Pre-Lease Condition Survey vs Schedule of Condition?

Pre-Lease Condition Survey vs Schedule of Condition?

A pre-lease condition survey and a schedule of condition of a commercial building are often mistook for the same type of survey/report. They are in fact very different types of services which are undertaken by a commercial building surveyor. The following summarises the main reasons for undertaking the specific instruction and the differences between the reports. 

Pre-Lease Condition Survey

Prior to taking occupation of a building on a leasehold basis it is very important for a business to understand the potential risks/liability and the associated costs that are being taken on.  A pre-lease condition survey is undertaken prior to a tenant executing a lease agreement. The purpose of the pre-lease condition survey is to enable the prospective tenant to understand all issues relating to the premises. 

One of the main items which the report will focus on is the condition of the building fabric and/or the mechanical and electrical installations and whether there will be a requirement for maintenance works over the duration of the lease term. In addition, the report will provide comment and recommendations on to what extent the premises comply with current statue, for example whether accessible toilet/welfare facilities are in place. Health and safety matters will also be outlined including the presence of deleterious materials such as asbestos, or non-compliant fire doors etc. The energy performance of the premises will also be assessed from a high-level perspective as this often relates to the function performance of the mechanical and electrical system, and it will also impact utility expenditure. Finally, other legal matters will be reviewed including the Title, draft lease terms, warranties etc.   

The report will be inclusive of recommendations for further investigations which may be required to ascertain the condition of certain elements. There may also be a requirement to approach the landlord to clarify specific issues, or evidence certain items, such as maintenance records. Budget costs will be provided to show the prospective tenant the likely short, medium and long-term expenditure required to ensure the building is maintained to a satisfactory and compliant standard.

It is also important for the commercial building surveyor and prospective tenant to discuss likely requirements of any fit out as this will help to inform the commercial building surveyor of any further issues which may arise when the works are undertaken. 

The general conclusions following issue of a pre-lease condition survey report are as follows:

• Prospective tenant is satisfied with findings and progresses with executing lease agreement;
• Prospective tenant is not satisfied with all or parts of the findings and further discussions take place which may lead to:
  • Requirement of schedule of condition to evidence condition of property;
  • Lease terms are reviewed and revised to reflect requirements;
  • Landlord completes additional works to the property to satisfy requirements;
  • Tenant is given financial incentive to complete the works.
• Prospective tenant is not satisfied with findings and looks to lease alternative premises.  

Schedule of Condition 

A schedule of condition is produced to document the condition of the building fabric and other building components. Schedules of condition are typically prepared prior to commencement of a lease term to evidence the condition of the premises at the commencement of a lease. This will assist with limiting a tenant’s contractual responsibilities at lease expiry. Schedules of condition can also be produced before works are undertaken to a property or part of a property, normally in conjunction with a Party Wall Award. 

A schedule of condition can be required prior the commencement of either a lease or construction works. The purpose is to limit a certain party’s liability, so they are not obliged to put a part of a building into any better standard of repair than documented in the schedule. The schedule will need to be drafted by one of the party’s Agents (typically a commercial building surveyor) although should be reviewed and signed off by all related party’s. The schedule of condition should, where practical be prepared as close to the beginning of the works or the lease term to enable the contents to be a precise testimony of the condition. The detail should be of an appropriate standard to allow a commercial building surveyor or the like to review the element on completion of the works or at expiry of the lease and an assessment made as to whether the condition has deteriorated. 

A schedule of condition will include a brief outline of the building including the location, type, arrangement, size etc. and an overview of the condition of the building. The schedule will also include a section on the condition ratings which are later referred to as a standard for the condition of specific items. The ratings are sometimes defined as very poor, poor, reasonable, good and very good condition. The main part of the schedule of condition will include an explanation of the building component, it will then provide commentary on the condition of said element. A condition rating will then be given and a photograph to depict the condition/element will also be included.  

At Commercial Building Surveyors, we offer condition surveys in the following locations: Condition Survey Bristol, Condition Survey London, Condition Survey Manchester, Condition Survey Cardiff, Condition Survey Birmingham