Landlords and tenants in Scotland will often turn their minds to dilapidations close to the end of a lease. Typically, shortly before lease expiry, a landlord will serve on a tenant a detailed schedule specifying the repairs that the tenant must carry out prior to expiry. Invariably, a tenant will not carry out the necessary works and a dispute will ensue about the extent of a tenant's liability - which often continues long after a lease has ended.
But it is important to remember that the majority of the obligations imposed by a typical commercial lease on a tenant in relation to dilapidations, such as keeping the premises in a particular standard of repair and decorating at specified periodic intervals, apply throughout the period of a lease and not just at the end.
Whilst it is easy to see that a landlord's main concern will be to ensure that, at the end of the lease, it receives its premises back in the required condition (or, alternatively, a cash sum to compensate it if the premises are in a lesser condition), it is often necessary for a landlord to take steps during the period of a lease to ensure that its premises are kept in the required condition.
So, what remedies are available to a landlord during the period of a lease?
1. Carry out the necessary works at the tenant's expense
It is very common for a commercial lease to contain a provision to the effect that, at any time during a lease, a landlord can serve notice on a tenant requiring it to carry out works within a specified period (e.g. not less than 28 days) failing which the landlord is empowered to take entry at the premises and to carry out works at the tenant's expense. The threat of a landlord taking entry is often enough to prompt action by a tenant. In practice, it is rare for a landlord to actually take entry and carry out works – mainly because it must do so without any guarantee that it will be able to recover the cost from the tenant.
It is worth noting that, unless there is an express contractual right, a landlord does not have the power at common law to take entry and carry out works at a tenant's expense.
2. Damages for breach of contract
In theory, if a tenant fails to keep premises in the necessary standard of repair, it is in breach of contract and liable to a landlord in damages. But, whilst a lease is running, it will often be difficult for a landlord to prove that it has suffered any loss.
3. Obtain a court order for specific performance
It is possible for a landlord to obtain a court order requiring a tenant to carry out specified works. This remedy is not used in practice as often as you might think (because obtaining a court order can be expensive and time consuming) but it is a useful tool in a landlord's armoury, especially in relation to significant works required to the fabric of a building (e.g. the overhaul or replacement of a roof).
4. Threaten to irritate the lease
Finally, if a tenant's breach of its obligation to repair is sufficiently serious, a landlord can threaten to irritate (terminate) a lease if specified works are not carried out within a specified period. A landlord can only terminate a lease where it is 'reasonable' in all of the circumstances and so this remedy is likely only to be available where (a) there is very significant disrepair; and (b) a tenant is first given a reasonable opportunity (i.e. a period equal to at the time actually required to procure and complete the works) to remedy its breach of contract.
If you require advice about dilapidations, please do get in touch with our Real Estate Litigation team or your usual Brodies' contact.
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