Schedule of Condition vs Schedule of Dilapidations

Prepared at, or shortly before, lease end (interim dilapidations are also possible during the term). A schedule of breaches of the lease's repairing, decorating, reinstatement and statutory covenants, supported by a costed remedial works section. Served by the landlord on the tenant under the Pre-Action Protocol; the basis on which damages are negotiated and settled.

Prepared before the lease is executed. A factual evidential record of the demise's condition at lease grant. Appended to the executed lease and referenced in the repairing covenant. Its purpose is to fix the contractual baseline against which the future dilapidations claim is measured, and to remove pre-existing items from that claim.

The Schedule of Condition fixes the lower limit. The Schedule of Dilapidations identifies the alleged shortfall against the lease covenants. Where a Schedule of Condition is in place, the dilapidations claim is reduced by the items already evident at lease grant, and the negotiation narrows to genuine post-lease deterioration.

Without a Schedule of Condition the tenant's repairing obligation is unqualified, measured against the standard of a property of similar age and character. The dilapidations surveyors on each side then have to construct a retrospective view of what the demise looked like at lease grant: contestable, evidence-light, and almost always to the disadvantage of one party.

Damages for breach of the repairing covenant at lease end are statutorily capped by reference to the diminution in the value of the reversion (Section 18(1), LTA 1927). The Schedule of Condition is not the only document relevant here, but it is the one that most directly evidences the condition the landlord let, and therefore the value the landlord could fairly expect on yield-up.