Corporates are generally not very good at running property litigation. This is because the matter does not get a high enough priority compared to day to day operational issues. In addition it is hard for the in-house team to acquire the required skill sets to be effective at running litigation cases.

What are the types of areas that corporates need such skills?
Two examples are break clauses and dilapidations:

• Break clauses

The effects of an occupier failing to ensure that a lease break is properly exercised can be enormous and is witnessed by the ever increasing number of cases in this area, as corporates or landlords try to deal with cases that are ambiguous.

What is needed? Someone who has the breadth of experience to understand all the issues and take a proactive approach to the case. That will mean getting the appropriate level of legal advice well in advance of the break notice date, including if appropriate advice from Counsel.

 Allied to that is the assessment of the dilapidation and reinstatement liabilities and the compliance impact they will have. Break clauses tend to come in three types – those requiring little compliance, those that have some compliance requirements and finally those requiring absolute compliance for certain matters, such as rent payment or reinstatement. Navigating the minefield requires experience.

That same experience is important for a corporate which has a legacy portfolio and where a subtenant may have failed to properly exercise a break. Just as failing to exercise a break where the corporate is in occupation can have a major effect so recognising that a subtenant has failed to comply with the break provisions will have a positive contribution to mitigating the liability to the corporate.

A large part of dilapidations work for the corporate is building surveying. What is often missing is the overview of the subject. In particular looking at the corporate issues and the question of diminution in reversion.

For a corporate, dilapidations are an anathema. Having spent money fitting out the property and often in their eyes improving it they struggle to understand why they then have to spend money taking out those improvements and handing the landlord the property in an improved condition. Aside from that the corporate will focus on the timing issues if they are vacating and ensuring that budgeting and costs are fixed. To that end assessing the liability at an early stage so costs can be planned and provided for is very important, often more so than the question as to whether it is the right or wrong number. That does not mean that building in large margins will be accepted, being right is crucial. A difficulty for the building surveyor in assessing the liability will be getting hold of files and deeds to prove who has done what over the period of the lease.

If valuation is regarded as an art rather than a science, assessing the diminution in reversion all too often falls in to the category of black art. Trying to deal with the various parameters of the diminution argument, in particular the inter-relationship with the works needed for the various options, is challenging. Understanding the corporate, the building surveyor and the valuer and then applying the legal framework requires a wide breadth of experience.