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Updated dilapidated property protocol to be given formal legal status

The protocol used by the property industry to avoid court action to recover damages relating to the physical state of a property at the end of a commercial lease is to be given formal legal status for the first time.02 Nov 2011

The Property Litigation Association (PLA) has provisionally issued a revised version of its Dilapidations Protocol, which will be formally incorporated into the Civil Procedure Rules (CPR). It is expected that this will take effect from 1 January 2012, the PLA said.

The protocol relates to claims for damages for dilapidations by landlords against tenants at the termination of a commercial tenancy. These are generally referred to as terminal dilapidations claims.

The CPR were introduced in 1998 to govern the procedure that is followed within the English civil court system. They require that all cases are dealt with in a way that enables the court to deal with cases justly. Since their inception different 'pre-action protocols', which set out the procedure the courts expect to be followed in certain categories of dispute, have been formally incorporated into the CPR.

The PLA published its own protocol for terminal dilapidations claims in 2002. It has been widely adopted by the property industry and endorsed by the Royal Institution of Chartered Surveyors as best practice. It was presented to the Civil Justice Council for adoption as a formal protocol in 2009.

The main addition to the updated protocol is that the tenant's surveyor will now have to endorse the tenant's response to the landlord's claim for damages. The endorsement must confirm that the works the tenant is suggesting are all those reasonably required to remedy the alleged breaches, that any costs quoted in the tenant's response are reasonably payable for those worksand that account has been taken of what the tenant, or tenant's surveyor, reasonably believes to be the landlord's intentions for the property.

Property law expert Sarah Campey of Pinsent Masons, the law firm behind Out-Law.com, said that this change was introduced because the Civil Procedure Rule Committee wanted both parties to include reciprocal endorsements.

"This means that neither party should overstate their position, making settlement easier," she said.

The landlord's endorsement has also been amended. It now provides for a case where the landlord itself, rather than its surveyor, provides the endorsement. It also reflects the fact that, where the landlord's surveyor is giving the endorsement, he is relying on what the landlord has said it intends to do with the property when the lease expires. .

The protocol has also been shortened, which Campey said will ensure it does not repeat pre-action provisions elsewhere in the CPR. Some of the language has also been modified to make it consistent with other pre-action protocols.

Although parties cannot be forced to follow a pre-action protocol before a matter goes to court, the court can take any failure to do so into account if there is no good reason for doing so. This means that the new protocol will still have important ramifications for those who fail to follow it said Campey.

"When making a costs order the court can take everything into account, and compliance with pre-action protocols is of particular importance. It has been confirmed that the court will look at whether the parties have complied in substance with the relevant principles and requirements," she said.

"Landlords and tenants should be aware of the requirements and ramifications if the protocol is not adhered to."

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