RICS guidance note

RICS professional guidance, Scotland

Dilapidations in Scotland
2nd edition

rics.org/guidance
 rics.org

Dilapidations in
Scotland
RICS guidance note, Scotland

2nd edition

Published by the Royal Institution of Chartered Surveyors (RICS)

Parliament Square
London
SW1P 3AD
www.rics.org

No responsibility for loss or damage caused to any person acting or refraining from
action as a result of the material included in this publication can be accepted by the
authors or RICS.

Produced by the Scottish Building Surveying Professional Group of the Royal Institution
of Chartered Surveyors.
First edition published 2011.

ISBN 978 1 78321 095 4

© Royal Institution of Chartered Surveyors (RICS) March 2015. Copyright in all or part of
this publication rests with RICS. No part of this work may be reproduced or used in any
form or by any means including graphic, electronic, or mechanical, including
photocopying, recording, taping or Web distribution, without the written permission of
the Royal Institution of Chartered Surveyors or in line with the rules of an existing
license.

Typeset in Great Britain by Columns Design XML Ltd, Reading, Berks

 Dilapidations in Scotland

Acknowledgments

RICS would like to thank the following for their contributions to

this guidance note:
RICS Scotland Dilapidations Forum Steering Group:
• Allan M Robertson – Director, Allan Robertson Consulting
Limited
• Colin Bruce – Director, Bruce Shaw Property Consultants
Limited
• Craig Mattocks – Director, GLM
• Ian A Henderson – Director, Henderson Surveying Limited
Thank you also to everyone who has reviewed previous drafts,
particularly Alan McMillan of Burness Paull LLP.

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Contents

RICS Professional guidance .............................. 1

1 Introduction..................................................... 3
1.1 General .................................................... 3
1.2 Areas covered .......................................... 3
1.3 Naming conventions................................. 3
2 Legal Framework in Scotland....................... 4
2.1 Basis of legal interpretation ...................... 4
2.2 The obligations of a landlord at common 4
law ...........................................................
2.3 The obligations of a tenant at common 4
law ...........................................................
2.4 Transfer of common law liability ............... 4
2.5 The principle of tacit relocation ................ 5
2.6 Common terminology............................... 5
3 Contract of lease............................................ 8
3.1 The definition of a lease ........................... 8
3.2 Types of lease .......................................... 8
3.3 The essential ingredients of a lease.......... 8
3.4 The contents of a lease............................ 8
4 The principles of dilapidations ..................... 9
4.1 Definition of dilapidations and wants of 9
repair........................................................
4.2 Essential ingredients of a dilapidations 9
claim ........................................................
4.3 Purpose of a schedule of dilapidations .... 9
5 The role of the surveyor ................................ 10
5.1 Introduction .............................................. 10
5.2 Adviser/negotiator .................................... 10
5.3 Skilled witness.......................................... 10
5.4 Independent expert .................................. 11
5.5 Technical Adviser...................................... 11
6 Taking instructions......................................... 12
6.1 Generally .................................................. 12
7 The lease and other enquiries ...................... 13
7.1 Documentation......................................... 13
7.2 Other Useful Information .......................... 13
7.3 Typical lease obligations of the parties ..... 13
7.4 Recovery of fees ...................................... 13
7.5 Schedules of Condition ............................ 14
8 The inspection ................................................ 15
8.1 Requirements for access.......................... 15
8.2 RICS guidance notes ............................... 15
8.3 Note taking .............................................. 15
8.4 Measurements ......................................... 15

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 Dilapidations in Scotland

8.5 Photographs ............................................ 15

8.6 Specialist input......................................... 16
8.7 Further investigation ................................. 16
9 The schedule of dilapidations....................... 17
9.1 Layout and content .................................. 17
9.2 Description of work .................................. 17
9.3 Service ..................................................... 17
9.4 Format ..................................................... 18
10 Negotiation of a settlement .......................... 19
10.1 General .................................................... 19
10.2 Timetable ................................................. 19
10.3 The Scott Schedule ................................. 19
10.4 Changing circumstances .......................... 19
10.5 Remedies open to landlord ...................... 19
10.6 Options open to tenant ............................ 20
10.7 Dispute resolution .................................... 20
11 Preparation of a claim for damages ............ 21
11.1 Introduction .............................................. 21
11.2 Right to monetary settlement ................... 21
11.3 Preparation of claim ................................. 21
11.4 Costing of the claim ................................. 22
11.5 Consequential losses ............................... 22
11.6 Settlement of the claim ............................ 22
Appendices
A Blank schedule of dilapidations ................ 24
B Worked example of a schedule of
dilapidations ............................................. 25
C Blank Scott Schedule............................... 26
D Worked example of a Scott Schedule...... 27
E Blank summary of claim........................... 29
F Value added tax ....................................... 31

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RICS professional guidance

In the opinion of RICS, a member conforming to the

International standards practices recommended in this guidance note should have
at least a partial defence to an allegation of negligence if
RICS is at the forefront of developing international
they have followed those practices. However, members
standards, working in coalitions with organisations around
have the responsibility of deciding when it is inappropriate
the world, acting in the public interest to raise standards
to follow the guidance.
and increase transparency within markets. International
Property Measurement Standards (IPMS – ipmsc.org), It is for each member to decide on the appropriate
International Construction Measurement Standards (ICMS), procedure to follow in any professional task. However,
International Ethics Standards (IES) and others will be where members do not comply with the practice
published and will be mandatory for RICS members. This recommended in this guidance note, they should do so
guidance note links directly to these standards and only for good reason. In the event of a legal dispute, a
underpins them. RICS members are advised to make court or tribunal may require them to explain why they
themselves aware of the international standards (see decided not to adopt the recommended practice.
www.rics.org) and the overarching principles with which
this guidance note complies. Members of RICS are Also, if members have not followed this guidance, and their
uniquely placed in the market by being trained, qualified actions are questioned in an RICS disciplinary case, they
and regulated by working to international standards and will be asked to explain the actions they did take and this
complying with this guidance note. may be taken into account by the Panel.

In some cases there may be existing national standards

which may take precedence over this guidance note.
RICS guidance notes National standards can be defined as professional
standards that are either prescribed in law or federal/local
This is a guidance note. Where recommendations are legislation, or developed in collaboration with other relevant
made for specific professional tasks, these are intended to bodies.
represent ‘best practice’, i.e. recommendations that in the
opinion of RICS meet a high standard of professional In addition, guidance notes are relevant to professional
competence. competence in that each member should be up to date
and should have knowledge of guidance notes within a
Although members are not required to follow the reasonable time of their coming into effect.
recommendations contained in the guidance note, they
This guidance note is believed to reflect case law and
should take into account the following points.
legislation applicable at its date of publication. It is the
When an allegation of professional negligence is made member’s responsibility to establish if any changes in case
against a surveyor, a court or tribunal may take account of law or legislation after the publication date have an impact
the contents of any relevant guidance notes published by on the guidance or information in this document.
RICS in deciding whether or not the member acted with
reasonable competence.

RICS guidance note, Scotland 1

 Dilapidations in Scotland

Document status defined

RICS produces a range of professional guidance and standards documents. These have been defined in the table below.
This document is a guidance note.

Type of document Definition Status

Standard
International standard An international high-level principle-based standard Mandatory
developed in collaboration with other relevant bodies.
Professional statement
RICS professional statement A document that provides members with mandatory Mandatory
requirements or a rule that a member or firm is
expected to adhere to.
This term encompasses practice statements, Red Book
professional standards, global valuation practice
statements, regulatory rules, RICS Rules of Conduct and
government codes of practice.
Guidance
RICS code of practice Document approved by RICS, and endorsed by another Mandatory or recommended
professional body/stakeholder, that provides users with good practice (will be
recommendations for accepted good practice as confirmed in the document
followed by conscientious practitioners. itself).
RICS guidance note (GN) Document that provides users with recommendations or Recommended best practice.
approach for accepted good practice as followed by Usual principles apply in cases
competent and conscientious practitioners. of negligence if best practice is
not followed.
RICS information paper (IP) Practice-based document that provides users with the Information and/or
latest technical information, knowledge or common recommended good practice.
findings from regulatory reviews. Usual principles apply in cases
of negligence if technical
information is known in the
market.

