The Implications of a Schedule of Dilapidations in a Dental Practice

Many dental professionals occupy their practice property by way of a lease; but how many understand the importance of a Schedule of Dilapidations? Getting to grips with this aspect of a leasehold property is essential for peace of mind for both the Landlord and Tenant. Whether you are setting up a squat practice, or nearing the end of your current lease, this often over-looked aspect can carry significant financial consequences, especially in the dental industry where specialist equipment and property modifications are common.

A Schedule of Dilapidations is a document which is usually prepared by a surveyor on behalf of the Landlord. The schedule sets out items of disrepair, lack of maintenance, or failure to reinstate / remove alterations, and may also include the estimated costs of remedying these breaches. Its main purpose is to notify the tenant of the works required to comply with their obligations under the lease and, if not remedied, to form the basis of a claim for damages for the Landlord.

Whilst a Schedule of Dilapidations is commonly served at the end of the lease, it can be served at different stages of the term:

·      Interim Schedule – this is served during the term of the lease to remind the Tenant of the repairs that are required;

·      Terminal Schedule – this is typically served towards the end of the term i.e. within the last couple of years. This gives the Tenant plenty of time to attend to the required works before the lease is terminated; and

·      Final Schedule – this is served once the lease has terminated and is usually the basis for a damages claim if the Tenant does not deal with the listed works within the required timeframe.

It is typical for the owner of a dental practice to undertake significant internal fit-out works to meet clinical, regulatory and aesthetic requirements. This may include installing dental chairs, compressed airlines and x-ray shielding. Whilst these works may be essential for running the practice, the Landlord may not want them in the property after the lease ends.

Tenants often overlook clauses requiring them to put the property back into the state they took it. If the lease includes a reinstatement clause, the Tenant may be required to remove the bespoke alterations from the property. The Landlord is entitled to remove these themselves and claim any costs incurred in doing so from the Tenant.

There are certain steps that a Tenant can take to mitigate their risk:

1.    Schedule of Condition – a schedule of condition can be included in the lease at the outset of the tenancy. This is a specific description of any damage present at the property at the commencement date and is often accompanied by photos of the damage. Where there is damage to the property at the start of the lease which is shown in the Schedule of Condition, the Tenant is not required to repair this when they vacate the property. For example, if a door handle has gone through the plaster behind the door and there is a hole in the wall at the start of the lease, the Tenant is not required to fix this when they leave as long as this damage is shown in the Schedule of Condition.

2.    Understanding the lease – it is important that all parties to the lease have a good understanding of terms and conditions set out in the agreement. If you are unsure about any terms of your lease we would strongly encourage you to seek legal advice on the same so you can ensure you are complying with your obligations.

3.    Continued maintenance – the Tenant may consider dealing with the decorative and repair needs of the Property as and when they arise. This can help to avoid having a large bill at the end of the tenancy by spreading the cost throughout the term of the lease. It also ensures the property complies with health and safety regulations and CQC standards.

A Schedule of Dilapidations is an important tool in protecting the interests of the Landlord and ensuring that Tenants comply with their lease obligations. Whether you’re a Landlord seeking to preserve your property, or a Tenant aiming to avoid unexpected costs and liabilities, understanding a Schedule of Dilapidations is essential.

If you have any queries on how a Schedule of Dilapidations may impact you, or if you would like us to review your lease and advise you of your repair and reinstatement obligations, please do not hesitate to contact us on 0330 088 2275 and a member of our Commercial Property team would be happy to speak with you.