Dilapidation Claims and Physical Yieldback Obligations in Industrial Leases
Proactive floor slab core-drilling, envelope maintenance, and Section 18 valuation caps reduce industrial lease dilapidations settlements by up to sixty percent.
Supersession Defense
Meaning
A legal argument allows a tenant to avoid paying for repairs that the landlord intends to render obsolete through redevelopment or alteration. Using the supersession defense protects tenants from funding dilapidations repairs that will be immediately destroyed by the landlord’s future works. This argument is a major element in lease-end dispute resolution.
Legal Principle
The argument rests on the claim that the tenant’s failure to repair has caused no loss to the landlord. If the landlord intends to demolish the building or remodel the space, the original state of the building is irrelevant. This principle is supported by valuation evidence showing no diminution in value.
Surveyor Role
Valuation surveyors play an active part in gathering evidence to support this claim. They inspect the property and analyze the landlord’s redevelopment plans to prove that the repairs would be superfluous. This report is used to negotiate a lower settlement or defend against a court claim.
Case Scenario
Typical examples include cases where a landlord plans to convert an office into residential apartments. In this situation, the tenant does not pay to replace the old office ceiling grid because it would be removed anyway. This logic prevents the landlord from receiving a windfall payment for work that will never be executed.
It is a highly effective tool for tenants facing large terminal claims on older buildings.