Legal and regulatory Flashcards
(37 cards)
- What are dilapidations?
Dilapidations is a specific area of law relating to breaches of a tenant’s lease obligations or covenants which may be either express or implied. A claim typically includes breaches of reinstatement, repair, redecoration, and statutory obligations and associated costs
- What is a dilapidations claim?
A common law claim for damages in respect of breaches of obligations or covenants within a lease between a landlord and a tenant.
- When can a claim for dilapidations be made?
A dilapidations claim can be made by the landlord against the tenant during the term (interim) or towards the end of a lease, or after the lease has ended (terminal).
- What is the role of the surveyor in the dilapidations process?
Advisor: Offer strategic advice in respect of making or defending a claim
* Obtain relevant information
* Inspect the premises
* Prepare a schedule of dilapidations / response and a Quantified Demand – must not exaggerate or underestimate claim
* Negotiate settlement of a claim on behalf a landlord / tenant
Expert Witness:
* A person whose level of knowledge in a particular field qualifies them to present their opinion about the facts of a case during legal proceedings.
* They must give objective evidence before a court / tribunal on particular aspects of the matters which are in dispute.
Dispute resolver:
* Appointment by private agreement or RICS Dispute Resolution Service
- What is a schedule of dilapidations?
A document that identifies breaches of relevant lease obligations, completed or proposed remedial works, and the estimated or actual cost incurred in remedying those breaches.
Landlord’s schedules are referred to as either Interim or Terminal depending on when they are served on a tenant during their term.
- What is a Scott Schedule?
A Schedule of Dilapidations with additional columns to enable the parties to set out their respective views.
- What is a Quantified Demand?
A document prepared for the purpose of and complying with Part 4 of the Dilapidations Protocol, typically incorporating a Terminal Schedule of Dilapidations. It sets out all aspects of the dispute and quantifies the damages being sought in respect of the breaches detailed in the schedule and any other losses incurred by the Landlord. It should also set out whether VAT applies.
- What costs may be included in a Quantified Demand?
- Loss of rent
- Rates liability
- Insurance, security, energy, and cleaning costs not already reflected in the Schedule of Dilapidations
- Loss due to lack of service charge recoupment
- Finance costs (including interest)
- Other fees of the surveyors (including fees relating to assessment of rent and diminution in value).
- What remedies are available for terminal dilapidations?
The legal remedy is typically a claim for damages if the breaches are not rectified prior to lease expiry.
- What cost are typically included in a summary page in a Schedule of Dilapidations?
- Cost of the remedial works
- Allowance for contractor Preliminaries
- Design and administration fees for the works
- CDM compliance fees
- Professional fees for preparation of the schedule
- Legal fees
- Statutory fees
- Allowance for irrecoverable VAT
- How do you typically go about estimating a claim for dilapidations / preparing a Quantified Demand?
I typically use the BCIS, Spon’s and in-house cost data. I prepare costings in sufficient detail to enable full understanding by the client, the other party, their advisers, the tribunal, etc. Where items of a specialist nature are to be included in the claim, I seek advice from the relevant discipline such as M&E Engineers or Cost Consultants.
- What should a surveyor do prior to endorsing a schedule of dilapidations?
Endorsement is a formal declaration of support. Before making the endorsement, the surveyor should ask the landlord to confirm in writing what its intentions are/were for the property and ensure that a written record of the reply is made and kept on file.
- What remedies are available for interim dilapidations claims?
- Damages
- Forfeiture
- Specific performance
- Entry to carry out the work
- What is a break clause?
A break clause is a provision in a lease which enables either the landlord or the tenant, or both, to terminate the lease prior to the contractual expiry date. Some clauses are conditional which require compliance before a break is deemed effective, for example:
- Vacant possession
- Notice
- Compliance with lease obligations
- What are the different types of offers?
dilaps
- Open offers: visible to a future tribunal.
- Without prejudice offers: not visible to a future tribunal.
- Calderbank offers (without prejudice save as to costs): visible only to tribunal that considers liability for costs, not the tribunal hearing the substantive dispute. Greater flexibility than Part 36 offers allowing the party making the offer to stipulate terms. If accepted, they create a binding contract between the parties.
- Part 36 offers: made in compliance with Part 36 of the CPR. Used to compel the other party to bring matters to a swifter conclusion by making a realistic offer to settle. Visible only to tribunal that considers liability for costs, not the tribunal hearing the substantive dispute (without prejudice). If a party does not accept a Part 36 offer, it risks being made liable to pay more in interest and/or costs on a judgment than if no offer had been made.
