Posted: Monday June 19, 2023
It is a common responsibility for a commercial tenant to decorate the leased premises. It is just as common for it to be misunderstood. This article is intended to discuss some differing aspects of the typical decoration clause of commercial leases and where common misconceptions and the errors are made.
In the article we will discuss:
To set the scene we will consider what one could consider as a standard wording for a clause which a tenant may sign up to:
‘The Tenant is to decorate the interior of the property every 5 years and within the last 6 months of the term and the exterior of the premises every 3 years and within the last 6 months of the term’.
This is a very generic version of what would normally be found. There are a variety of tweaks that can be made which will significantly alter the application.
We will discuss some of these tweaks in a moment however, the above quite simply requires the tenant to do exactly what is said and on the face of it, it seems really quite straight forward.
Firstly, the thing that commonly goes wrong
is that a tenant will be quite unaware of the existence of this clause and it will be a surprise when a Schedule of Dilapidation lands with the Landlord’s surveyor requesting decoration works to be carried out. This is so common that we can immediately think of numerous defences the tenant will have as to why the surveyor drafting the Schedule of Dilapidations is deficient in many areas of their life, professionally and personally.
A starting point is denial that decorations are needed because, the paint finishes are in repair, or the decoration of particular elements is outside of their responsibility, or the costs being attributed are incorrect. These are all common and an experienced surveyor usually this see this ilk of response coming directly from the tenant, rather than another surveyor. It is tiresome if you have seen this several hundred times. The issue with this is simply ignorance of the Contract that has been entered into willingly by the tenant. Ignorance is certainly not a bad thing but simply taking a stance and arguing whilst being ignorant is not uncommon, we have experienced this with many tenants, from small companies, large companies and Members of Parliament.
In addition to the example clause above, there will often be terms such as ‘all previously decorated surfaces’ included, so as to qualify specific elements. This addition refers to anything which has a decorative finish whether that is a painted wall, a painted metal bar, a wall papered wall or painted skirtings, they have to be decorated to comply with the terms of the lease.
This is quite clear but occasionally, if the claim comes as a surprise to a tenant, then immediately a defence is to deny responsibility is not unheard. In a court of law this does not absolve the Tenant of their obligation. Alternatively a tenant will provide their own interpretation of the legal meaning,.
Sometimes the clause addition will be phrased as usually decorated. This goes further in so far as an item which may have received decorative finishes prior to the tenant’s lease term should actually. A feasible example of this would be an office, which has been subdivided and a storeroom has been built with plasterboard finished walls, with taped and filled plasterboard joints but no paint finish. Under the clause there would be reasonable scope to argue that a plastered wall would usually be painted. As such finding a claim for such an item really isn’t unusual and in actual fact is a reasonable request.
The ‘what’ needs to be decorated does extend to what may not necessarily be considered, or indeed visible. A pitfall, that can form really significant claims, relate to the exterior buildings, in particular industrial buildings. On some older metal clad buildings the factory finishes of the cladding deteriorate and it is not uncommon to find a previous tenant of landlord has repainted the building. The crux is that the cladding will have varied from being factory finished element and not decorated, to having been previously painted, this then falls within the remit of the decoration clause.
This is significant because this may all of a sudden necessitate the scaffolding of the building and a notable increase in the cost. There are similar aspects such as the painting of floors in warehouses where there does need to be a careful separation of what could be considered a decorative finish to a finish which is applied to a floor which is there for a functional reason. Of note, where an item such as the painting of the floor, could be argued as not being decorative but for practical reasons, the element may well then fall within the remit of a repair clause. If it has fallen into disrepair this could require being put into repair.
There decoration clauses which may specifically exclude items elements of a building. Previously we have advised tenants to ensure an exclusion is included that the coating system to a metal roof is excluded. Expressly differentiating what could be considered a decorative finish from a protective coating. The benefit of taking this point of view is that whilst, if it falls into disrepair, it is in disrepair and repairs would have to be carried out, at least there is no automatic requirement as per would be the case with the decoration clause that it needs renewal.
To put into context in respect to money. A floor coating system could cost between £10 per square metre, or less, to in excess £100 per square metre. At the lowest cost end, the finishes are likely to fail over the course of three years in a well-used warehouse, with forklift trucks manoeuvring. This budget paint system may have seemed like a brilliant deal and the financial controller’s dream, but may eventually cost double, as it will be left in need of repair or redecorating at the end of the lease.