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1 Introduction

1.1.7 Surveyors should not allow their professional

1.1 General standards to be compromised in order to advance clients’
cases. A surveyor should not allow a document that
1.1.1 The purpose of this publication is to provide
contains statements or assertions that they know, or ought
practical guidance to RICS members on the skills and
to know, are not true or properly sustainable or reasonably
approach required when instructed in connection with
arguable to be sent bearing their name or the name of
dilapidations matters in Scotland.
their firm. A surveyor should give proper advice even
1.1.2 The guidance deals primarily with commercial and though the client might choose to ignore it.
industrial property in Scotland and is not intended to be a
comprehensive guide to dilapidations. It is also
recommended that surveyors familiarise themselves with 1.2 Areas covered
any additional documents that are cross-referenced herein.
1.2.1 The situations in which surveyors can be asked to
1.1.3 The overall intent is to advise members on the act or advise and that are covered by this guidance note
factors they should take into consideration when: are as follows:
• taking their client’s instructions • claims at the end of the lease term
• reviewing the lease and other relevant documents • claims during the lease term
• inspecting the leased premises, and • irritancy situation
• producing and responding to schedules and other • break clause situations
documentation for use by the client, the other party to • claims by tenants against landlords.
the lease, third parties, the courts or other dispute
resolution proceedings. This notwithstanding, the remainder of this guidance note
refers generally to claims by landlords against tenants.
1.1.4 An item of dilapidations is an allegation of breach of
contract and as such is actionable in law.

1.1.5 When advising a client on dilapidations matters, a 1.3 Naming conventions

surveyor should seek fully to understand the client’s
1.3.1 This text has been gender neutralised in accordance
position, the reason why the surveyor’s advice is sought
with RICS house style.
and the use to which that advice might be put. The
surveyor should try to ascertain the factual and legal 1.3.2 The word ‘tribunal’ is used to mean courts,
background insofar as it will impact on that advice. tribunals, arbitrations, and independent experts.
1.1.6 Often, after a surveyor has advised their client, a
document is sent or disclosed to the other party to the
lease, to third parties, or to a court or tribunal. That
document can be held out as the product of the surveyor,
applying their training, knowledge and experience of the
matter. The surveyor, while complying with their client’s
instructions, must ensure that any such document does
not contain statements or assertions that the surveyor
knows, or ought to know, are not true or properly
sustainable or reasonably arguable.

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 Dilapidations in Scotland

2 Legal framework in Scotland

• The tenant should use reasonable care in the

2.1 Basis of legal interpretation management of the leased premises as they are liable
for any damage attributable to their negligence.
2.1.1 In the absence of express repairing obligations in a
lease, the obligations of the parties are governed by • The tenant is obliged to pay the rent when it becomes
common law. due.

2.1.2 The wording of the lease can be critical in

establishing the extent to which the landlord’s common law
obligations have been removed/passed on to the tenant.
2.4 Transfer of common law
2.1.3 In essence, in almost all cases involving the subject
liability
of dilapidations in Scotland, provided it is clear and 2.4.1 The obligations outlined in common law are often
unambiguous, the text of a lease of a commercial property altered by express provision in the terms of the lease
can be interpreted as meaning what it says, subject to the between the parties.
overriding requirements of the common law position.
2.4.2 The common law position is, however, of potential
2.1.4 It is essential that the surveyor acting for either the significance in situations where the lease is silent or where
landlord or the tenant examines the complete lease to doubt or ambiguity exists concerning the meaning of a
identify all clauses that impose a relevant obligation on the word or phrase contained in the lease.
tenant beyond their common law obligation. It may well be
necessary to obtain the input of your client’s legal adviser. 2.4.3 A landlord’s repairing obligations in common law can
be displaced by incorporating appropriately worded
clauses into the lease.
2.2 The obligation of a landlord 2.4.4 At commencement of the lease the implied warranty
in common law noted in 2.2.1 might be dealt with by incorporating words
or phrases into the lease similar to:
2.2.1 The principal obligations of a landlord in common
law can be summarised as follows: ‘The tenant accepts the premises as being in good
and substantial condition and repair and in
• The landlord is obliged to give full possession of the
tenantable condition and in all respects fit for the
leased premises at the date of entry.
purpose for which they are let.’
• Once the tenant is in possession, the landlord must
not do anything to deprive the tenant of their It is worth noting that the word ‘accepts’ has been
possession. interpreted as having the effect of setting the benchmark
condition for the interpretation of any subsequent
• The landlord warrants that the leased premises are
obligation to repair on the tenant.
reasonably fit for purpose at the outset of the lease.
• The landlord has a continuing duty to keep the leased 2.4.5 There may also be additional wording in other
premises in a tenantable condition and wind and clauses of the lease that has the effect of displacing the
watertight during the currency of the lease, provided landlord’s common law implied warranty at
and once they are told of circumstances which require commencement. This would apply if there is a statement
attention. to the effect that:

‘The landlord grants no warranty in respect of the

2.3 The obligations of a tenant in premises being suitable or fit for purpose.’

common law 2.4.6 To deal with the transfer of the landlord’s repairing
obligation to the tenant during the lease, the lease may
• The tenant should enter into possession of the leased include a phrase similar to:
premises at the date of entry.
• The tenant should remain in possession of the leased ‘The tenant is obliged to keep the premises in good
premises for the duration of the lease. and substantial repair and in tenantable condition at
• The tenant should only use the leased premises for all times during the currency of the lease.’
the purposes for which they are let.

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The precise terms of a repairing clause will dictate the

extent to which a tenant is obliged to repair.

2.4.7 It should be noted that express wording in a

repairing clause is required if the tenant’s repairing
obligation is to extend to carrying out ‘extraordinary’
repairs (for a definition refer to section 2.7). Wording in a
lease similar to:

‘…irrespective of the cause of the damage

necessitating such repair…’

has been regarded as effective in extending the tenant’s

repairing obligation in this respect.

2.5 The principle of tacit

relocation
2.5.1 In simple terms, in a situation where a landlord or
tenant fails to give an appropriate notice to quit within the
appropriate timescale, then the lease may continue for a
period of one year, or the period of the lease if it was for
less than one year. All of the lease terms remain in force,
including repairing obligations.

2.6 Common terminology

2.6.1 Because the legal system in Scotland differs from
the rest of the UK, there is a significant difference in the
terminology used.

2.6.2 The following table is not an exhaustive list of legal

terms, but gives examples of different terms or phrases
with broadly similar meanings.

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 Dilapidations in Scotland

Table 1: Glossary
Term Meaning Equivalent terms

Assignation The transfer of rights to heritable and/or moveable property Assignment

or the document by which such rights are transferred.

Burden A limitation or restriction affecting property. Encumbrance

Common property Property belonging to, or for the use of, two or more Tenancy in common
occupiers.

Conclusion of missives Conclusion of offer and acceptance. Exchange of contracts

Factor The person who manages heritable property on behalf of Estate manager or agent
the owner(s).

Irritancy The removal of a right, through negligence or Forfeiture

contravention. It may be legal (implied by law) or
conventional (the result of an agreement), enforcement
may require a court decree.

Irritancy clause The provision in a lease providing a right to the landlord to Forfeiture clause
terminate the contract if the clause is contravened, but
subject to overriding statutory provisions.

Irritate To terminate a lease by irritancy. Re-enter

Ish The date of natural expiry of a lease. Lease expiry date

Obligation The requirement to perform a contractual duty. Covenant

Parts privileges and Everything connected with or forming part of lands Appurtenances
pertinents conveyed that is not specifically reserved.

Servitude A legally enforceable and real right held by one person in Easement/profit à prendre
his/her capacity as owner of one piece of ground (the
dominant tenement) over another piece of ground (the
servient tenement) in the vicinity, but in separate
ownership by which some benefit is conferred on the
dominant tenement.

Specific implement The performance of a contractual obligation other than by Specific performance
payment of money.

Tacit relocation In relation to leases, implied re-letting where no notice of Holding over
termination is given. The renewal is for one year if the lease
is for a year or more, or for the period of the lease if the
lease is for less than a year.

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Table 2: Useful definitions

Term Meaning

Dilapidations claim The overall process associated with an allegation of a breach of contract in relation to a
lease/tenancy in respect of the condition and/or use of the premises, typically as identified
in a schedule of dilapidations.

Diminution valuation A valuation prepared in order to calculate the difference in value between the premises in
its present condition by comparison to a condition consistent with the lease/tenancy, so as
to arrive at a measure of (usually) a landlord’s loss. In Scotland this has no statutory
significance.

Extraordinary repairs Generally accepted as an extension to a tenant’s obligations for ‘ordinary’ repairs. For the
tenant to have responsibility for ‘extraordinary’ repairs, then the lease requires to be
specific in its terms. The main considerations to be taken into account in establishing
whether a particular alleged breach and want of repair is an ‘extraordinary’ repair are – the
origin of the damage; the extent of the damage/remedial work; and the nature of the
damage/remedial work – and is generally considered to be the substantial and/or extensive
replacement or renewal required as a result of a significant defect caused by the passage
of time, natural decay, as a result of latent or inherent defects, or an extraordinary event.

