|Issue||Dilapidations & lease surrender|
|Project Manager||Andy Colangelo|
Preparing a dilapidations assessment & sucessfully negotiating lease surrender 3 months early for commercial premises
Our multinational client held a circa 9,000 sq ft office building under a lease with an unexpired term of about 6 months. Due to changes with the client’s management structure, the building was surplus to requirements and had remained empty for several years. The client sought advice on its potential dilapidations liability at expiry of the lease and also expressed a desire to exit its lease early to limit its residual liabilities to maintain and secure the building.
Hicks Baker inspected the premises and prepared a dilapidations assessment setting out the client’s anticipated liabilities to repair, reinstate and redecorate the premises. Based on the client’s anticipated liabilities, Hicks Baker was able to commence discussions with the landlord relating to a proposed early surrender of the client’s lease. Hicks Baker was able to successfully negotiate the surrender of the client’s lease 3 months before the natural lease expiry date. A surrender premium was agreed which was based on a dilapidations settlement negotiated with the landlord’s building surveyor.
The successful surrender of the lease 3 months early ensured that the client’s exposure to costs associated with maintaining and securing the premises was mitigated and its liability for dilapidations was limited. The client’s liability for insurance costs and business rates would also cease early. The client was therefore able to proceed with certainty as to the total cost of vacating the premises.Download PDF