13 May 2011 Richard Heap
Conference speakers urge early action to avoid costly legal cases
The dilapidations process is outdated and should be reformed, an event in London has heard. The Business Approach to Dilapidations event, run by law firm Mishcon de Reya, Dilaps UK and Property Week last Wednesday, informed more than 100 attendees that there could be a much quicker way to determine how much tenants should pay to put a building right when they end a lease.
Speakers warned that legal action tended to get mired in hypothetical discussions between lawyers that do not serve the interests of landlords or tenants. Daniel Levy, head of real estate dispute resolution at Mishcon de Reya, said that it was not rare for modest claims to drag on for a long time.
“Delay doesn’t suit anybody, except the merry-go-round of surveyors, advisers and experts – and I include lawyers in that,” he said. He supports the use of an adjudication process for smaller claims, as this would get claims settled quickly and still leave open the possibility of arbitration or legal action.
He said the adjudication process used in rent review disputes was a good template and that landlords could already ask lawyers to include such clauses in their contracts. Levy also had advice for those already preparing dilapidations claims: work out your obligations early and make an attractive offer to settle early based on that focusing on the actual loss, rather than hypothetical figures, would resolve problems quicker.
Jonathan Seitler QC, barrister at Wilberforce Chambers, agreed that dilapidations claims did get mired in legal discussions that do not help landlords or tenants. He backed the use of compulsory mediation in these cases.
“Compulsory mediation is something that needs to be considered. These cases often involve spending more money than is at stake. My experience of mediation is that it does work, and results in around 80% of settlements in two weeks,” he said.
Anthony Lorenz, senior partner at the Lorenz Consultancy and strategic marketing director at Dilaps UK, said the law on dilapidations was antiquated and was one of few areas in the legal process that has been amended.
He advised landlords to start looking at dilapidations claims 14 months before leases end. Lorenz said that, if tenants were considering leaving a building, serving a large schedule of dilapidations early may encourage them to stay.
Lawyers recommend new approach to dilapidations
13 May 2011
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