replace certain of the asbestos sheets and fixings. As an alternative, a more comprehensive series of works could be undertaken which would make the roof good for 40 years, but at a much higher cost.
As the lease had only three years to run, the tenants entered into discussions with the landlord regarding the options, but these did not amount to anything, so the tenants proceeded with the less expensive scheme of repairs.
At the end of the lease, the tenants vacated the premises and the landlord replaced the roof, claiming a total of over £120,000 under the dilapidations clause.
The dispute went to court and consideration was given to the question as to whether a covenant which required a tenant to ‘well and substantially’ repair the premises meant that the patched repair undertaken by the tenants was sufficient under the lease.
The court’s conclusions were:
· a covenant expressed in these terms does not require a tenant to put the premises back into a state of perfect repair – the appropriate standard is that of an occupier judging the premises for the purposes of its intended use;
· the test must consider the incoming tenant’s view from the point of view of taking a lease on the same terms as the lease under consideration;
· replacement is only a requirement if repair is not a feasible option; and
· where the tenant has a choice of repair methods to use, it cannot be criticised for using the cheapest method.
Accordingly, the landlord’s claim against the tenants failed. Had the landlord negotiated with the tenants, it is likely that they would have made a contribution to the cost of the re-roofing. This would have led to a substantial saving for the landlord compared with bearing the whole cost of re-roofing the property and then losing in court.
We can assist in helping to ensure that negotiations with landlords or tenants reach a conclusion that is satisfactory to all.