What are the Dilapidations Protocol?

The Dilapidations Protocol is an important set of rules and procedures that guide how landlords and tenants should handle disputes regarding property repairs, maintenance, and other responsibilities. It establishes a structured framework for both parties to follow, ensuring a fair and efficient resolution. Our team has extensive knowledge of the necessary protocols and schedules for commercial leases, guaranteeing that all required actions are taken to fulfill legal obligations. This expertise allows us to provide clear guidance on the steps to take in the event of any disputes or breaches, whether physical or contractual. We understand the significance of compliance and will verify that all terms are fulfilled before proceeding. With our comprehensive understanding of the process, we can ensure a seamless resolution to any issues that may arise, providing you with peace of mind throughout the entire procedure.

How Does the Dilapidations Protocol Work?

When a commercial property lease ends, the landlord may seek compensation from the tenant if they believe the tenant has failed to meet their obligations to maintain the property, as stated in the lease. This would then prompt the Dilapidations or Pre-Action Protocol process. 

The Dilapidations Protocol is designed to simplify calculating any dilapidations claim and other related matters before the landlord or tenant starts court proceedings. If no agreement can be reached, the protocol encourages alternative dispute resolution through mediation and negotiation to avoid litigation.

Courteously, the Protocol aims to:

Encourage both parties to settle the disputed issues, avoiding costly and time-consuming litigation.

Ensure prompt and comprehensive information sharing about the dispute between the landlord and tenant.

Establish the court's expected guidelines for each side's steps before initiating legal proceedings, including a timeline.

Determine the content requirements and quality standards for schedules, Quantified Demands, and pre-action negotiations.

Facilitate effective management of proceedings if litigation becomes unavoidable.

We understand that dilapidation claims can be a complex and challenging process. Considering the potential costs involved and the impact any dispute may have, it is crucial to have experienced experts assisting you. The team of chartered surveyors at Dilapsolutions has extensive experience in handling all aspects of the Dilapidations Protocol, from initial discussions to providing expert evidence in court. We are here to support you throughout this process.

Substantial Compliance

The Protocol emphasizes that the Court is more concerned with substantial compliance with relevant principles and requirements rather than minor or technical issues. Both parties should know that failure to comply with the Protocol may impact the Court's decision on costs under CPR 44.2(5)(a). It is crucial to evidence compliance where possible. The Protocol outlines the steps and timeline for both landlord and tenant in terminal dilapidations claims, and parties should carefully consider the implications of Section 18(1) of the Landlord and Tenant Act 1927 on damages before proceeding.

Schedule of Dilapidations

The landlord must prepare and send the tenant a schedule detailing the breaches, required remedial works, and associated costs. The schedule must be in the form specified in Annex B (surveyor-prepared) or Annex C (landlord-prepared) of the Protocol, with the relevant endorsement. The schedule should be sent within a reasonable time, within 56 days after the tenancy's termination.

A schedule served before the tenancy ends does not need to follow the Protocol unless it starts the Protocol process strictly. However, it is best if the schedule complies with the Protocol. The landlord should also follow the lease terms to serve the schedule, such as the time frame and address. The Protocol recommends sending the schedule electronically so the tenant's comments can be included in one document.

Quantified Demand

The landlord must send the tenant a Quantified Demand within the same timeframe as the schedule of dilapidations. The Quantified Demand should clearly outline the dispute, the monetary damages sought, and other losses. It should specify if VAT applies, confirm the landlord's attendance at a meeting, and give the tenant a reasonable time, usually 56 days, to respond. The monetary damages and other losses must be fully quantified and substantiated, and the legal basis for recovering losses should be explained. The figures should be limited to the landlord's likely loss.

The landlord should carefully consider whether to claim the full cost of the works or if the relevant law limits the claim to a lower amount.

Tenant's Response

The tenant should respond to the Quantified Demand within a reasonable time, typically 56 days. The response should use the landlord's schedule of dilapidations, providing sufficient detail to convey the tenant's views on each item. The tenant or their surveyor should confirm that the proposed works are reasonable and the associated costs are justifiable, considering the landlord's intended use of the property.

Tenants are not required to respond to every item in the Quantified Demand, but providing their views on each item can help narrow the issues in line with the Protocol's objectives.

Process Before Issue

The Quantified Demand and Response are not formal legal statements. Disclosure is limited, but the parties can agree to provide more. Meeting within 28 days of the Response is encouraged to resolve as many issues as possible on a non-prejudice basis. The parties should consider alternative dispute resolution before litigation.

Before initiating proceedings, the landlord must provide the tenant with a detailed breakdown of the issues and losses based on a formal diminution valuation, actual expenditure, or a combination of both. The tenant must state their case for diminution and provide a diminution valuation to the landlord within a reasonable time, generally 56 days. Suppose the dispute is not resolved through the provided procedures. In that case, the parties should review their positions and evidence to determine whether the issues can be narrowed or the proceedings can be avoided.

Conclusion

The Protocol outlines a clear procedure for handling terminal dilapidations claims, which both parties should follow closely. While the costs of complying with the Protocol are not covered, they may be recoverable as part of the proceedings if a claim is filed. The court may require evidence of each party's compliance with the Protocol.