Dilapidations constitute 'exit costs' for a tenant at the end of their lease. These costs are usually attributable to restoring the property back to its original or 'CAT A' condition (depending on the particular lease obligations). These costs will include stripping out the tenant fit out and reinstating any aesthetic alterations.

It is often possible to reach a negotiated cash settlement agreement with the landlord, but an occupier needs to be certain that such an agreement is documented before their back stop date for carrying out the works themselves passes. Occupiers risk financial penalties for the late return of premises without having fulfilled out their dilapidations liabilities.

We have extensive experience of conducting the terminal dilapidations negotiations on behalf of occupiers, and entering into an early dialogue with the landlord is key to avoiding the penalties.