There is little doubt that we are likely to see an increasing number of confiscation disputes between owners and tenants of commercial real estate. The Protocol of Confiscation of the Code of Civil Procedure (officially referred to as the Pre-Action Protocol for Damages To the Physical Condition of Industrial Property upon Termination of a Lease), as well as the relevant RICS Guidelines, are best practices for parties seeking or seeking forfeiture. However, there may be practical or business issues when it comes to complying with these rules. So how do final forfeiture requests actually work and to what extent should parties follow the rules for such claims? Consideration of these issues is usually part of a general instruction to a building appraiser to inspect the property and create an expiration schedule (or, in the case of a tenant advisor, to advise on likely obsolescence). Before creating a schedule, it usually makes sense for landlords to check what the lease allows in terms of cost recovery, as this can affect adherence to the schedule. According to the expiry protocol, those who comply with an annex before the end of a lease must either confirm to the lessee at the end of the lease that there has been no change, or adhere to another schedule within a reasonable time after the end of the lease. In addition to consulting the Confiscation Protocol, any confiscation investigator practising in England and Wales will be familiar with the Guide to Confiscation in England, Wales (7th edition, published in December 2016). This guide advises reviewers on the factors they should consider when creating expiration schedules, quantified requests, responses, Scott schedules, and downsizing assessments. The guide is essential reading for those who advise landlords and tenants on dilapidated claims. A quantified request now usually accompanies the timing of the decay, as provided for in the expiry protocol.
It specifies the amount claimed by the landlord as compensation for the offences listed in the schedule, as well as for all other elements of loss, e.B loss of rent. The Protocol provides that certain details must be accompanied by a quantified claim to support the amounts claimed and the legal basis for the claims. However, the ICSI guidelines recognize that the landlord has often not completed the work at the time of scheduling and that, therefore, the quantified application is more likely to provide a detailed estimate of the likely cost of the work than the invoices. In many cases, it is the landlord who is under pressure to create a downsizing assessment – especially if they have not completed all the work specified in the expiry schedule. However, parties should always consider the relevant circumstances and keep in mind that there may be instances where it would be « inappropriate » to incur costs for an undervaluation. Consultants should also review the requirements of the decay protocol. It states that an expiration schedule must be delivered within a reasonable time, suggesting that this will usually be the case within 56 days of the lease expiring. The schedule should include the appropriate note, as required by the protocol, including to confirm that the landlord`s intentions with respect to the property have been fully considered (as recommended by the landlord, when the landlord`s surveyor signs). If possible, a copy of the schedule should be sent electronically to the tenant`s assessor so that the comments can be included in a document. Where should parties start when assessing a request for forfeiture? The main guiding principles of the Resolution Protocol set out above are useful in promoting the exchange of information and reasonably timely progress in negotiations between the parties.
However, deciding how to pursue a claim beyond these steps often depends on its likely value and includes an assessment of where it makes sense to incur costs. In high-value cases or if there is a high risk that the case will eventually go to court, it makes sense to follow the requirements of the protocol more closely. However, it may be wise not to stick to it strictly in some cases – to see if the parties can reach an agreement without incurring costs that could complicate the settlement, and on the basis of evidence that might not be necessary. If it turns out that an agreement is not possible, the parties may at any time verify to what extent additional measures must be taken before the opening of legal proceedings. The first point that the parties must consider in a situation of disrepair is the extent of the tenant`s repair obligations. For example, any condition plan associated with the lease generally limits the scope of repairs needed by a tenant. After assessing the extent of the tenant`s repair obligations, a landlord will want to determine if there is a breach of those responsibilities. Of course, tenants should keep in mind that there is usually nothing in the lease that requires a landlord to inform the tenant of necessary repairs before the lease expires – which can be especially frustrating for a tenant trying to exercise an interruption option that depends on compliance or « substantial compliance » with the lease. What are the first steps for parties to a claim? Nevertheless, landlords should keep in mind that a lease or alteration licence may require them to inform the tenant before the end of a lease of the extent to which modifications to the premises must be removed (or, if necessary, left in place).
If notice is required, landlords must review and comply with the terms of the notice in the applicable lease and/or permit. Despite all the changes that have resulted from Covid-19, it is unlikely to rely solely on the courier service – unless there are clear agreements to do so. The protocol also states that any tenant who relies on a reduction defence must « present their case and provide a reduction assessment to the landlord. » The protocol expects a tenant to respond to the quantified request within a « reasonable period of time, » which should also include appropriate confirmation. Again, 56 days is suggested, if any, which is sufficient in most cases. It is also expected that there will be an impartial meeting of the parties after the tenant has sent their response to the claim – with a reasonable period of 28 days for this. For example, one of the most controversial points is whether and, if so, when a « section 18 assessment » (which refers to section 18(1) of the Landlords and Tenants Act, 1927) should be provided. The protocol specifies that a landlord should quantify their loss before initiating proceedings by providing a detailed breakdown of problems and consequential damages. He notes that this may be based either on « a formal assessment of the reduction or a statement of actual expenditures or, if [the landlord] has implemented some, but not all, remedies, a combination of the two; unless it is unreasonable to do so in all circumstances. ». « Lexology is a useful and informative tool. I keep copies of relevant articles and often share them with colleagues.
Although I do not know all the authors/companies, by reading their articles I understand their appreciation of a topic, and if it proves necessary, I would not hesitate to contact them on these topics. « Unfortunately, there can sometimes be servile references to the protocol by the parties, which can cripple negotiations. Parties should bear in mind that the Protocol expressly states that the tribunal will consider « whether the parties have substantially complied with the relevant principles and requirements and are unlikely to address minor or technical deficiencies ». In reality, the issue of non-compliance with the protocol is likely to result in the issue of costs, and even then, a judge is likely to focus only on conduct that resulted in unnecessary costs and/or misrepresentation. If you handle your case reasonably and with an appropriate exchange of evidence, you are unlikely to be punished. Another point that may arise is the suggestion in the dialpidation protocol that the parties should consider whether some form of alternative dispute settlement procedure would be better suited to the settlement of the claim than a dispute. .