Improvements Repair, replacement or renewal that is normally beyond the ‘ordinary’ or ‘extraordinary’
obligation of a tenant. Improvement may however be unavoidable in fulfilling an obligation
e.g. statutory compliance.

Ordinary repairs This is the normal repair and maintenance required to keep the premises in the
appropriate condition and wind and watertight.

Repair Restore to good condition; renovate or mend by replacing or re-fixing parts.

Renewal Restoration (often to the original state).

Response A document prepared (usually) by the tenant in response to (usually) a landlord’s schedule
of dilapidations. See definition of Scott Schedule below.

Schedule of dilapidations A document which typically identifies relevant lease/tenancy obligations, alleged breaches
of those obligations; any wants of repair/remedial works suggested, or proposed, or
completed in order to rectify each alleged breach; and, in certain circumstances, the
estimated or actual cost incurred in rectifying those breaches. The document is usually
prepared by a building surveyor.

Scott Schedule A schedule of dilapidations with additional columns to allow the parties to set out their
respective views. (See Response)

Tenantable condition Case law suggests that in assessing this standard, regard should be had to the age,
character and locality of the building and whether the condition of the subjects would be
reasonably acceptable to a reasonably minded tenant, of the kind likely to take on a lease
of the building or part thereof on similar lease terms.

Wants of repair The remedy required to correct a breach of a non-monetary obligation.

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 Dilapidations in Scotland

3 Contract of lease

• the name of the parties to the contract, i.e. the

3.1 The definition of a lease landlord and the tenant
3.1.1 A lease can be defined as: a contract between a • a definition of the premises to be let, which may make
landlord and tenant whereby the landlord grants to the reference to a plan or title
tenant a right of occupancy and possession of a property • the duration of the lease or contract with a start and
for a period of time, in return for the payment of a finish date
consideration, usually a periodic monetary payment, in • the rent payable
other words a rent.
• a statement detailing the condition the tenant accepts
the leased premises as being in at the date of entry
• a statement detailing the condition the leased
3.2 Types of lease premises are to be maintained in by the tenant
3.2.1 There are two most common forms of commercial • the frequency of decoration that the tenant must
lease: adhere to
(a) The ‘full repairing and insuring’ lease: • a statement detailing the condition that the leased
While there is no ‘industry standard’ this normally premises are to be left in at expiry of the lease by the
attempts to transfer the obligation to repair fully onto tenant
the tenant for the whole of the leased premises. • the insurance provisions
(b) The ‘internal repairing only’ lease: • the process the tenant needs to go through in order
By contrast this attempts to transfer the obligation to to obtain the landlord’s consent to carry out any
repair only the internal fabric of the leased premises proposed alterations
over to the tenant. Very often there may also be an • reinstatement provisions in respect of any permitted
additional obligation on the tenant to pay service alterations carried out
charge contributions to the landlord for the repair of
• where relevant, details of the landlord’s repairing
the ‘common parts’ of the building.
obligations
• statements regarding statutory compliance and who is
responsible
3.3 The essential ingredients of
• the landlord’s right of entry to the premises during the
a lease term of the lease to view the state of repair
• how disputes are to be handled
3.3.1 There are four essential ingredients of a lease at
common law in Scotland. These are that: • most modern leases will include a fees clause; this
may allow the landlord to recover fees incurred in the
(a) there are two parties, properly identified as the preparation and service of a schedule of dilapidations,
landlord and the tenant along with any costs incurred in remedying any breach
(b) there is identification of the premises which the on the part of the tenant.
tenant is entitled to occupy • restrictions on the tenant’s use of the premises
(c) there is an obligation on the part of the tenant to pay • the extent, if any, of the landlord’s and/or tenant’s
rent and fixtures and fittings and may refer to a schedule
(d) there is an identifiable expiry date (the ‘ish’). • responsibility for compliance with any title provisions
Note: A lease of one year or less can be concluded orally. • requirements for the service of notices
• Where relevant, a definition of common parts and the
larger building, reference may be made to a plan or
3.4 The contents of a lease title
• Where relevant, a definition of service charge costs in
3.4.1 Most modern leases are fairly lengthy documents. relation to common parts and the larger building,
A typical ‘full repairing and insuring’ lease may cover the reference may be made to a schedule of services to
following matters in order to assist the dilapidations be provided by or on behalf of the landlord and to
assessment: which service charge costs relate.

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4 The principles of dilapidations

4.1 Definition of dilapidations 4.3 Purpose of a schedule of

and wants of repair dilapidations
4.1.1 In the context of property, ‘dilapidations’ might be The purpose of a schedule of dilapidations is to identify the
defined as: nature and extent to which a party is in breach of their
obligations (usually the tenant) and to identify the wants of
‘The breach of a non-monetary obligation under repair arising.
the terms of a lease such as an obligation to
repair, reinstate, redecorate or to comply with It is also, typically, the first step in a legal process to prove
statute.’ a breach of contract which has or may result in loss or
expense to the other party.
4.1.2 ‘Wants of repair’ might be defined as:
There are a number of reasons why a landlord may serve a
‘The remedial action reasonably required to schedule of dilapidations:
correct a breach of a non-monetary obligation.’
(a) During the currency of a lease, to remind a tenant of
their obligations, or to specifically require that repair
or maintenance works are carried out.
4.2 Essential ingredients of a (b) To define the work that ought to have been
dilapidations claim completed by the date of lease termination.
(c) To define the breaches to substantiate the wants of
4.2.1 For a dilapidations claim to be successful there must repair and to quantify and pursue a claim for
be three essential components: damages for the works the tenant has failed to carry
(a) A lease or contract must exist between the parties. out.
(b) The premises or the part to which the alleged
dilapidations refer must be included in the
description of the premises as contained in the lease
or contract.
(c) There must be an identifiable breach of obligation,
which results in a want of repair, which has caused,
or is likely to cause, the other party (usually the
landlord) to suffer loss or expense.

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 Dilapidations in Scotland

5 The role of the surveyor

on strategy and tactics in relation to a dilapidations claim

5.1 Introduction or potential dilapidations claim.
5.1.1 Surveyors can be requested to undertake a number 5.2.4 Schedules of dilapidations or responses should not
of roles in relation to dilapidations, including: contain allegations of breaches that do not exist, remedies
• adviser/negotiator that are inappropriate (for instance, replacement of
components when repair would be sufficient to comply
• skilled witness with the lease), or costs that are knowingly exaggerated or
understated. The tenant should be entitled to assume that
• independent expert
a dilapidations claim is being put forward with integrity, in
• technical adviser. good faith and on sound advice. A landlord should be able
to assume likewise in respect of the tenant’s response.
5.1.2 Care is required from the outset as the roles can
overlap. In many instances surveyors will be asked to 5.2.5 Surveyors should guard against exaggeration or
advise a client on the issue of dilapidations, but if the understatement, whether in terms of the content of the
matter is not settled they may subsequently be called on schedule of dilapidations or in preparing a statement of
as a skilled witness. If so, the surveyor’s duty is to give claim.
objective professional advice/opinion to the tribunal.
5.2.6 A surveyor who is appointed solely to prepare a
5.1.3 In all cases it is incumbent on the surveyor to response to, or comment on, a schedule of dilapidations is
provide sound professional advice based on the evidence not a skilled (expert) witness. The current edition of the
of condition prevailing and the obligations of the parties to RICS practice statement and guidance note Surveyors
the lease and to guard against exaggeration, acting as expert witnesses, will therefore not apply until the
understatement or unfounded opinion. surveyor is considering accepting instructions as a skilled
witness. Nonetheless, the surveyor should be influenced by
5.1.4 Prior to accepting instructions the surveyor must be the considerations relating to skilled witnesses in advising
satisfied that they are suitably competent in this area of their client, particularly to provide objective advice. It is
work and have the resources to complete the task and important for the surveyor to keep in mind that their
that there are no conflicts of interest that would prevent the credibility as a skilled witness at a future hearing may be
surveyor from fulfilling their responsibilities. When undermined by any failure to follow the guidance in
considering whether a conflict of interest exists, the paragraphs 5.2.3 to 5.2.5 when acting as an adviser.
surveyor must have regard to the current edition of the
RICS guidance note ‘Conflicts of Interest’. 5.2.7 It is important that surveyors do not formalise
settlements without the consent and authority of clients.
5.1.5 Having ensured there is no conflict of interest and Indeed, in some situations it might be appropriate, or even
having agreed their terms and conditions of engagement, a client requirement, that the settlement is formalised via
the surveyor should carry out their duties in an objective, solicitors.
honest and professional manner.

