Decision details

To consider the report of the Cabinet Member for Resources outlining the proposed settlement of the Council’s Landlord’s terminal dilapidations claim following the surrender of the Council’s lease of Southbrook Rise offices.

NOTE: Elements of this report may be considered exempt from public distribution.

To approve payment of the terminal dilapidations liability to the landlord following surrender of the Southbrook Rise lease, as set out in the Confidential Appendix.

It is a contractual requirement under the lease terms for the council to keep and yield up the premises in good and tenantable repair and condition, subject to specific exceptions outlined in paragraph 6 below. The council vacated the premises without carrying out reinstatement, repairs, and redecorations resulting in a dilapidations liability.  All this is in line with normal commercial practice between landlord and tenant where it is not unusual for tenants to vacate the premises at the end of their lease in need of outstanding repairs and reinstatements.

1. The Council undertake works directly - although this was considered in some detail it was felt that the consequent and costly delays to the ASAP project would rule this out. Now that the council no longer has a legal interest in the property this is not feasible.
2. Seek payment into an escrow account held to the joint order of landlord and the council so that the council can be 100% assured that the monies can only be used 100% for the intended purpose, and not be held back for something else, and not for betterment of the property.  This is not necessary as the landlord’s clear intention is to undertake the repairs, redecorations and reinstatement works as soon as they have access to the dilapidations damages.  There is no known precedent for dilapidations payments into an escrow account and would be likely to significantly delay a settlement
3. If the Council does not settle this claim an application will be made to Court by the Landlord and costs would increase including landlord’s fees and costs plus increased interest payments.