Case Study - Dilapidations

Published on Wednesday, February 1, 2006

The clients had inherited the freehold of the building which had been subject to a long lease to a public authority that had neglected the repairs of the building. The objective was to a) get the property into good repair, b) renew the lease and c) sell the investment.
The strategy adopted was the preparation of a detailed Schedule of Dilapidations on behalf of the landlords. This was made up of two particular schedules, served on both the Head Lessee (not in occupation) and a Sub Lessee (in occupation). This was a two pronged negotiation in respect of works that actually needed doing and a financial settlement for the diminution in the value of the landlord’s freehold interest.

The repairs were carried out by the Landlord which had the effect of fixing the amount by which the freehold value was reduced and led to a satisfactory financial settlement paid by the Head Lessee and subsequently the Sub Lessees in occupation undertook complete redecoration of the property which was negotiated as part of the lease renewal process.
The Result
Kirkby & Diamond dealt with very complicated negotiations in a multiple party scenario where it would have been easy for the building/ landlord’s claim to fall between the responsibilities of either the Head Lessee (not in occupation) and the Sub Lessee (in occupation).
By careful management of the situation, practical involvement in undertaking some of the works and continued negotiation Kirkby & Diamond achieved the best result for the client.
The result was property being put into good order, the lease renewal terms were agreed and subsequently a stunning result was achieved at auction on the sale of the freehold interest subject to the terms of the lease renewal.