5.3 Skilled witness

5.2 Adviser/negotiator
5.3.1 A surveyor acts as a skilled witness (otherwise
5.2.1 The most common role that a surveyor will be asked known as an expert witness) once they accept a formal
to fulfil is as an adviser to their client who may be either instruction from a client to give or prepare evidence for the
the landlord or the tenant of the lease. purpose of proceedings. A skilled witness can only give
evidence before a tribunal by direction of that tribunal. The
5.2.2 Surveyors appointed as advisers have an obligation
appointment of a skilled witness can only be made after
to act in accordance with the RICS Rules of Conduct and
such direction is given. In practice, however, this is often
their own professional responsibility to their clients.
done in anticipation of such direction at the request of the
5.2.3 The role of ‘adviser’ can encompass surveyors using client/legal adviser and surveyors should sensibly treat
their expertise to identify or comment on breaches of themselves as acting as a skilled witness from the date of
obligations and appropriate remedies, prepare schedules of accepting any such instruction, even if no formal direction
dilapidations or responses, negotiate with other parties has been made.
with the aim of achieving a settlement, and provide advice

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5.3.2 The role of the skilled witness is dealt with in the

current edition of the RICS practice statement and
5.4 Independent expert
guidance note, Surveyors acting as expert witnesses. The 5.4.1 Where a dilapidations dispute has arisen, the parties
guidance note has been prepared against the background
to the lease may decide that the dispute should be settled
of the comments emanating from the courts regarding the
by referring the matter for independent expert
duties and responsibilities of skilled witnesses.
determination, rather than pursuing the matter through the
5.3.3 The duties of a skilled witness can be summarised courts or tribunal. The RICS Dilapidations Dispute
as follows: Resolution Scheme can be used for this purpose. In the
event that parties in dispute are unable to agree upon the
• The primary and overriding duty of the surveyor is to identity of the independent expert, they may wish to apply
the court or judicial body to whom evidence is given. to the Chairman of RICS Scotland to make an independent
appointment on their behalf.
• The duty is to be truthful as to fact, honest as to
opinion, and complete as to the coverage of relevant 5.4.2 The independent expert in this context is appointed
matters. to deal with the specific issues raised, based on the
investigations, knowledge and experience of the
5.3.4 The surveyor’s evidence must be independent,
independent expert who will be liable for damages if either
objective and unbiased. In particular, it must not be biased
party can demonstrate negligence.
towards the party responsible for instructing or paying the
surveyor. 5.4.3 It is conceivable that an independent expert may be
appointed by a tribunal in which case the same
5.3.5 A skilled witness should be able to demonstrate full
considerations apply.
knowledge of the requirements when giving evidence,
including the need for objectivity.

5.3.6 It is therefore important when a surveyor is 5.5 Technical adviser

preparing a schedule of dilapidations, or a response to a
schedule of dilapidations, that they understand that it may 5.5.1 Where the parties, assisted by their respective
subsequently be submitted as evidence in a dispute surveyors (acting as advisers), have failed to settle the
resolution proceeding, and that they must accordingly act dilapidations dispute, and this is referred to the courts, or
with objectivity and professionalism, bearing in mind that other tribunal, there can be occasions due to the technical
they may be called on to justify their opinion. nature of the dispute where the tribunal requires impartial,
professional advice on the claim and counterclaim.

5.5.2 In these circumstances the court or tribunal may

appoint a technical adviser to assist in reviewing and
commenting on the evidence submitted by the parties.

5.5.3 The role and responsibility of the technical adviser is

normally set out by the tribunal and agreed by the parties.

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 Dilapidations in Scotland

6 Taking instructions

6.1 Generally
6.1.1 Instructions relating to dilapidations should be taken
in accordance with RICS Rules of Conduct. Particular
regard should be paid to notification of terms and
conditions of engagement to be provided in writing to the
client. Instructions in dilapidations matters are no different
in this respect from any other instruction.

6.1.2 Surveyors should predict and advise their clients

whether or not other consultants are required, or may be
required, to advise on specialist areas during the course of
the instruction (for example valuers, letting agents, services
engineers, structural engineers, etc.).

6.1.3 Fees for undertaking dilapidations instructions are a

matter for contractual agreement between surveyors and
their clients.

6.1.4 Surveyors have an obligation to set out the basis of

their fees in such a way that the client is aware of the
financial commitment being made by instructing the
surveyor.

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7 The lease and other enquiries

7.1 Documentation 7.3 Typical lease obligations of

7.1.1 The surveyor should be aware of their client’s the parties
interest in the property, i.e. whether they are the head
landlord, mid-landlord, tenant, or sub-tenant. 7.3.1 Surveyors should understand the documentation to
the extent that enables them to discharge their
7.1.2 It is essential that the surveyor attempts to obtain all instructions. While surveyors do not give legal advice, they
relevant information prior to conducting their inspection. should be mindful of the court’s approach to the
Surveyors must properly understand the terms of all lease interpretation of contractual provisions generally, as well as
agreements that affect their client’s interests and, if the more specific treatment of lease clauses which apply in
necessary, follow advice from the client’s legal adviser on dilapidations claims. Surveyors who are uncertain about
any ambiguities or uncertainties. any item contained in a document, such as the
interpretation of a particular obligation or the extent of the
7.1.3 Additional documents that should be considered property, should bring the matter to the attention of the
and that may be vital in establishing the obligations of the client and, if appropriate, the client’s legal adviser.
parties, in advance of the survey, are noted as follows:
• assignations of lease
• minutes of variation or extension to lease 7.4 Lease clauses of interest
• licenses or other consents for alterations, with plans Whilst the whole of the lease documentation should be
and specifications read, particular clauses to which the surveyor will refer
• any agreement for lease (if intended to survive the include those listed below:
grant of the lease)
7.4.1 Leased premises
• side/back letters or other written agreements
Generally a tenant’s non-monetary obligations are limited to
• schedules of condition annexed/referred to in the
the property that has been let to them. Further, a landlord’s
lease together with all relevant photographs, reference
obligation to repair, if there is one, will usually be limited to
drawings, etc.
those areas not required to be repaired by the tenant. The
• schedules of landlord’s fixtures and fittings surveyor should ensure that he fully understands what
• any planning or other notices attached to the property constitutes the physical subject matter to be considered.
• plans/drawings showing general arrangement of the 7.4.2 Repair
subjects at lease commencement and thereafter.
Repairing obligations vary widely. Some leases state
7.1.4 Surveyors should satisfy themselves that the nothing more than the property is to be kept in ‘good
documentation obtained is sufficient for them to discharge repair’. Others, prepared using the ‘torrential’ form of
their instructions. Any questions of authenticity need to be drafting, contain a list of requirements, such as to uphold,
addressed to the client or the client’s legal adviser. repair maintain, rebuild, renew, amend, etc. In whatever
Ambiguities in the documents or in the instructions should manner the obligation is drafted, its scope should be
be clarified as they arise. understood thoroughly. The surveyor should have specific
regard to the nature of the express obligations (i.e. good
and substantial condition, tenantable condition, etc.)
7.2 Other useful information against which the nature and extent to which a party is in
breach should be assessed.
7.2.1 The surveyor should be familiar with the landlord’s
intentions for the property and the potential impact that 7.4.3 Decoration
may have on the tenant’s liability in respect of dilapidations, If there is an obligation to decorate, it might be contained
for example: in a separate lease clause or might be included as part of
• Does the landlord intend to demolish or substantially the repair clause. It is usual, but by no means universal, for
alter or refurbish the premises following lease expiry or there to be an obligation to decorate at specific intervals or
do they intend re-letting the building immediately? on particular dates during the lease period, as well as
within some period (usually specified) shortly before lease
• Does the landlord wish all, some or none of the tenant
expiry.
alterations be reinstated at lease expiry, if such
matters are at their discretion?

