5 things you need to know about Dilapidations in Leases:
1. Although the obligation to repair/renew a property leased from a landlord may differ from lease to lease, the tenant in all cases will have an obligation to return the property in an appropriate condition at the end of the lease. In some cases, this will be by reference to a photographic Schedule of Condition prepared and agreed between the landlord and the tenant at the commencement of the lease.
2. Most commercial leases entitle the landlord to enter the leased subjects in order to assess the state of repair at any given time during the lease term with the tenant being obliged to remedy any wants of repair identified in an interim Schedule of Dilapidations. Tenants are advised always to check such schedules to ensure that the works identified therein are really their obligation in terms of the lease.
3. In principle, the rectification of dilapidations in a leased property is appropriate. Care should always be taken however to ensure that the works identified therein represent repairs rather than extra-ordinary repairs or improvements where such may not be the responsibility of the tenant.
4. This, perhaps, is no more obvious than at the end of the term of a lease where what are called terminal dilapidations are identified by the landlord. Such schedules should be served timeously in terms of the lease and be examined carefully against what the lease states with regard to the tenant's obligation to reinstate the property to the condition it was in at the commencement of the lease. If available, the schedule should be assessed against a photographic record of the condition of the property as at the date of entry.
5. In certain cases, the lease may provide for a payment to be made by the tenant to the landlord akin to the rent which the landlord would otherwise be entitled to receive if it was letting a unit in good tenantable condition and repair to a new tenant following the expiry of the former lease. If such a provision is in a lease, the tenant should seek to limit the period during which such a payment will be due.