What is a Schedule of Condition? And what should be in it?
A Schedule of Condition is a detailed document that records the existing state of a property at a specific point in time, usually at the start of the lease.
They are frequently used in commercial lease agreements to clarify the state of the property before occupancy. They can help to prevent disputes about damage or maintenance responsibilities when the tenant vacates the premises.
Some, if not most tenants are under a duty to repair and maintain the property. If so, it’s very important that a Schedule of Condition is prepared so that the tenant is not responsible for any existing damage or defects.
The detailed and photographic evidence of the current condition of the property is a valuable tool. Once the lease has ended, the tenants’ repair obligations can be assessed more easily.
How should it be used?
A Schedule of Condition is usually attached as an appendix to the lease or other legal document.
What’s in it?
- Written descriptions: Detailed notes about the condition of various elements, such as walls, floors, roofs, and fixtures. Particular emphasis of areas of concern, existing disrepair, or areas that might need monitoring, e.g. asbestos.
- Photographs: Visual evidence to back up the written description. Often these are annotated to give extra detail.
- Defects and Issues: Any existing defects, damages, weaknesses or areas needing repair are highlighted.
A Schedule of Condition should include the follow information:
- The purpose of the Schedule of Condition
- Date
- What is included or excluded from the assessment and reference to specific lease clauses where relevant
- Property plans
- Location address and extent of the property
- Description of the property’s construction.
How is a Schedule of Condition written?
The Schedule of Condition should be tailored to the type of property and the reasoning behind why it is required. There is no one document or checklist to use to create one. However RICS do provide a guidance note.
If the Schedule of Condition is appended to a lease (which is highly recommended) the Schedule should be specifically referenced within the lease. This avoids the Schedule of Condition being ignored when the lease ends, which could be sometime in the future, when different people may be managing the property and lease.
What’s the difference between a Schedule of Condition and a Condition Survey?
The Schedule of Condition acts as a record of the condition of a building prior to occupancy, so that it can be referred to when the lease ends to see what level of work needs to be undertaken to get the property back to its initial condition.
A Condition Survey identifies the condition of the building prior to lease to decide what works are required, prior to leasing.
Follow our Commercial Property Explainer blogs and get completely in the know on commercial leases. And if you need expert legal advice in the meantime, call Katie Miller on 01756 692 884 or email katie.miller@awbclaw.co.uk
7 October 2024
Further Reading:
The Commercial Lease Explainer: Heads of Terms
The Commercial Lease Explainer: The Plan
The Commercial Lease Explainer: Rent Reviews