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 Dilapidations in Scotland

The provisions of these obligations should be carefully 7.4.6 Statutory obligations

studied as they do vary. The number of coats of paint may
be specified. Reference may be made to surfaces that Leases normally include obligations requiring the tenant to
‘previously’, ‘usually’ or ‘ought to be’ decorated. There comply with and carry out works required by the provisions
may also be additional obligations to ‘paper’, ‘treat’, of any relevant statute or regulation. Many statutory
‘polish’ or ‘restore’ certain surfaces. obligations are specific to the use and occupation of the
premises. The actual requirements of statutory provisions
7.4.4 Alterations and reinstatement should be carefully interpreted relative to the obligations of
The surveyor should have regard to both the lease and any the parties in terms of their lease obligations. If necessary,
licences for alterations when considering alterations and legal advice should be sought.
reinstatement. Either, or both documents, may contain 7.4.7 Recovery of fees
provisions relevant to the tenant’s obligations to reinstate.
An obligation to reinstate lawful alterations will only arise if Modern leases of commercial property commonly contain
there is express provision in the lease or licence stating this an express provision enabling the landlord to recover from
to be the case. In addition, it may also be incumbent upon the tenant the reasonable costs and fees incurred in the
the landlord to serve prior notice timeously and in preparation and service of a schedule of dilapidations.
compliance with any associated conditions if the obligation These express provisions may go further, for example, by
is to be enforceable. including the fees incurred in negotiating a settlement of
the landlord’s claim. In consequence, when considering the
It may be evident to the surveyor, either from inspection of recovery of fees, the first point of reference should always
the premises or from the documentation, that the premises be the lease.
have been subjected to unauthorised alterations. In such
circumstances enquiry may be made of the client and/or In default of a contractual right to recover fees, the landlord
their legal adviser as to the extent to which the tenant is to may be entitled to recover such costs as part of its claim
be obliged to reinstate. to damages, but should seek appropriate legal advice
before attempting to do so.
In seeking to identify alterations, the surveyor may also
have regard to: Surveyors should keep an adequate record of time spent
and any other costs incurred to enable possible recovery
• obvious differences in construction and materials
by the client.
• materials which are inconsistent with the age of the
building
• parts of the property which directly relate to the trade 7.5 Schedules of condition
or occupation of the tenant (i.e. an extension
constructed to store chemicals) The usual purpose of a schedule of condition, when
• plans, photographs or other documentary evidence annexed to a lease, is to modify or clarify the repairing
obligation. The surveyor preparing a schedule of
• the existence of partitions and fitting out
dilapidations, or a response, where a schedule of condition
• plans attached to the lease (although these very often is relevant, should carefully consider the content of the
are referred to as ‘demonstrative’ and not ‘taxative’ schedule of condition. They should also consider the terms
and so cannot always be relied on fully). under which the schedule of condition should be
7.4.5 ‘Yielding up’ (or ‘redding up’) clause interpreted when assessing the extent to which there is a
breach of the repairing obligation.
The ‘yielding up’ clause might simply require the property
to be yielded up by the tenant in accordance with the
obligations of the tenant under the lease. It might, however,
impose specific obligations, or the requirement to reinstate
or not and the removal of tenant’s fixtures and fittings, and
to make good damage arising. If the clause is relevant to
the surveyor’s instruction, i.e. the lease is shortly to end or
has ended, the clause should be considered carefully.

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8 The inspection

• removal works
8.1 Requirements for access • reinstatement works
8.1.1 Whenever an inspection is to be undertaken before • breaches of the repairing obligation covering ceilings,
the lease expires, whether the tenant is in occupation or cornices, walls, skirtings, floor and floor coverings (if
not, it is prudent to comply with any requirements of the relevant), windows, doors, lighting, heating, power,
lease regarding arrangements for access. ventilation, fixtures and fittings, etc.
• redecoration works
8.1.2 When arranging access, the surveyor should always
request information relevant to compliance with control of • statutory compliance issues.
asbestos legislation.
8.3.6 At the time of the initial inspection, it is advisable
that the surveyor notes the general standard of repair in
the locality and whether similar properties are vacant or
8.2 RICS guidance notes boarded up. It is also advisable to note any changes to the
nature of the area since the lease was granted. The
8.2.1 The surveyor should be acquainted with all RICS information might be relevant to the assessment of the
professional guidance relevant to carrying out inspections scope and standard of repair. It also has relevance to the
and surveys of property. These guidance notes are diminution in the value of the subjects in the event that
available at www.rics.org/guidance. alternative measures of loss become a consideration
following lease expiry.

8.3 Note taking 8.3.7 The surveyor should also take note of
documentation available on site, for example:
8.3.1 During the carrying out of an inspection, sufficiently • health and safety files
detailed notes and sketches should be taken and kept.
• asbestos management documentation
The surveyor should bear in mind that these may be relied
on at some point in the future to substantiate a claim. • O&M manuals
• gas safety certificates
8.3.2 Inspection of the property should follow a logical
• electrical test certificates
and systematic sequence and is likely to be similar in detail
to that needed in the preparation of a schedule of • building services information
condition. • drawings/plans.

8.3.3 Prior to progressing with the survey it is useful to

record the following information: 8.4 Measurements
• the property being inspected
8.4.1 During the carrying out of an inspection for the
• date of inspection
purpose of preparing a schedule, sufficient measurements
• surveyor carrying out inspection should be taken to enable the wants of repair to be
• weather conditions at the time of inspection (and if quantified and subsequently costed when required.
they vary)
• orientation of the property
8.5 Photographs
• general description of the property
• occupation of the property. 8.5.1 During the course of an inspection, photographs
should be taken by the surveyor. These should include
8.3.4 Inspection of the property should then progress to general reference photographs and also photographs of
ensure that all of the required information is collected. specific defects.
Individual surveyors have generally developed their own
specific methodology in this regard, although it is essential 8.5.2 The purpose of taking and retaining photographs is
that, on completion, the location, nature and extent of all not only for your own records, but as a record to illustrate
breaches can be clearly identified. the actual condition at the time of inspection. Photographs
can also be utilised in discussions/negotiations with other
8.3.5 Although not exhaustive, a typical checklist on a parties and/or to assist in future dispute resolution
space-by-space basis might be: proceedings.

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 Dilapidations in Scotland

8.6 Specialist input

8.6.1 Further specialist input may be required, e.g. from a
building services consultant or structural engineer. It is for
the surveyor to advise the client of the need to engage any
specialist required and then to incorporate the information
provided by the specialist(s) into the schedule.

8.6.2 The surveyor may be required to provide guidance

to the specialist on the extent of the advice sought, as well
as the form and context of the information to be provided.

8.7 Further investigation

8.7.1 Surveyors are expected to use the skills developed
in carrying out inspections to determine the extent of
disrepair, but there will be occasions when the full extent of
the disrepair can only be determined by opening up the
structure, or by carrying out specialist sampling and
testing.

8.7.2 It is for the surveyor to advise the client of the need

to carry out such further investigations and then to
incorporate any such findings into the schedule.

8.7.3 It should be borne in mind that there might be

circumstances prevailing, prior to the expiry of the lease,
where it is more appropriate for the tenant to carry out
such further investigations.

8.7.4 At or about lease expiry, it is incumbent on the

landlord, usually via their surveyor (and any appointed
specialists) to establish the nature and extent of any
breaches of the tenant’s obligations through further
inspection, investigation, sampling, testing, etc.

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9 The schedule of dilapidations

9.1.9 The surveyor should be mindful that certain

9.1 Layout and content obligations, such as requirements to reinstate, may require
sufficient notice to be given in advance of lease expiry.
9.1.1 A schedule of dilapidations is a statement of the
items of dilapidation that exist and the wants of repair 9.1.10 Ideally, a statement of breach should be made
consequently arising. separate to a statement of remedy as the two can vary
independently to each other as circumstances change and
9.1.2 Irrespective of how it is presented, a schedule of
negotiations progress. It is also good practice to be clear
dilapidations should be set out in a logical manner and
from the outset as to the basis of the alleged breach.
must identify the breach of lease terms and conditions, i.e.
There can, of course, be more than one lease clause
the defect, dilapidated condition or physical state that fails
where the tenant is in breach. It is therefore considered
to achieve the standard required by the lease. The
good practice to identify the relevant lease clause or
deficiency must be clear and concise in its terms if the
clauses against each item for which the tenant is in breach
remedy arising from the defect is to stand up to
of their obligation.
interrogation, i.e. a statement of the actual physical state is
what is required. 9.1.11 Schedules of dilapidations normally contain the
following columns:
9.1.3 The terms ‘interim’ and ‘terminal’ schedule of
dilapidations have become widely used in Scotland, • itemised numbered reference
however, these are borrowed from England and have no • the relevant clause(s) of the lease or other document
legal relevance under Scots Law.
• the breach alleged
9.1.4 Although the title of the schedule is not critical, there • the remedy required
are in practice differences between what ought to be
• the cost of the remedy (when relevant to its purpose).
considered when preparing a schedule of dilapidations
served during the term of a lease and a schedule served at 9.1.12 The recommended layout of a schedule of
or near lease expiry. dilapidations is shown in Appendix A. A worked example of
a schedule of dilapidations is shown in Appendix B.
9.1.5 It is important that each item of a schedule has a
unique reference to aid identification.

