Jersey smaller business owners: If you don’t have a handle on dilapidations, the profit you have earned from all your hard work could end up paying for dilapidations
For a Jersey smaller business owner entering into commercial lease, it is essential to consider the potential issues and liabilities associated. One issue that is not always adequately considered are dilapidation costs. If you don’t have a handle on dilapidations the profit you have earned from all your hard work could end up going to pay the dilapidations on the property.
What are Dilapidations?
In simple terms, dilapidations represent the ‘exit costs’ for a tenant at the end of a commercial lease, although on occasions dilapidations may be claimed by the Landlord during the term of the lease.
These costs are typically attributed to putting the property back to its original, pre-let state as set out by the lease agreement. They may include repairs, cosmetic enhancements, or even structural adjustments, depending on the extent of the repair covenant terms.
If significant changes were made to the property while the tenant was in situ or if it was acquired in a state of disrepair with a high-threshold repair covenant, substantial dilapidation costs could also be incurred.
How can a Jersey smaller business tenant protect against a dilapidation claim?
As the tenant, the process of protecting yourself against a dilapidation claim should commence before your tenancy begins.
The terms of the draft lease should be carefully considered and reviewed. Jersey commercial leases tend to be somewhat lengthy documents and as such it is always worthwhile seeking a Jersey property lawyer to review. Be careful to consider carefully the old saying ‘what you don’t know you don’t know’ before you make a decision not to seek advice.
As tenant you should also always consider requesting a ‘schedule of condition’ to be included as part of the lease. This may be useful to act as a benchmark for limiting your liability.
Most importantly, make sure you maintain the building regularly during your occupation to reduce the need for repairs and costs related to a dilapidations claim.
Carl Parslow Partner | Advocate | Notary Public
When will I get served with a dilapidations claim?
Depending upon the terms of your Jersey commercial lease a dilapidations claim may be served at any time throughout the lease but it is more commonly made at the end of the term.
How does the Landlord deal with a dilapidations claim?
Your landlord will issue you with a schedule of dilapidations.
The schedule of dilapidations will outline the work required to return the property, in accordance of lease terms, to its original condition, as well as a figure for the cost of carrying out the work.
What should I do if I receive a schedule of dilapidations?
In essence you have three options.
- You can agree the repairs and carry them out yourself. If you have no dispute as to the extent of the repairs and accept you are obligated to the same this may be the most cost-effective method as you will remain in control of the costs.
- You can agree the repairs and pay the Landlord to deal with them. As above, but if you accede to the Landlord completing the repairs you may have no control over costs.
- You can dispute the claim. You should always take appropriate advice before formally disputing a claim. Seeking an expert’s review of the lease documentation, the landlords schedule and on the process is recommended.
Take away:
Conduct Regular Inspections of the premises: Periodic inspections identify issues early, preventing escalation to significant dilapidation costs.
Carry out regular maintenance and repair: If you identity repair or maintenance issues, deal with them as soon as possible.
Budget for Costs: Establish financial provisions during the lease term to meet dilapidation obligations.
All in all, proactive measures, including understanding lease terms, regular inspections, and engaging professionals, can mitigate the financial impact of any dilapidation costs for Jersey small business owners dealing with commercial leases.
Our team of experinced commercial lawyers is ready to offer their expertise. They can assist you in devising a strategic approach to effectively mitigate the risks associated with contracts customized to meet the unique needs of your business. Your success is our priority, and we’re here to support you every step of the way.
Jersey smaller business owners: If you don’t have a handle on dilapidations, the profit you have earned from all your hard work could end up paying for dilapidations
For a Jersey smaller business owner entering into commercial lease, it is essential to consider the potential issues and liabilities associated. One issue that is not always adequately considered are dilapidation costs. If you don’t have a handle on dilapidations the profit you have earned from all your hard work could end up going to pay the dilapidations on the property.
What are Dilapidations?
In simple terms, dilapidations represent the ‘exit costs’ for a tenant at the end of a commercial lease, although on occasions dilapidations may be claimed by the Landlord during the term of the lease.
These costs are typically attributed to putting the property back to its original, pre-let state as set out by the lease agreement. They may include repairs, cosmetic enhancements, or even structural adjustments, depending on the extent of the repair covenant terms.
If significant changes were made to the property while the tenant was in situ or if it was acquired in a state of disrepair with a high-threshold repair covenant, substantial dilapidation costs could also be incurred.
How can a Jersey smaller business tenant protect against a dilapidation claim?
As the tenant, the process of protecting yourself against a dilapidation claim should commence before your tenancy begins.
The terms of the draft lease should be carefully considered and reviewed. Jersey commercial leases tend to be somewhat lengthy documents and as such it is always worthwhile seeking a Jersey property lawyer to review. Be careful to consider carefully the old saying ‘what you don’t know you don’t know’ before you make a decision not to seek advice.
As tenant you should also always consider requesting a ‘schedule of condition’ to be included as part of the lease. This may be useful to act as a benchmark for limiting your liability.
Most importantly, make sure you maintain the building regularly during your occupation to reduce the need for repairs and costs related to a dilapidations claim.
Carl Parslow Partner | Advocate | Notary Public
When will I get served with a dilapidations claim?
Depending upon the terms of your Jersey commercial lease a dilapidations claim may be served at any time throughout the lease but it is more commonly made at the end of the term.
How does the Landlord deal with a dilapidations claim?
Your landlord will issue you with a schedule of dilapidations.
The schedule of dilapidations will outline the work required to return the property, in accordance of lease terms, to its original condition, as well as a figure for the cost of carrying out the work.
What should I do if I receive a schedule of dilapidations?
In essence you have three options.
- You can agree the repairs and carry them out yourself. If you have no dispute as to the extent of the repairs and accept you are obligated to the same this may be the most cost-effective method as you will remain in control of the costs.
- You can agree the repairs and pay the Landlord to deal with them. As above, but if you accede to the Landlord completing the repairs you may have no control over costs.
- You can dispute the claim. You should always take appropriate advice before formally disputing a claim. Seeking an expert’s review of the lease documentation, the landlords schedule and on the process is recommended.
Take away:
Conduct Regular Inspections of the premises: Periodic inspections identify issues early, preventing escalation to significant dilapidation costs.
Carry out regular maintenance and repair: If you identity repair or maintenance issues, deal with them as soon as possible.
Budget for Costs: Establish financial provisions during the lease term to meet dilapidation obligations.
All in all, proactive measures, including understanding lease terms, regular inspections, and engaging professionals, can mitigate the financial impact of any dilapidation costs for Jersey small business owners dealing with commercial leases.
Our team of experinced commercial lawyers is ready to offer their expertise. They can assist you in devising a strategic approach to effectively mitigate the risks associated with contracts customized to meet the unique needs of your business. Your success is our priority, and we’re here to support you every step of the way.