- What is meant by the term ‘Without Prejudice’?
Statements made on a “without prejudice” basis, in a genuine attempt to settle the dispute, will generally not be admissible in court as evidence against the person making the statement. The rationale for this principle is that it is in the public interest to encourage parties to settle disputes and avoid litigation wherever possible.
For example, if a Bank is owed a debt of €10,000 and legal proceedings have issued in respect of it (or are contemplated) and that Bank offers to accept a sum of €8,000 in a “without prejudice” letter, but the offer is rejected by the Customer, that Customer cannot subsequently produce the letter in court as evidence of a weakness in the Bank’s case, or as evidence of a claim that the Bank’s debt is truly only worth €8,000.
- What legislation is relevant to commercial dilapidations in England and Wales?
Fire Safety Order 2005
Health and Safety at Work Act 1974
Equality Act 2010
Law of Property Act 1925
Leasehold Property (Repairs) Act 1938
Landlord and Tenant Act 1954
Th Civil Procedure Rules 1998
- What relevance does S18 of the Landlord and Tenant Act have to dilapidations?
Limb 1: Diminution of the landlord’s reversionary interest
* The amount claimable by the landlord is capped to the diminution in value.
* S18 valuation requires one valuation in repair and one valuation in the current state of repair.
Limb 2: Supersession
* No damages are payable if the building is to be demolished or structural alterations will be completed to as to render the repairs valueless.
- How do you assess the required standard of repair?
Dowding and Reynolds recommend a 5-point test:
1. Is the item demised?
2. Has there been damage or deterioration from a former state?
3. Does the item fall below the required standard of repair?
4. What is the required remedial work?
5. Fact and degree test – is what is being demand an act of repair and not something beyond that?
- What is the difference between a fixture and a chattel?
Chattels are items of personal property that are identifiable and movable. Fixtures are items that are permanently attached or fixed to real property. A chattel can become a fixture if it has been affixed to the land and it cannot be removed without causing damage.
Holland v Hodgson – degree and purpose of annexation test.
- What is the purpose of the Dilapidations Protocol?
The aim of the Protocol is to facilitate early exchange of documentation to enable surveyors to fully understand the claim, and ultimately to settle before court proceedings. It sets standards for the content of the claim, correspondence, and the conduct of pre-action negotiations.
- What are the different timescales that must be observed under the Dilapidations Protocol?
The Protocol suggest a landlord should have served the Schedule of Dilapidations on a tenant within 56 days of lease expiry. The tenant then has 56 days to respond. Thereafter, the respective surveyors should meet on site to discuss the claim and seek to agree as many of the items in dispute as possible.
- What recourse is available if the processes outlined in the Dilapidations Protocol fail in resolving a dilapidations dispute?
The Protocol encourages Alternative Dispute Resolution to settle dilapidations rather than litigation. This might include use of the RICS Dispute Resolution Service: Dilapidations Scheme where an Independent Expert is appointed to make their own investigations and will rely on personal knowledge and experience to reach a binding decision.
- What are the different ADR procedures?
- Negotiation: Where the parties work together to reach an agreement. No third party is appointed. Decision not legally binding – meaning it cannot be enforced by the courts.
- Mediation: Jointly instructed neutral party that assists with communication between the parties to the dispute but will generally not offer opinion or assessment (facilitative only). Decision not legally binding.
- Conciliation: Jointly instructed conciliator will evaluate the parties’ cases and make recommendations based on his or her view (evaluative only). Decision not legally binding. Example:
- Adjudication: Jointly instructed neutral party/parties that is a specialist in the field. Decisions are binding unless and until they are revised by arbitration or litigation. Generally, adjudicators do not have the power to award costs (other than their own fees and expenses).
- Arbitration: is a formal and binding process where the dispute is resolved by the decision of a nominated third party, the arbitrator. Arbitrators have the power to ascertain facts, rather than just listen to submissions, and to order costs.
- Expert Determination: a process where parties a third party with knowledge of the matter to reach a decision on the matter. The decision is binding unless the parties agree otherwise. More suited to where the issues are technical, rather than legal. For example, RICS Dilapidations Scheme.
- Litigation: the courts. When all ADR mechanisms fail.