9.1.6 In theory, a schedule of dilapidations need only set 9.2 Description of work
out the nature and extent of a tenant’s breach with the
suggested remedy and cost being added later. 9.2.1 If a schedule of dilapidations is prepared in the form
of a description of works then extreme care must be taken
9.1.7 Where a schedule of dilapidations has been served to ensure the nature and basis of a defect or alleged
before the end of the term, surveyors should be mindful of breach is stated, as well as the extent of any remedy.
the following:
9.2.2 The nature of a description of works is such that it
• The clauses of the lease alleged to have been may create a tendency simply to state what work the
breached will depend on when the schedule of tenant is obliged to do, without substantiating why by
dilapidations is served. Different obligations can apply reference to the state of condition of the item in question.
during the term and at the end of the term. In such an event, a landlord’s claim for damages can be
The property should be re-surveyed at the end of the undermined if the basis of claim cannot be shown to be
•
lease. The condition of the property set out in a time relevant to the period of the lease.
schedule of dilapidations served before the end of the
term might not be the same as the condition at the
end of the term. 9.3 Service
9.1.8 Given the likelihood of defects deteriorating through 9.3.1 A schedule of dilapidations can be served at any
time and the relevance of timing to the date of lease expiry, time during the period of the lease, or after expiry of the
it is good practice to identify the appropriate quantified lease, although the latter may prove disadvantageous to
remedy within the schedule of dilapidations. the landlord. As stated above, the surveyor should be
mindful that certain obligations, such as requirements to
reinstate, may require sufficient notice to be given in
advance of lease expiry.

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 Dilapidations in Scotland

9.3.2 The schedule should be served by way of formal

notice on the tenant, by the means prescribed in the lease,
often to the tenant’s registered office or premises. It is
advisable that the client’s solicitor serves the schedule. It is
prudent to request acknowledgement of receipt.

9.3.3 Unless otherwise stated in the lease, the landlord is

not obliged to serve a schedule of dilapidations at or
shortly before expiry of the lease. A breach of contract may
exist without any schedule – the schedule is, however, a
useful record of this.

9.4 Format
It is important that the format of a schedule of dilapidations
is such that it can be edited and expanded. Nowadays,
this usually means a digital format, preferably one that is
commonplace, readily capable of being edited and which
carries out calculations automatically. A systematic method
of maintaining versions of the document, and exchanging
edits is recommended.

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10 Negotiation of a settlement

possible circumstances against each item where the

10.1 General breach, remedy or quantum can be accepted or otherwise.
10.1.1 Negotiations will normally follow the service of a 10.3.5 This layout will be very helpful to a tribunal in
schedule of dilapidations. This will usually involve each dealing with a claim enabling them to see the history,
party stating their case in claim and answer by exchanges progress and effect of any negotiations. It also assists in
of correspondence, supporting documentation, developing focusing on the true nature of the remaining items in
a Scott Schedule and holding meetings. The negotiation dispute between the parties.
process will depend on the particular circumstances, but is
likely to be concerned with whether, or to what extent,
there is a claim for dilapidations to answer. The
competence and validity of the technical aspects of the
10.4 Changing circumstances
schedule and the legal principles involved are further
10.4.1 During negotiations, whether before or after lease
matters to consider. The burden, at law/in court of proving
expiry, both surveyors should be mindful of any change in
factual condition and quantum rests with the pursuing
circumstances where the validity of an item may be over-
party (usually the landlord).
ridden by the actions of one or other of the parties.
10.1.2 The surveyor should be mindful of the expenses Examples of such circumstances are given in section
associated with any dispute resolution process when 11.4.2 Alternative measure of loss.
advising the client.

10.5 Remedies open to landlord

10.2 Timetable 10.5.1 In circumstances where a tenant fails to comply
10.2.1 The timing for the surveyors’ responses in relation with the obligations of the lease agreement, the question
to a schedule of dilapidations, and subsequent then arises as to what remedies are open to the landlord.
correspondence between the parties, should at all times The landlord’s principal options are noted below and the
be reasonable, to facilitate the effective progression of landlord’s surveyor should work with the landlord’s solicitor
negotiations taking account of the circumstances of the as appropriate if invoking these remedies.
case. 10.5.2 Decree of specific implement
Where the lease expressly states that an obligation exists,
10.3 The Scott Schedule in the event of a breach of that obligation a court order
can be sought requiring due performance of that
10.3.1 To facilitate the exchange of comments during obligation. This remedy is for enforcement of a tenant’s
negotiations a Scott Schedule can be utilised, as it sets non-monetary obligation and can only therefore be sought
out for the parties (and, if necessary, a tribunal) the nature during the currency of the lease (unless the lease expressly
and extent of the dispute on the contractual claim, on an provides otherwise).
item by item basis.
10.5.3 Instigate repair works
10.3.2 The suggested structure of a Scott Schedule is set The lease may make provision, upon default of the tenant,
out in Appendix C and is a useful method of keeping track that the landlord can lawfully enter the premises, usually
of negotiations between the parties. A worked example of after a stipulated time period and carry out the necessary
a Scott Schedule is shown in Appendix D. works himself. Thereafter, he will seek to recover all
reasonable and valid costs incurred which the lease might
10.3.3 Such schedules allow the respective surveyors to
provide for as a debt due from the tenant. This option
comment against each item of alleged breach and remedy,
must often be balanced against the tenant’s right of
as well as the quantum.
peaceful possession.
10.3.4 The Scott Schedule is a tabulated document 10.5.4 Terminate lease
setting out the basic ingredients of the claim with additional
columns added to record the tenant’s responses, changes The landlord may terminate the lease by invoking the
to costs and any changes to the basis of claim. Further irritancy clause for failure by the tenant to comply with their
columns can also be added to reflect the outcome of lease obligations, provided adequate notice has been
negotiations in the event of a dispute, or to reflect various given. They may then be entitled to seek recovery of

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 Dilapidations in Scotland

damages from the tenant for breach of contract. Further • to carry out only those works they consider
legal guidance must be sought if seeking to invoke this appropriate
remedy.
• to carry out all works contained in the schedule
10.5.5 Claim for damages
• to seek to offer a monetary settlement in lieu of
On the natural or earlier termination of the lease, if the carrying out works
tenant has failed to comply with their lease obligations then
the landlord may seek damages from the tenant for breach • to do nothing if the likelihood is that the landlord’s
of contract. Such damages are a measure of the loss claim will fail by virtue of the schedule as prepared, or
suffered by the landlord as a result of the tenant’s failure to prevailing/changing circumstances.
comply. The appropriate measure of loss is discussed in
section 11.4.
10.7 Dispute resolution
10.6 Options open to tenant 10.7.1 In the event of a breakdown of negotiations, the
surveyor should be aware of the various methods of
10.6.1 Prior to expiry of the lease the tenant will have resolving disputes. The most common are listed as follows:
various options open to them. It is the sole responsibility of • litigation
the tenant to decide how the obligations are to be properly
discharged prior to the end of the lease, and to take • arbitration
appropriate action regardless of whether a schedule is
• mediation
served or not. It should be appreciated that when the lease
expires, the tenant has no right to remain in occupation • expert determination.
unless there is specific provision or agreement to the
contrary. Taking account of prevailing circumstances, the 10.7.2 Reference should be made to the lease to
surveyor acting for the tenant should advise their client on determine whether there is any prescribed means for
the available options for dealing with their liability for determining disputes.
dilapidations.
10.7.3 Further information on ADR, including the RICS
10.6.2 The options open to the tenant may include the Dilapidations Dispute Resolution Scheme, can be obtained
following: through the RICS Dispute Resolution Service in Scotland.

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11 Preparation of a claim for damages

