It is commonplace for purchasers to obtain a detailed Building Survey as part of their Due Diligence prior to acquiring the freehold interest in a property. However, incoming Tenants often neglect to gain a full understanding of their potential liabilities prior to entering into a Lease.
A Pre-Lease Acquisition Survey considers the current condition of the building and reports upon any immediate liabilities, and also takes into account future liabilities reporting on issues that may arise during the term of occupation and at lease end.
It is widely believed that a schedule of condition will help mitigate a tenant’s liability for dilapidations at the end of a lease. However, many tenants are surprised when, although their repairing liability may be limited by reference to a schedule of condition, they still face significant claims at the end of Leases, and this isn’t always as a result of a poorly drafted schedule of condition.
Our Pre-Lease Acquisition Survey Reports typically include advice on the following;
- Immediate liabilities – works which are considered necessary/desirable in order to put the property into a state of repair to suit the Tenants occupation.
- Where required we would include budget costs for the above items to aid negotiations with the Landlord along with advice as to whether it would be prudent to request the Landlord complete the works or grant a rent-free period to cover the costs.
- Future liabilities – where an element presents in poor condition, it might not be enough just to record it as such in the Schedule of Condition. If the condition is such that complete failure of a component is likely during the term of occupation you need to be aware of the potential liability and associated costs. Where appropriate we will advise as to items which may warrant negotiating out of the lease terms.
- Review of the heads of terms, agreement to lease, or lease – including any advice as to suggested variations to the terms, and/or onerous obligations that the Tenant may be taking on.
- Advice on any items requiring further investigation, specialist testing, and certification etc.