A schedule of condition is one of the most cost-effective forms of protection available to a commercial tenant. Prepared before or at the commencement of a lease and annexed to it, the schedule records the property's condition and limits the tenant's repairing obligation to maintaining the property in no worse state. Without one, a tenant taking a full repairing lease of a property with pre-existing defects may find themselves liable for repairs that have nothing to do with their occupation.
A robust schedule of condition includes dated, high-resolution photographs of every element of the property, both internally and externally, accompanied by clear written descriptions of the condition observed. It covers the roof, external walls, windows, doors, floors, ceilings, internal walls, building services and any common parts the tenant is responsible for. A good schedule is systematic, using a consistent format that cross-references photographs to written descriptions, making it easy to use as evidence in any future dilapidations dispute.
When the lease contains wording such as "the tenant shall keep the property in no worse condition than shown in the schedule of condition annexed hereto," the schedule becomes the benchmark against which the tenant's obligations are measured. At lease end, any defect that existed at the start and was recorded in the schedule cannot form part of a dilapidations claim. This can dramatically reduce a tenant's exposure, particularly in older buildings.
A schedule of condition is recommended whenever you are taking a new lease, an assignment of an existing lease, or a sub-lease, particularly if the property is not in new condition. It is also commonly prepared for party wall purposes to record the condition of adjoining properties before building works begin. The cost of preparing a schedule is modest compared to the potential savings at lease end.
A detailed record of a property's condition at a specific point in time, typically annexed to a commercial lease. It documents every element with photographs and written descriptions.
When taking a new lease, assignment or sub-lease, especially if the property is not in new condition. Also for party wall purposes before building works begin.
When annexed to the lease, it caps the tenant's obligation to maintaining the property in no worse condition than recorded. Pre-existing defects cannot form part of a claim.
Dated high-resolution photographs, clear written descriptions of every element, coverage of all areas including roof, external elevations, internals and services, and a cross-referencing system.