What is a schedule of condition?

What is a schedule of condition?

A schedule of condition is a report that provides an accurate record of a property’s condition at a point in time. That point in time is commonly the start of a commercial lease. Providing a snapshot of the property’s condition when the lease begins can prevent tenants from becoming liable for repairs and rectifications they are not responsible for when it ends.

Here we cover what a schedule of condition is in more detail, what it typically includes, who prepares it and why it’s so important in commercial property leases and transactions. 

What is a schedule of condition and do I need one?

A schedule of condition is a report that contains photographs and written descriptions of the state of repair of a property at the time of an assessment. It typically covers the property’s interior and exterior, including its structural elements and fixtures, and highlights any areas of disrepair. It also includes an inventory, which is a list of fixtures, equipment and other items within the property along with their condition.

The primary purpose of a schedule of condition is to protect the interests of one or more parties involved in commercial property transactions such as lease agreements, dilapidation assessments and property acquisitions.

A schedule of condition can also be useful when building works start close to your property. The condition report will enable you to determine whether the neighbouring works have damaged the property and to what extent. You can then ask for them to be repaired.

Why is it important to have an inventory or schedule of condition?

Almost all commercial property leases are either ‘full repair and insuring (FRI)’ or ‘internal repair only’. Either way, as the tenant, you are responsible for repairing all or just the internal parts of the property once the lease ends. Many tenants make the mistake of thinking they must hand the property back in a similar state of repair and condition as when the lease began. However, that is not always the case. 

Some leases stipulate that the tenant should return the property to a good state of repair and condition. If the property is in a poor state of repair at the start of the lease, that could make you liable to return it in a better condition. Other leases require you to return the property to its original state at the end of the lease term. In either case, by getting a schedule of condition and annexing it to the lease, you can ensure you are not liable for repairs and rectifications you should not be responsible for when the landlord serves the dilapidations. 

Who prepares a schedule of condition?

A professional building surveyor will prepare the schedule of condition. With significant experience in producing building surveys, they will be able to identify building defects, the key indicators of a property’s condition and other aspects that could be disputed when a lease ends. 

Different parties can commission a schedule of condition in several property-related transactions, including:

Lease agreements

• Tenants - Commercial tenants often commission a schedule of condition at the start of a lease to document pre-existing damage.
• Landlord - Landlords may commission the survey to establish a clear baseline before a lease begins.

Property acquisitions

• Buyers - Property buyers often arrange a schedule of condition as part of their due diligence before committing to a purchase.  

Dilapidations assessments

• Landlords - At the end of a lease, a landlord may arrange a schedule of condition so they can determine what damage a tenant is liable for. 

What is involved in a schedule of condition?

A schedule of condition contains a detailed description of every item inspected internally and externally, where it is and it’s state of repair. That includes elements like external walls, the roof, the building’s structure, floor coverings, doors, windows, ceilings and internal finishes. The surveyor will look for and document evidence of damp, cracks, staining, holes, discolouration, deterioration and disrepair.

The condition report will include text descriptions of defects and items of disrepair as well as photographs and video evidence. There will also be a description of the property, its location, the land it’s on, details of any tests the surveyor performed and architectural drawings. 

Putting protection in place

A schedule of condition is a cost-effective way for tenants, landlords and buyers to avoid undue repair bills and get peace of mind. Find out more about our UK-wide schedule of condition service at Eddisons and get in touch to discuss your requirements with our team.