What is the Schedule of Conditions in a UK Commercial Lease?

As a tenant entering a commercial property lease in the UK, your legal team will negotiate various terms in your lease agreement with your landlord. A lease agreement is a legally binding contract detailing both parties’ rights and obligations in a commercial lease. One responsibility is repairing the property, where you may decide if a schedule of conditions is helpful to you. This article will explain the schedule of conditions in a commercial lease.

What is a Schedule of Conditions?  

During the preparation of heads of terms for your commercial lease, your legal representative and commercial landlord will address various considerations. For instance, they may discuss your repair liabilities in the commercial lease agreement. To address cost issues, they can either agree on technical writing, known as technical drafting, or opt for a schedule of conditions. The latter is to be completed through a condition survey. 

Commonly known as a defect report, a schedule of conditions limits your liability for repairs to the premises. This is because it details the current state of the property as evidence of how to return it to your landlord. The best time to agree on this is when deciding the heads of terms.

What You Need to Know 

As a commercial tenant, you should understand some crucial points about the schedule of conditions in UK commercial leases. 

Benefits

A schedule of conditions protects a tenant against any dilapidation claim your commercial land may make. Dilapidations refer to damage or disrepair that is your responsibility to rectify at the lease term’s end. However, it is crucial to understand that this document only limits repair obligations to the property’s state before occupancy. It will not restrict addressing deterioration during the lease.

Format 

The format of this document can vary. It could either be in the form of the following:

• narrative;
• photos; or
• narrative and photos.

A photo format is a simple way to present this and is commonly known as a photographic schedule of conditions. You might also accompany the photos with written words or a video. The presence of a video will allow you to record parts of the premises that pictures cannot accurately show, such as:

• damp;
• leaks;
• movement; and
• the extent of the issues.

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Details to Include

A schedule of conditions should include several essential details and serve as evidence for the property’s condition, such as: 

• its purpose;
• the description of the commercial premises;
• the date of the inspection and the weather on that date;
• its purpose;
• if there were any restrictions during the inspection; and 
• definitions of terms used.

The schedule of conditions provides accurate evidence of the property’s condition before entering the lease, limiting your liability. As such, you must include all necessary details, as anything left out might be your responsibility if you cannot prove the damage existed before your arrival. Accordingly, this document should be as detailed as possible and point out areas of the commercial premises which are in disrepair. 

Repairing Clause

When negotiating a schedule of conditions for your commercial lease, this must be reflected in the lease agreement within a repairing clause. 

You should alter this lease provision to refer to the schedule of conditions for your repair obligation. It is crucial to mention the schedule, as its absence may not affect your repair obligations in the commercial lease.

Key Takeaways

When you enter a commercial lease, you may decide to include a schedule of conditions. This document will detail the state of the commercial premises before you enter the lease to limit your repair obligations. When completing this,  you must ensure that it depicts the state of repair or lack of repair of the premises. This document can be in different formats and should contain basic information about the property through photographs, videos or written text. It is crucial to note that the schedule of conditions is not in itself sufficient, as the repair obligation in the lease must detail this too.

If you need help understanding a chedule of conditions in a commercial lease, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

What is the schedule of conditions?

A schedule of conditions is a document that details the state of the commercial premises before you enter the commercial lease to limit your liability on repairs.

What do commercial tenants need to know about a schedule of conditions? 

As a commercial tenant, there are many things you need to know about this document. For example, it can be photographic, in writing, or even both. It can also include a video.