A SALUTARY TALE:

Although the story below relates to commercial property, it shows the importance of getting adequate professional advice at the right time!

This is how matters go awry when not watched properly.

So, Joe Gubbins (name changed) decided that his business, which he'd been running from home, was going well. The bank agreed and so did his accountants. The next step was to find some premises which would be the right size and location. Not too high a rent, not to long a lease and not too many of those "covenant" things about repairs.

His solicitor looked at the Lease and said - yes the terms were reasonable. The Lease was for five years. The Tenant was liable for the repairs to the building; also liable for all the Landlord's costs in relation to the Lease. So, that's standard isn't it. Did Joe want a Schedule of Condition? Hells-bells more fees - more money. This business expansion was getting expensive.

"No, the Landlord's the guy who currently occupies and I've met him and he's a decent sort who's not going to do the dirty on me."

Five years later, the business going well, Joe decided to move on and find bigger premises. He let the Landlord, or rather his agents, know that he would not be renewing his lease.

Oh Calamity!

At some time over the intervening five years, his "decent" Landlord had sold the premises to a big property company. These people had not been in occupation of the premises when Joe moved in. As far as they were concerned the building was in pristine condition then and they wanted it back in pristine condition now!

So, as was demanded by the Lease, along went the Landlord's surveyor who produced a Schedule of Delapidations. It listed item after item of repairs which the Tenant had to put right. It wasn't just simple redecoration, which Joe was expecting. This was stuff like removing the fixing plugs in the walls where he'd had his name board, replacing tiles, repairing the guttering, repointing some of the brickwork and replacing some bricks which, years ago, well before Joe had taken over, had been damaged by a delivery lorry. The estimated cost of the repairs listed came to over a third of the annual rent which Joe had being paying.

Joe naturally pleaded that the repairs list included faults which were there when he took over. The Landlord's surveyor pointed out that there was nothing in the Lease to state that any faults existed at the beginning of the term and the Landlord was entitled to assume that all the damage had occurred during Joe's occupation. Joe had to pay up.

It didn't stop there, though. The lease required that the Landlord's costs relating to the drafting and submission of the Schedule of Delapidations was also down to Joe. O.K, thought Joe. A few hundred for the inspection is fair. When it came to the end there were other fees. The lawyers' fees for submitting the claim (the Landlord's surveyor wanted to get it right), the surveyor's costs for negotiating with Joe and, of course, the surveyors fees for making sure that the work carried has been done correctly. All in all, the additional fees brought Joe's bill to half as much again.

This was a bitter blow to Joe just when he was on the next stage of his business expansion. He had to forego the new office suite which he'd promised himself and his secretary and he had to give up the thought of the new car which was to make the public statement about his continuing success. He admitted to his pals, quietly of course, that he should have had the survey at the start so that the Schedule of Condition could be attached to the lease and he also said he should have thought about getting his solicitor to put a cap on the costs for which he was going to be liable.

Funny thing is, Joe's just taken on new premises. His solicitor said he might think about having a surveyor provide a Schedule of Condition for him. But Joe said he knew the Landlord and he was a decent sort of bloke who new that the building, whilst it was quite new, wasn't in pristine condition....

Many business people can find themselves in the same position as Joe. To avoid some of these nasty surprises when you are taking on fresh premises it is best to arrange for a Chartered Surveyor to provide you with a Schedule of Condition. It may cost a bit at the start but it could save you a fortune later.