Tenant dilapidations
and Schedule of Condition FAQ
A practical reference for commercial tenants and their solicitors. Specialist answers on how the Schedule of Condition caps repairing liability under FRI leases, when it must be commissioned, and how it shapes a dilapidations claim at lease end. If you have already received a schedule of dilapidations or a quantified demand, see our tenant dilapidations advice.
For commercial tenants
Overview
On most modern commercial leases, Full Repairing & Insuring (FRI) and Internal Repairing & Insuring (IRI) terms, the tenant assumes the obligation to return the property in good repair at the end of the term. Without a Schedule of Condition, that obligation can extend to remedying disrepair that pre-existed the lease and was never attributable to the tenant in the first place.
A properly executed Schedule of Condition fixes the recorded condition at lease commencement and limits the tenant's repairing liability to no better and no worse than that baseline. The questions below cover the points incoming tenants and their solicitors most commonly need answered.
Before lease completion
Timing and execution are critical, a schedule prepared after lease completion offers very little protection.
The Schedule of Condition must be commissioned, completed and either annexed to the lease or expressly referenced in the repairing covenant before lease completion. The repairing covenant should be drafted to limit the tenant's obligation to no better than the condition recorded in the schedule.
Solicitors typically negotiate the wording. The earlier in the transaction the schedule is commissioned, the lower the risk of completion delay.
During the lease term
Once executed, the schedule is fixed, but practical questions arise around alterations, assignments and interim repair notices.
End of term & dilapidations
The schedule does its real work in the final 12-18 months of the lease and at lease expiry.
The landlord will typically serve a Schedule of Dilapidations toward the end of the term, either an interim schedule before expiry, a terminal schedule shortly before lease end, or a final schedule after expiry. The tenant's surveyor will respond by reference to the lease and any annexed Schedule of Condition.
Items recorded in the original schedule as already in poor condition are removed from the claim. The tenant's exposure is thereby capped at the difference between the original recorded condition and the condition at lease end.
Process, cost & coverage
What incoming tenants most commonly overlook
The most frequent mistake we see on the tenant side is leaving the Schedule of Condition until late in the transaction, which either delays completion or, worse, results in the lease being completed without the schedule being properly appended. The second is commissioning a thin, low-cost schedule that lacks the photographic and written depth needed to be relied upon at lease end, often years later.
For most commercial tenants, the Schedule of Condition is the single most effective piece of risk management at lease grant. The cost of an evidentially robust schedule is consistently very small relative to the dilapidations exposure it limits.
, CBC, Schedule of Condition specialists
Commission a tenant-side Schedule of Condition
We act for incoming commercial tenants, occupiers and their solicitors across the UK. Same working day fixed quote, evidential reporting prepared in lease-ready format and signed off by an experienced specialist surveyor.
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