11.1 Introduction 11.3.2 Identifying the appropriate remedy

Only by recording the alleged breach can the appropriate
11.1.1 In terms of dilapidations, a claim for damages remedy be identified and substantiated. The surveyor
typically only arises once the lease has expired or is should detail the appropriate remedy based on the alleged
terminated. A claim for damages can only be sustained breach. This will form the basis for determining the true
where loss is suffered. Prior to lease expiry the tenant still measure of loss.
has obligations with which to comply and although a
tenant may be in breach of contract, it may be unlikely that 11.3.3 The true measure of loss
the landlord will have suffered loss at that stage. It is often not until after lease expiry that the true measure
of loss can be determined or assessed. Unless
11.1.2 The surveyor acting for the landlord should be
circumstances are evident to the contrary, the surveyor
familiar with the options open for recovery or avoidance of
acting for the landlord should assume the measure of loss
loss.
as being the cost of carrying out remedial works necessary
11.1.3 It should be understood that a claim for damages to return the leased premises to the state of repair and
in the context of this guidance note refers to the condition, had the tenant complied with their obligations
information set out in the schedule of dilapidations, and not throughout the duration of the lease.
the preparation for, and issuing of formal proceedings for Consideration is given to alternative measures of loss when
dispute resolution. costing the claim in section 11.4 of this guidance note.
11.3.4 Taking account of the time factor
11.2 Right to monetary It is essential that the breach identified existed during the
lease period. The surveyor must bear this in mind when
settlement preparing the schedule of dilapidations and should take
photographs or refer to any other documentation to be
11.2.1 The remedies open to a landlord to seek reparation
able to substantiate that the breach existed during the
for a tenant’s breach of contract can vary depending upon
lease period. This is particularly important in order to satisfy
the terms of the lease and the timing of any alleged
the evidential requirement that will arise when facing court
breach. Refer to section 10.5 of this guidance note for the
action, or other forms of dispute resolution.
various remedies that are open to the landlord.
If a breach or cause of a breach cannot be shown on
11.2.2 In order for a claim for damages to succeed, the balance to have existed during the lease period, it is
landlord, through their surveyor, must establish, firstly that unlikely that a claim for that alleged breach will succeed, or
the tenant is in breach and secondly, substantiate the true it is likely that the claim for such items could be
measure of loss arising from that breach. The claim for compromised.
damages is settled by a monetary payment to the party
suffering loss, equivalent to the true measure of that loss. If
11.3.5 Substantiating the claim
there is no loss, there is no claim. Bearing in mind the relevance of timing, it is best practice
for the schedule of dilapidations to be prepared so as to
properly substantiate the basis and nature of the breach,
11.3 Preparation of the claim and to also confirm the appropriate remedy. The true
measure of loss cannot be conclusively measured until
11.3.1 Substantiating a breach about or after lease expiry. If the schedule does not detail
It is essential in the preparation of the claim to set out the the nature and extent of the breach to support the
nature of the breach, the relevant clause that the tenant is appropriate remedy, it leaves the landlord in a weaker
in breach of and the quantum of the alleged breach. It is position in the event that the tenant contests the schedule.
essential that these factors are recorded time relevant to In some cases, this can be well after lease expiry. At worst,
the lease period, as circumstances can change after lease poor preparation of the schedule of dilapidations can leave
expiry. the landlord with no proper basis on which to pursue a
tenant for damages.

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 Dilapidations in Scotland

11.4 Costing of the claim 11.5 Consequential losses

11.4.1 Typical measure of loss 11.5.1 Relevant professional fees
As detailed in section 11.3.3, the typical measure of loss, Whether the pursuer in a claim is entitled to recover the
when raising a dilapidations claim at or about lease expiry, cost of professional fees for the preparation and service of
is the cost of carrying out those works necessary to put a schedule of dilapidations, and/or negotiation of a
the premises into the state of repair and condition settlement is dependent on the terms of the lease
necessary as if the tenant had complied with their agreement between the parties.
obligations under the lease. In practice, the pursuer in a Depending on the scale and/or complexity of the remedial
claim may be entitled to damages whether such remedial works, it is normally appropriate to include, as a separate
works are carried out or not. The surveyor acting for the head of claim, the cost of professional fees involved in
landlord must be able to substantiate the cost of repair as specifying, administering and managing the works.
reasonable. This could involve justification of costs by
reference to the RICS Building Cost Information Service 11.5.2 Further investigation
(BCIS), published cost data, i.e. price books, or by
It may be reasonable to include the predicted cost of
reference to competitively tendered costs or rates obtained
further investigation that may become necessary as
from relevant projects, or invoices for works reasonably
negotiations progress in order to determine the true liability
carried out.
of the tenant, provided such liability can be seen to have
11.4.2 Alternative measure of loss existed during the lease period. Such further investigation
may include specialist surveys and reports, concrete
If the defender in the claim (typically the tenant) wishes to testing, etc. The pursuer may require to show merit in
challenge the measure of loss, it is incumbent upon them carrying out further investigation if the cost of doing so is
to substantiate that an ‘alternative measure of loss’ is to be recovered.
justified. It still remains incumbent upon the pursuer
(typically the landlord) only to claim for the true measure of 11.5.3 Other considerations
loss, as their position could be significantly compromised in Where relevant, the following consequential losses may be
the event that an alternative measure of loss is deemed to added to the claim:
be the appropriate remedy.
• loss of rent
In Scotland, a claim for damages relating to a dilapidations
• rates
dispute is not capped by statute. This differs from the
position in England/Wales. • insurance premiums
For example, offices located within a much larger • service charge payments
development where much of that larger development is • finance cost (including interest).
vacant and desolate may be a case in point. Regardless of
These losses will only be relevant where an actual loss has
whether the offices within the development are in good
been suffered by the pursuing party, or there is express
condition or not, there may be no market and therefore
provision in the lease giving entitlement to the pursuer to
little value attached to the premises. In such a case, the
recover such costs. The burden of proof, as always, is with
true measure of loss may be much lower than the value of
the pursuer.
the remedial work required to put the offices into the
condition required by the lease. 11.5.4 Legal costs
In the event that the premises are sold, re-let, refurbished, The costs involved in dealing with matters in dispute,
redeveloped or demolished, etc. following lease expiry, to whether at litigation, arbitration or otherwise, could result in
the extent that post-lease events are considered relevant, considerable expense to one or both parties. The client
such events can negate all or part of any loss suffered and should be advised to take legal guidance on such matters.
therefore seriously compromise or prejudice the claim.
These are examples of changes in circumstances as
referred to in section 10.4. 11.6 Settlement of the claim
Input from other surveyors specialising in lettings,
investment or property valuation may be necessary in order 11.6.1 Most claims do not end up in a court judgment.
to substantiate an alternative measure of loss particularly They are normally settled by negotiation. Those
where diminution in value is being considered. negotiations will often be undertaken by the surveyors who
act as adviser and who prepared, or responded to, the
original schedule. When advising their client about possible
settlement of the dispute, the surveyor should consider the
dispute as a whole, including the time and cost of pursuing
the claim. He or she should bear in mind that the total cost
to both parties in relation to a claim, taken through to
some form of dispute resolution procedure, will often

22 RICS guidance note, Scotland

 rics.org

exceed the value of the claim. It is therefore important that 11.6.6 A settlement agreement should:
the surveyor provides objective advice on the merits of a preferably be in writing, identifying:
•
proposed settlement.
– the parties (i.e. the landlord and the tenant)
11.6.2 If a claim is determined by a dispute resolution
procedure (e.g. court proceedings, arbitration or – the relevant lease
independent expert determination), the successful party will
– the schedule and the claim to which the
have a court order, award or determination which can be
settlement applies
enforced by a court.
• be open, i.e. not marked ‘without prejudice’
11.6.3 If court proceedings are settled ‘out of court’, the
• be stated to be in full and final settlement of the claim
terms of the settlement can be recorded at the court by
(if it is)
way of a court order. In this way, the proceedings are
disposed of, and again, the successful party has a court • deal with each and every part of the claim, including,
order, which can then be enforced. where appropriate any interest and costs

11.6.4 If a claim for dilapidations is settled between the • state the date by which:
parties (and most are) without court proceedings being – if appropriate, any payment pursuant to the
used, the parties must record the terms of the agreement agreement is to be paid, and by whom, and/or
precisely in order that, if necessary, the agreement can be
enforced by commencement of court proceedings in the – if appropriate, works are to be carried out and
event of breach of the agreement. completed, inspected and signed off (including, if
appropriate, a procedure for agreement and
11.6.5 In Scotland (unlike in England/Wales) if an signing off of any snagging items)
agreement is documented in such a way as to be
• be dated, and
registrable (in the Book of Council and Session) ‘for
preservation and execution’ then one can go to immediate • be signed by each party, or signed for and on behalf
enforcement on breach without the need for court, with the of each party by a duly appointed surveyor, lawyer, or
resultant potential cost saving. agent authorised to bind the party for whom they sign.

RICS guidance note, Scotland 23

 Appendix A: Blank Schedule of dilapidations

Item Clause Breach Remedial work required Landlord cost

no. Unit Quantity Rate Cost

24 RICS guidance note, Scotland

Dilapidations in Scotland
 Appendix B: Worked example of a schedule of dilapidations

Item Clause Breach Remedial work required Landlord cost

no.
Unit Quantity Rate Cost
1.0 1st External areas Rake out and repoint. m 2 £7.50 £15.00
1.1 Pointing fallen out between gate post and wall
1.2 1st Rouchcast is boss, off-key and bulging with vegetarian Cut out, prepare and patch repair roughcast in lime m2 2 £79.37 £158.74
growth and cracking; all to right hand end of front based render. 2m2@ £79.37 (BCIS reference noted if
elevation. appropriate).
1.3 1st Several lengths of concrete copes to garden wall are Lift and re-bed (BCIS reference noted if appropriate). m 4 £46.03 £184.12
loose.
1.4 1st Base of timber facing both sides of rear door are Take off and remove, prepare and supply and fit new to m 4 £15.00 £60.00
decayed. match existing.
1.5 1st External steps causing damp penetration through rear Lift and lay aside steps, cut out render and supply and Sum Sum Sum £384.00
wall. fit damp proof membrane, metal lath and re-render an
reinstate steps. Allow labourer and tradesman 1 day. 8
hours @ £18.00 plus 8 hours @£22.50 plus £60 for
materials.
1.6 1st Cement skew fillet to west raking rear parapet has Erect tower/staging and remove defective fillet and Sum £300.00
become detaced and broken resulting in gaps at junction debris and prepare, supply and apply new cement fillet
with wall full length of roof slope and at base. to full length of parapet. 6m@ £25.00 plus £150 for
staging.
1.7 1st Joints between parapet copes are open and mortar is Rake out and repoint. m 22 £7.50 £165.00
cracked and missing both front and rear slopes both
sides.

