Dilapidations - inheritance issue 4 and half years after passing

notmyrealname25

Hello all,

This looked like the best category to post this under, apologies if it is not the right one. I fear this is a bit complicated but I will try to structure this in the easiest to follow structure.

My father passed away towards the tail end of 2015 - he did not have a will. He did have; a wife (who has renounced her share of anything) and 8 children who have become the sole beneficiaries of the estate. The estate was made up of 2 elements, his residential home which has been sold and dealt with to pay inheritance tax. The 2nd element was a business (6 employees - not large) which rented a premises and had done since (I believe) 1983. The business continued as the estate was being prepared and settled, it was decided by a majority vote of the beneficiaries that the business was sold and the value proportioned to each of them. In the same time frame the landlord of the building, where the business was carried out, served notice to vacate the premises. Apparently both the landlord ( a very large national company) and my father did not have a copy of the original lease (to complicate things further) however it was agreed the business would be wound up and vacate the premises by the end of the next quarter day, being December 24th 2017. The building was made up of commercial and residential sub-lets (apparently agreed upon in the lease - as per conversations with my father before he passed). The landlord kept on the residential tenants and the business was sold to the manager (or the shop) who negotiated a new lease with the landlord, meaning the majority of the building had 0 days with loss of rent. I say majority as part of the business which was carried out on a separate floor of the building was not sold on and became a vacant space (I do not know how long for but had been recently re-furbished so not in dis-repair).

The estate has been sat with the administrator and solicitor ever since with very little progression. I have chased several times and it appeared "dilapidations" on the commercial property were holding up the progression of the estate. The information I obtained was that the solicitor was unable to obtain any contact with the landlord for a considerable amount of time and finally found out that the landlord had sold the property on to another party who would then be dealing with the dilapidation schedule.

My questions I would like some opinions on are currently;

Considering the premises was vacated in December 2017, is there any grounds to throw out any dilapidation claim?

I do not believe the original schedule of dilapidation was served within 56 days of the premises being vacated as per the protocol. However if it was I have a feeling it was a figure plucked from thin air, but then when the solicitor entered "negotiations" and was unable to receive a response from the original landlord does this nullify it?

As there is no copy of the original lease can they show which covenants are in breach and should be payable by the estate?

Are you able to sell a property with the proviso that Dilapidation are due, when they are not even in negotiations?

How can you show what the difference is between market value purchase price and price paid due to dis-repair?

Should I be bringing action to the solicitor of the estate? - As the longer this drags out the more money they charge.

I am not adverse to some dilapidation being paid however the state of the building was not derelict, over 90% of the building was continually rented out after the vacated date, without any repair work taking place. The schedule that was finally submitted was in excess of £265,000 (I understand without reference this could be a drop in the ocean but an estimate on a rebuild of the entire building would be roughly £400,000). If the estate paid this amount it would leave nothing for the beneficiaries and it has been going on for 4 and a half years. This has been very stressful and taken its toll on all of us and I have finally had enough and, honestly, feel like someone must be committing some kind of crime?!?

What information would I need to be able to take this somewhere to get it resolved?

Many thanks to any thoughts, opinions or advice on this matter.

davidmcn

I can't see any hint of a crime from what you've said, so no idea where that idea is coming from unless there's something you haven't told us.

It's not clear from your story what "the business" means - was your father simply trading as a sole trader or was there another legal entity?

There's nothing preventing a landlord from selling their interest with dilapidations still to be agreed. Normally it would be surveyors who would negotiate a dilapidations schedule on behalf of each party.

Unfortunately I don't know what the default assumptions or timescales are in England & Wales (if that's where the property is) for an unwritten/lost lease.

AdrianC

notmyrealname25 said:

My father passed away towards the tail end of 2015
...
The estate was made up of 2 elements
...
The 2nd element was a business (6 employees - not large) which rented a premises and had done since (I believe) 1983. The business continued as the estate was being prepared and settled, it was decided by a majority vote of the beneficiaries that the business was sold and the value proportioned to each of them.

Did your father run the business as a sole trader? Or did he own the shares of a limited company?
If it was a limited company, and the company was sold, then the lease and debt will have stayed with it, unless he made some kind of personal guarantee.
If he was operating as a sole trader, then the entire business finances are inseparable from his own personal finances - and he is personally liable for any debts. Selling any assets of the business on doesn't affect other assets or debts.