There is merit in even approaching the decoration of an uncoated floor as being an alteration, asking for the landlord’s permission, to recognise this variation. This would allow for the agreement that redecoration at the end of the lease would not be necessary. It should be noted that any surveyor acting on behalf of the landlord would probably recommend the opposite, ensuring it is included for decoration.
The issue of timing is important. The decorations of external timber do have an aesthetic purpose, but overriding these, the purpose of painting is to protect the underlying timbers from the elements. In contrast, the painting of plastered walls would be largely down to the aesthetics. There is no great necessity from a functioning perspective for a clean plastered wall to be painted.
It is on this basis that the timing is important, if decorations are seen as being crucial to maintaining the exterior repair of the property, it is more understandable why the timing for exterior decoration is at more regular intervals than the interior.
External decorations are eked out to the point of decoration only being carried out when those decorations eventually fail. In ideal circumstances, decoration should be carried out at regular intervals, preventing doors and windows and all other timber elements which are often seen decaying, to get to the state of disrepair. It is sometimes met with a snort of disdain to paint surfaces which appear to be in good decorative order, the preference being to want to see a difference by allowing deterioration. When the paint flakes away and the underlying timber decays the costs only increases, early work, results in easier preparation and a better finish.
What starts as poor decorations can lead to poor repair and the cost of work increases
All too often, on traditional buildings with timber elements, you can see a history of regular upkeep. This is evidenced by timber window sills which have layers and layers and layers of paint flaking off, all of which indicate that upkeep of the building to a point and a recent deterioration.
In this case instead of decorating timber cladding had to be replaced, which exposed a deteriorated felt and decay to the timber frame….
The timings inserted within the lease for decorations should be some guide as to how regularly the decorations should be considered. Delaying will normally result in higher costs. It is not at all unusual to find the exterior of the building having never being decorated during the term of a tenancy. A tenant can start with a building which is in reasonable order, by the end of the lease the building will look in poor repair, untidy and scruffy; it is fair for a landlord to wish to see the building put back into a condition they expect. It is reasonable and commercially sensible for a tenant to understand this and be unsurprised by a decoration claim.
The end of a lease is an important aspect, often, as per the example above there would be a requirement to redecorate in the last 12, 6, or 3 months’ of a term. So that when the building is handed back to the landlord it is in decoratively good condition. This is something which, if a tenant does read the lease and understand it and is advised accordingly at the outset, they should be quite clear about this.
The necessity to obtain ‘colours and materials approved by the Landlord’ is often found. This is to ensure the Landlord has the right to have colours restored back to how the Landlord wants to have it. It is possible for a tenant to get this horribly wrong. We have been involved with cases (acting as the landlord’s surveyor) where a property has been redecorated but not in a fashion the landlord is satisfied with. Permission wasn’t sought for the colour or materials, having redecorated once, the tenant is then landed with another claim to decorate once again.
The decoration clause will often state in a little more detail that previously painted surfaces have to be painted, previously papered surfaces should be papered, etc. In some older leases there are archaic with references to distemper, etc. Often the key to this would be that how an element is finished should broadly remain the same.
The reference to paper, or wall papers to be used is important because sometimes the wallpapers which one sees is a lining paper, which would normally be repainted. There may be wallpapered walls which have received many coats of paint over the years and arguably inappropriate to consider these to be repapered.
This varies once again where there may be finishes such as vinyl wallpapers where it is reasonable to assume that these would be renewed. Sometimes there are concessions that can be made in negotiations with the Landlord, where wallpapered walls which would of otherwise be renewed with wallpaper be repainted.
Standards vary and, as with repair which is discussed in another article, there is legal precedence to determine this. The obligation to decorate may include the words ‘A good and workmanlike standard’ this realistically imposes that the standard isn’t simply that which a novice DIYer would take, but rather being the quality expected of a suitably experienced and qualified trades person.
As with the above, the standard is important because this relates back to the timing and the deterioration which has occurred. If there has been significant deterioration, then instead of it simply being a case of a light rubbing down of a surface and then the application of one or two coats of paint, to achieve a good quality finish may necessitate the stripping off of all paint finishes.
As with repair, the decoration clause can be limited to a handful of words, a mouthful of words. Whilst of no great cost in ink, the costs to a tenant can run into tens of thousands of pounds and is typically has very little wriggle room.
The are nuances and expert advice can help a tenant to minimise costs or test whether the claims being made are accurate.
When it comes to diagnosing defects and finding the best solutions for your building, trust the expertise of our Commercial Building Surveyors. With a wide network of approved contractors, each specialized in various fields, we guarantee competitive tenders and excellent health and safety standards.