1.8 13th Tenant’s fitted aerial to west chimney to be removed at Remove aerial and associated fixings and fittings and Sum £30.00
lease expiry or surrender. make good damage arising.
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RICS guidance note, Scotland 25

 Appendix C: Blank scott schedule

Breach Remedial work Landlord cost Tenant’s comments on (date) Landlord’s response to tenant on (date)
required
Unit Qty Rate Cost Breach Remedy Cost Breach Remedy Cost

Item
Clause no.

26 RICS guidance note, Scotland

Dilapidations in Scotland
 Appendix D: Worked example of a scott schedule

Breach Remedial work Landlord cost Tenant’s comments on 2 January 2014 Landlord’s response to tenant on 3 January
required 2014

Item
Clause no.
Unit Qty Rate Cost Breach Remedy Cost Breach Remedy Cost
1.1 1st Pointing fallen out Rake out and m 2 £7.50 £15.00 Agree Agree £15.00 Agree Agree £15.00
between gate post repoint.
and wall.
1.2 1st Rouchcast is boss, Cut out, prepare and m2 2 £79.37 £158.74 Agree Agree but only £79.37 Agree Agree £79.37
off-key and bulging patch repair extends to 1 m2
with vegetarian roughcast in lime
growth and based render. 2m2@
cracking; all to right £79.37 (BCIS
hand end of front Reference noted if
elevation. appropriate).
1.3 1st Several lengths of Lift and re-bed. m 4 £46.03 £184.12 Not accepted as No works £0.00 Disagree, garden Works called for £184.12
concrete copes to (BCIS Reference garden wall is not therefore area included in therefore
garden wall are noted if part of the leased accepted Minute of competent and
loose. appropriate). premises. Agreement dated justified.
1 January 2005.
1.4 1st Base of timber Take off and remove, m 4 £15.00 £60.00 Agreed Extent of work £30.00 Agreed Splice repairs £40.00
facing both sides of prepare and supply called for not accepted but cost
rear door are and fit new to match accepted. Allow not sufficient.
decayed. existing. splice repairs
both sides only.
1.5 1st External steps Lift and lay aside Sum Sum Sum £384.00 Not accepted as Works called for £0.00 Acknowledged Accepted works £15.00
causing damp steps, cut out render steps detail is as not therefore step detail is as called for not
penetration through and supply and fit existing and accepted. existing, however therefore the
rear wall. damp proof damp penetration gaps exist tenant's liability.
membrane, metal is therefore an between steps Therefore reduce
lath and re-render inherent defect and wall thereby scope of work to
and reinstate steps. for which the resulting in point gap
Allow labourer and tenant is not greater damp between steps
rics.org

tradesman 1 day. 8 liable in terms of retention. and wall. Allow

hours @ £18.00 the ordinary 2m @£7.50.
plus 8 hours @ repairing
£22.50 plus £60 for obligation.
materials.

RICS guidance note, Scotland 27

 Breach Remedial work Landlord cost Tenant’s comments on 2 January 2014 Landlord’s response to tenant on 3 January
required 2014

Unit Qty Rate Cost Breach Remedy Cost Breach Remedy Cost

Item
Clause no.
1.6 1st Cement skew fillet Erect tower/staging Sum £300.00 Agreed Agreed £300.00 Agreed Agreed £300.00
to west raking rear and remove
parapet has become defective fillet and
detached and debris and prepare,
broken resulting in supply and apply
gaps at junction new cement fillet to
with wall full length full length of
of roof slope and at parapet. 6m@

28 RICS guidance note, Scotland

Dilapidations in Scotland

base. £25.00 plus £150

for staging.
1.7 1st Joints between Rake out and m 22 £7.50 £165.00 Agreed Agreed £165.00 Agreed Agreed £500.00
parapet copes are repoint.
open and mortar is
cracked and missing
both front and rear
slopes both sides.
1.8 13th Tenant’s fitted aerial Remove aerial and Sum £30.00 Disagree. Aerial Not accepted £0.00 Disagree. Refer to Removal of the £30.00
to west chimney to associated fixings not fitted by Licence for Works aerial is therefore
be removed at lease and fittings and tenant. dated 1 June justified.
expiry or surrender. make good damage 2005.
arising.
 Appendix E: Blank summary of claim

HEAD OF CLAIM Landlord's Costs

Cost of Works

Total Cost Building Works, excl. Prelims, Overheads and Profit £

Contractor's Preliminaries @ 0.0% £

Contractor's Overheads and Profit @ 0.0% £

Total Cost of Building Works £

Professional Fees for Design/Contract Administrator @ 0.0% £

Professional Fees for Mechanical and Electrical Engineer @ 0.0% £
Professional Fees for Quantity Surveyor @ 0.0% £
Professional Fees for CDM Coordinator @ 0.0% £

Total Cost of Construction £0.00

Professional Fees for Preparation of Schedule of Dilapidations £

Solicitor's Fees for Serving the Schedule £
Loss of Rents ? Weeks @ £0.00 £
Loss of Service Charge ? Weeks @ £0.00 £
rics.org

Cost of Additional Insurance ? Weeks @ £0.00 £

Loss of Rates ? Weeks @ £0.00 £
Loss of Interest ? Weeks @ £0.00 £

Quantum of Claim (exc. VAT and fees for negotiation or monitoring) £

Damages in Lieu of VAT (if relevant) @ ?% £

RICS guidance note, Scotland 29

 Quantum of Claim (exc. fees for negotiation or monitoring) £

Fees for Negotiation of Settlement or Monitoring of Works ?% of the claim (exc £

VAT)

Damages in Lieu of VAT on Negotiation or Monitoring Fees (if relevant) @ ?% £

30 RICS guidance note, Scotland

Dilapidations in Scotland

Total Cost of Negotiation or Monitoring (including damages in lieu of VAT if £

relevant)

Total Claim £0.00

 rics.org

Appendix F: Value Added Tax

The question of whether a landlord can properly claim VAT situation, the landlord cannot properly reclaim an equivalent
as part of a damages claim often arises. amount as damages from the tenant.
It is for the landlord to demonstrate that they cannot
A sum equivalent to the VAT a landlord has incurred (or is
recover the VAT incurred for whatever reason.
likely to incur), on the costs associated with the works that
the tenant failed to do, is recoverable as damages where A further question that often arises is whether a tenant can
the landlord is unable to reclaim that VAT as input tax from require the landlord to provide a VAT invoice in respect of
HMRC. the dilapidations payment made to the landlord.
HMRC has clear guidance (see Land and property, Notice
Generally, the services required by a landlord from
742, paragraph 10.10) that a bona fide dilapidations claim
contractors and professional advisers to deal with
represents a claim for damages by the landlord against the
dilapidations will be standard rated ‘supplies’. So those
tenant and that the payment involved is not the
contractors and advisers will, unless they are very small
consideration for any ‘supply’ for VAT purposes and so is
businesses, have to add VAT to the charge for their
outside the scope of VAT. Thus, a VAT invoice for
services. A VAT charge will therefore be incurred by the
dilapidations must not be raised by the landlord. As a
landlord.
consequence, the tenant, even if VAT registered, cannot
recover from HMRC any ‘embedded’ VAT element of the
Whether the VAT incurred can then be recovered by the
damages payment to the landlord equal to the landlord’s
landlord from HMRC as input VAT depends on their own
irrecoverable VAT.
tax position and the nature of the property. The precise
circumstances in which a landlord will be able to recover In view of this, if the landlord cannot recover VAT incurred,
VAT incurred on their costs is beyond the scope of this there could be a financial advantage to a VAT registered
guidance. However, it should be noted that if the landlord tenant in undertaking dilapidations works before the end of
is unable to recover (in part or whole) the VAT incurred, the term. The tenant might then be able to recover the VAT
then an amount equivalent to the irrecoverable VAT that their contractors and professional advisers charge, as
incurred can properly be added to the damages claim. overhead VAT incurred on the tenants business. By doing
Conversely, if a landlord can fully recover the VAT incurred the works themselves, the tenant would avoid liability for
as input tax from HMRC, then they will not have suffered a any proportion of damages equivalent to the landlord’s
loss as a consequence of VAT incurred. In this latter irrecoverable VAT.

RICS guidance note, Scotland 31

32 RICS guidance note, Scotland
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