Some leases will prescribe a deadline for service, such as at least six months before the end of the term; others will be less prescriptive, but may provide for the costs of preparing and serving the schedule to be recovered only where it is served before or within three months of the end of the term. In any event, conversations about repairing obligations are best started early, to avoid the prospect of a dispute further down the line. Landlords may be happy to negotiate a cash settlement in lieu of the works being carried out by the tenant, especially where there may be plans for the property’s reconfiguration or upgrade. Tenants might also agree with this, in order to get certainty as to the extent of their obligations and avoid the time and cost of engaging contractors of their own.
Each case is different and the timing of the schedule will be different according to the landlord’s strategy, but the one thing that must not be missed is the notice to reinstate alterations.
If the tenant has carried out alterations to the property and there is a covenant requiring those to be reinstated at lease end, the terms of the covenant have to be closely looked at. In many cases, the cost of this reinstatement work can be the lion’s share of the claim. Is reinstatement dependent upon the landlord giving the tenant notice or otherwise communicating its requirement to reinstate? If so, how and when should that notice be given?
As to the ‘how’, it is generally accepted that service of the schedule of dilapidations can constitute valid notice to reinstate. As to the ‘when’, that’s slightly less clear cut.
In cases where no date is specified in the clause, the right construction will ordinarily be that the notice must be given at the latest immediately before expiry of the lease, but does the notice have to be given in time for the tenant to carry out the works before expiry of the lease?
There have been several cases which have dealt with the issue of notices served too late to enable the tenant to complete the relevant work before expiry of the lease. In such cases authorities point towards two options:
- Notice may be given at any time up to the term date and the tenant is entitled to remain in occupation for such period thereafter as is reasonably required in order to complete the works. This would require the implication of a term or the grant of a licence.
- A term should be implied into the lease that notice should be given sufficiently early to enable the tenant to complete the works by the term date.