In the same time frame the landlord of the building, where the business was carried out, served notice to vacate the premises. Apparently both the landlord ( a very large national company) and my father did not have a copy of the original lease (to complicate things further) however it was agreed the business would be wound up and vacate the premises by the end of the next quarter day, being December 24th 2017.

That sounds as if it was your father himself who was the lessee of the building, rather than a limited company.

Considering the premises was vacated in December 2017, is there any grounds to throw out any dilapidation claim? I do not believe the original schedule of dilapidation was served within 56 days of the premises being vacated as per the protocol. However if it was I have a feeling it was a figure plucked from thin air, but then when the solicitor entered "negotiations" and was unable to receive a response from the original landlord does this nullify it?

No. Who was the administrator of the intestate estate? The landlord would deal with them on the deceased's behalf.

As there is no copy of the original lease can they show which covenants are in breach and should be payable by the estate?

A standard commercial lease will be assumed, in the absence of documentation. Dilapidations are part of standard commercial leases.

Are you able to sell a property with the proviso that Dilapidation are due, when they are not even in negotiations?

Of course.

How can you show what the difference is between market value purchase price and price paid due to dis-repair?

The landlord will have engaged a chartered surveyor.

Should I be bringing action to the solicitor of the estate?

Are you the administrator? If not, it's none of your business.
If you are, then if you've got professional advice, why on earth wouldn't you use it?
And, if you are, but don't have specialist professional advice, GET IT. Commercial tenancies are complex, specialist stuff.

This has been very stressful and taken its toll on all of us and I have finally had enough and, honestly, feel like someone must be committing some kind of crime?!?

Why on earth do you think that? It's a simple commercial debt arising from your late father's ill-documented and badly-structured business activities.

What information would I need to be able to take this somewhere to get it resolved?

As with any other debt...

The creditor hands a bill to the debtor. The debtor refuses to pay and queries the bill. The creditor takes the debtor to court. The court decides if the debt is valid or not. Unless there's been six years of non-chasing, the debt can still be pursued.

notmyrealname25

Thank you for your replies. Apologies it was the emotions part of it where I said it feels like there must be a crime here. key word was feels, as it 'feels' criminal that the dilapidation can drag on this long.

Did your father run the business as a sole trader? Or did he own the shares of a limited company?
If it was a limited company, and the company was sold, then the lease and debt will have stayed with it, unless he made some kind of personal guarantee.
If he was operating as a sole trader, then the entire business finances are inseparable from his own personal finances - and he is personally liable for any debts. Selling any assets of the business on doesn't affect other assets or debts.

My father was the leasee, but the business was a sub-lettor. The dilaps are towards my fathers estate which is correct and I have no issue with that.

No. Who was the administrator of the intestate estate? The landlord would deal with them on the deceased's behalf.

The administrator is my father's wife (who renounced her share - they only got married 7 days before his passing).

I know that the landlord should have instructed specialists and done certain proceedings but one of the points is that since the beginning of the proceedings it seems that the estate has been dealt with incompetence and lack of care.

To this I understand the landlord would have eventually instructed a chartered surveyor my concern is the time frame in which it was done and the amount being claimed. The Dilapidation protocol legislation suggests the schedule be presented to the tenant within 56 days of the end of tenancy. I believe it was nearly a year after the property was vacated that any schedule was provided and now it is over 3 years since the property was vacated by the estate. 

As I say, I am not the administrator so your point of "none of your business" is heard however being a beneficiary I believe it is my business and 8 out of 8 beneficiaries believe the estate is being handled without the estates best interest in consideration.

I probably should have mentioned above that for 2 years prior to my father passing I was a director of the business and oversaw the running of it. Within that time I had the building internally renovated, new electric wiring, new fire safety system installed. However since the estate has been handled I have not been asked any information about the state of the building and I am unsure if this is also a sign that there is negligence on the part of the solicitors dealing with the estate.

