A Schedule of Condition is one of the most powerful tools a tenant can use to manage risk in a commercial lease. By documenting the state of a property at the outset, tenants can prevent being unfairly held liable for pre-existing issues. In this blog, the Bressummer A.R.K team explain what a Schedule of Condition is, why it matters and how it can save tenants thousands of pounds in dilapidations claims.
Introduction
When tenants sign a new commercial lease, the focus is usually on location, rent and layout. What often gets overlooked is the condition of the property itself and how this can place liabilities on new Tenant’s if not documented correctly.
Without formal documentation, tenants may inadvertently take on responsibility for repairing long-standing defects that were never their fault. This is where a Schedule of Condition comes in. Think of it as a safety net, an official record that protects tenants from unfair claims at the end of their lease.
What is a Schedule of Condition?
A Schedule of Condition (SoC) is a professionally prepared report, usually accompanied by photographs, that records the exact state of a property at the start of a lease.
It provides evidence of:
This document then becomes a benchmark. When the lease ends, the landlord cannot reasonably claim the tenant is responsible for repairing or improving issues already present at the start.
Why It Matters for Tenants
Dilapidations claims can be significant, often tens or hundreds of thousands of pounds. Without a Schedule of Condition, tenants may find themselves footing the bill for defects they never caused.
Having a clear record strengthens a tenant’s position when negotiating lease terms or challenging landlord claims at lease expiry.
An SoC creates clarity. Both parties know exactly what condition the property was in from day one, reducing the likelihood of disputes later.
Commissioning an SoC is relatively inexpensive compared to the potential liabilities it mitigates. It is an investment in peace of mind.
Common Situations Without a Schedule of Condition
In both cases, a Schedule of Condition could have prevented the dispute.
How a Schedule of Condition is Prepared
Step 1: Site Inspection
A chartered building surveyor, such as Bressummer A.R.K, visits the property to assess and document the condition.
Step 2: Detailed Report
The surveyor produces a written record describing each element of the property: floors, ceilings, walls, doors, windows and services.
Step 3: Photographic Evidence
High-quality images accompany the report to provide visual proof of any defects or wear.
Step 4: Incorporation into Lease
The Schedule is then attached to the lease and formally referenced, ensuring it is legally recognised as part of the agreement.
When Should a Tenant Commission a Schedule of Condition?
Ideally, as early as possible in the leasing process; certainly before signing the lease. It should be prepared after heads of terms are agreed but before contracts are finalised.
Even tenants taking on short-term leases can benefit. Minor disputes over repairs or reinstatement can still result in significant costs.
The inclusion of a schedule of condition must be agreed with the Landlord as part of the lease negotiations so it is important to consider this also.
Simple but Important
A Schedule of Condition may be a relatively simple document, but its impact is profound. It provides tenants with a clear line of defence against unfair dilapidations claims, strengthens negotiations and gives confidence when signing a new lease.
For businesses, it is not just a precaution, it is essential risk management.
Schedule of Condition and Bressummer A.R.K
Considering a new commercial lease? Don’t leave yourself exposed. Contact Bressummer A.R.K today to organise a professional Schedule of Condition and protect your business from future costly surprises.
It records the property’s condition at lease commencement, protecting tenants from being held liable for pre-existing defects.
Yes, when attached to and referenced in the lease, it forms part of the contractual agreement.
Costs vary depending on property size, but they are usually a fraction of the potential savings on avoided claims.
Most landlords will, as it creates transparency. If they resist, tenants could view this as a red flag.
It’s important, in order for us to understand your requirements from the outset in order to give the best commercial building consultancy advice we can.
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When delving into the intricacies of commercial real estate, one document that stands out is the Schedule of Condition (SOC). Think of it as a detailed 'snapshot' of a property’s current state, similar to an 'inventory' list for a rental car, capturing all existing dents and scratches before driving off the lot. This snapshot helps prevent disputes about who caused what damage later on.
At Bressummer ARK Ltd., we believe that business success should go hand in hand with making a positive impact.
