Why it matters on a commercial lease
Commercial leases routinely run for five, ten or fifteen years. Over that period, the gap between the condition the tenant actually inherited and the standard the landlord may seek to enforce at lease end can become substantial, and expensive.
A Schedule of Condition closes that gap. It records, on a specific date, the exact state of the demise so that the tenant's repairing covenant is measured against a documented baseline rather than an idealised standard.
The tenant's perspective
For tenants, a commercial lease Schedule of Condition is the single most cost-effective protection available against end-of-lease dilapidations exposure. It prevents the landlord from claiming the cost of remedying defects that pre-existed the lease and ensures the tenant only carries forward the obligations they actually agreed to.
The landlord's perspective
Landlords benefit from a clearly documented baseline too. A properly drafted schedule reduces the risk of dispute at lease end, supports realistic negotiation on dilapidations, and protects the reversionary value of the property by establishing exactly what the tenant took on.
FRI leases and repairing liability
Most commercial leases are FRI, the tenant carries the full burden of repair, decoration and insurance. The Schedule of Condition is the mechanism that qualifies that covenant. The lease will typically state that the tenant is not required to put or keep the property in any better state of repair than evidenced by the appended schedule.
When to instruct on a commercial lease
The Schedule of Condition must be in place before the lease is completed. It is appended to the lease and referenced in the repairing covenant by your solicitor. We recommend instructing as soon as Heads of Terms are agreed, this gives time for the survey, draft and any landlord comments before completion.
What a commercial lease Schedule of Condition contains
A CBC commercial lease Schedule of Condition includes a written schedule of every element of the demise, comprehensive cross-referenced photographic evidence, dated and located, and a cover document in the format expected by commercial property solicitors so it can be appended directly to the lease.