With the above points in mind, the issue I face is the cost of dilapidation when to renovate the entire building would cost roughly £70,000. However 3 out of 4 floors continued to be rented so there is no "loss of rent" claim available on these floors and the other floor was renovated and ready to be rented out immediately (obviously my opinion - so some changes may be applicable but I would struggle to see it be anything over £10,000 in value)so any dilapidation bill should have been minimal so I am unsure how the figure of £260,000+ was achieved.

My fear is that the estate is being drained of the little money it has left and proceedings are purposefully being dragged out to enable other parties to charge more for time spent. For context an Email was received 5th July 2018, stating the estate was chasing the landlord for a response on dilapidation proceedings, the next correspondence was  June 12th 2019 with an "update" to the effect that the estate is chasing the landlord for a response on the dilapidation, and finally I received an "update" 27th April 2020 which had no real update other than the estate was chasing for a response. All of this is costing the estate money and is not allowing the 8 children to move on to a different chapter of their lives after our father passed.

Is it normal for this part to take so long?

Sorry its a bit of an emotional subject, I apologise if I 'waffled' on

AdrianC

notmyrealname25 said:

My father was the leasee, but the business was a sub-lettor. The dilaps are towards my fathers estate which is correct and I have no issue with that.

So the relevant party to the lease is your father personally - or, more accurately now, his estate. That's who the landlord's case is against, and why they should only be talking to the administrator. Your father's estate may have a claim against the sub-letting limited company, but that's probably not worth pursuing. The landlord should not be talking to them - there was no direct contractual relationship.

The administrator is my father's wife

Then she's the one who is doing all of this. The rest of you can offer her whatever advice, but she is the only person the "other side" should be talking to.

(who renounced her share - they only got married 7 days before his passing).

Both these details are irrelevant.

I know that the landlord should have instructed specialists and done certain proceedings but one of the points is that since the beginning of the proceedings it seems that the estate has been dealt with incompetence and lack of care.

Irrelevant.

however being a beneficiary I believe it is my business and 8 out of 8 beneficiaries believe the estate is being handled without the estates best interest in consideration.I probably should have mentioned above that for 2 years prior to my father passing I was a director of the business and oversaw the running of it. Within that time I had the building internally renovated, new electric wiring, new fire safety system installed. However since the estate has been handled I have not been asked any information about the state of the building and I am unsure if this is also a sign that there is negligence on the part of the solicitors dealing with the estate.

No, it's simply because the subletting party, the limited company, is irrelevant to the head lease between your father and the landlord.

My fear is that the estate is being drained of the little money it has left and proceedings are purposefully being dragged out to enable other parties to charge more for time spent.

The estate is only liable for whatever your father would personally have been liable for. That's the figure that's in dispute... Whether he could have claimed some of that off the limited is another question entirely. And if the landlord and administrator cannot mutually agree on that figure, let a court decide it. The administrator's best tactic should probably be to say "Nope, not paying. Here's an offer in full-and-final settlement. You want more? See you in court."

But it is NOT YOUR JOB, beyond advising your step-mother. Whether she wishes to take your advice or not is another question. She is doing the job of administering your father's estate. If you wanted to administer it, you should have agreed with her that you would be the administrator.

notmyrealname25

The estate is only liable for whatever your father would personally have been liable for. That's the figure that's in dispute... Whether he could have claimed some of that off the limited is another question entirely. And if the landlord and administrator cannot mutually agree on that figure, let a court decide it. The administrator's best tactic should probably be to say "Nope, not paying. Here's an offer in full-and-final settlement. You want more? See you in court."

But it is NOT YOUR JOB, beyond advising your step-mother. Whether she wishes to take your advice or not is another question. She is doing the job of administering your father's estate. If you wanted to administer it, you should have agreed with her that you would be the administrator.

Thank you for this. I just wanted to see if anyone thought it sounded like anything seemed unfair or as if it was not being done properly. I have been offering any info I have to the administrator but wanted an external opinion as I feel the length of time it is taking to progress is excessive. I believe a counter offer (by administrator to landlord) has been made and we are waiting for a response still... this is the part that takes the longest and so far waiting for over 2 years for a response.

AdrianC

notmyrealname25 said:
I believe a counter offer (by administrator to landlord) has been made and we are waiting for a response still... this is the part that takes the longest and so far waiting for over 2 years for a response.

If it does ever get to court, the court will certainly regard that as being unreasonable on the landlord's part.