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SURVEYS

Schedule of Condition

What is a Schedule of Condition?

A Schedule of Condition (SOC) is a written report with a series of photographs that evidence the state of repair and condition of the property and highlight any areas of disrepair at a certain point in time. This report is included as part of a lease – usually immediately before the lease commences. The repairing clause in the lease is then caveated so that the tenant is not required to put the property into any better state of repair and condition than as evidenced in the Schedule of Condition.

When taking out a lease on a commercial property, it is often a full repairing and insuring lease (FRI lease), meaning the tenant takes on the full costs of repairing and insuring the whole of the property, including the structural parts – such as the foundations, walls and roof.

Other leases are “internal repair only” where the Tenant is only obliged to look after the internal parts of the property, such as the floor, wall and ceiling surfaces.Regardless of whether the lease is FRI or Internal-Repair, the repairing obligations can place a considerable financial burden on tenants, so it is important that the tenant is clear about the extent of the property they will be required to repair, and which elements of repair they will be responsible for, either directly or by reimbursing the landlord via a service charge.

Dunham Hale Surveyors, advise that many people mistakenly believe that they only need to hand back a commercial property in a similar state of repair and condition to what it was in when they first took the lease. However, this is usually not the case.

What happens at the end of a lease?

At the end of the lease, and when the tenant hands the property back to the landlord, the landlord will commission a separate report called a Schedule of Dilapidations (SOD), which will record the condition of the property at the end of the lease. This SOD will be cross referenced with the SOC and the tenant may be liable for costs to put the property back into the repair state it was at the start of the lease.

The repairing obligations in a lease typically require a tenant to put and keep the property in a good and substantial state of repair and condition. This can mean putting the premises into a better state of repair and condition than they are in when the tenant first takes occupation. This can be particularly onerous, especially when the property is in a poor state of repair to begin with. It is therefore important to ensure you properly assess the current state and condition of a property and check what your repairing liabilities are going to be before committing to a commercial lease.

One way that a tenant can seek to limit their repairing obligations is by reaching an agreement with the landlord to annex a Schedule of Condition to the lease.

At Dunham Hale Surveyors, we are experienced in carrying out Schedules of Condition and Schedules of Dilapidations on various type of commercial property. Before you lease a property, make sure you have an exit strategy by seeking professional advice, please give us a call so we can help you.

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