Schedule of Condition: SoC Surveys For Commercial Properties

In most cases, this report is prepared for legal (lease or contractual) reasons and can be very useful if there are any disputes, in particular, as a way of avoiding or reducing the issues in any future dilapidations claims under the terms of the lease. It can also ensure that any issues with a property are identified before signing up for a lease.

Schedules of Condition can be presented in a range of different forms, including photographic formats. This is known as a Photographic SoC. A Full SoC includes text, as well as photos and sometimes video.

These reports can be used when a new lease is entered into, providing a detailed account of the premises’ condition before the lease starts. This means that any existing defects (as well as their repair costs) will be identified before the lease is signed. This guarantees a limit on a tenant’s liability for those repairs, and helps make clear the tenant and landlord’s responsibility to repair.

Schedules of Condition may also be used near the end of a lease. In these cases, they can help to establish responsibility for any dilapidations claim, repairing terms and reinstatement between the parties.

When preparing Schedules of Condition, some important elements to include are:

• A clear statement about the purpose of the Schedule
• A record of any pre-existing issues and their extent
• Technical drawings
• Clear details regarding the location and extent of the property and premises
• A general description of the premises construction
• Clear definitions of terms used to describe conditions in the property.
• A clear statement of the time of the inspection, as well as what the date was, and weather condition
• Photographs (these are some of the most important materials to be included). Videos as well as panoramas and drone footage can also be helpful
• A written record of the location, nature and condition of each item inspected (inside and out)
• Details regarding any specific tests taken on the property (for example, damp testing)

Photos must be clear in their depiction of the property. If a landlord, for example, is claiming that there are issues with the property, but photos taken beforehand are unclear in showing the actual state of the property then their value will be limited.

Photos alone are of limited value and use. Dilapsolutions has encountered several cases in which a property owner has taken plenty of photos of their building but have failed to provide descriptions. This means that only part of the issues are known, and other problems are in effect hidden.

The proper and combined use of both Photos and Text can give much greater weight to the report.

Our sister chartered surveying consultancy Raeburn Consulting specialises in negotiating lease terms for commercial and leisure properties throughout the UK and ROI. This allows us to effectively manage your exposure to excessive repairing liabilities not only by conducting thorough surveys, including high-quality SoC reports, but also by utilising other tools to exclude certain elements altogether, ensuring that you are protected from unexpected costs.

It's important to note that in England & Wales, the standard repairs clause wording in a lease requiring tenants ‘to keep’ the property in good and substantial repair is interpreted at law to mean that if you take on a property in poor condition, you are then responsible for returning it at the end of the lease in better condition. This means that as a tenant, you may be required to invest time and resources into maintaining and improving the property throughout your occupancy. This legal interpretation can have significant implications for tenants. Therefore, before entering into any lease agreement, it is strongly advised to obtain a surveyor’s report.

While a well-structured SoC can help mitigate this unjust exposure to some extent, it is not a cure-all solution. Please read the article which, in short, explains that the apparent protection afforded by qualifying the tenant repairs lease clause to ‘not having to hand back in any better (or no worse) condition than evidenced by the attached SoC’ often fails in practice for elements of a property which inexorably deteriorate in any event. For instance, what the report shows to be a one-third rotted window sill at lease commencement, ends up being 50% rotted by the end of the lease. As it is impossible to fix just the rot which occurred during your lease so as to meet your contractual obligation, the position at law is that you then have to replace the whole sill (or window) in order to comply. Imagine a similar scenario with a more significant item such as the entire warehouse roof (inexorably advancing cut-edge corrosion)!

So we not only identify building defects & disrepair before you sign a lease, we advise on the most effective solutions to limit your obligations going forwards which include, but are not limited to, Schedules of Condition.