Dilapidations for CRE Brokers: What AI Can (and Cannot) Do

Dilapidations — the process of assessing a tenant's obligations to repair, reinstate, and yield up premises at lease end — is one of the most contentious areas of UK commercial property. Claims routinely run into six figures for larger units, and the negotiation can make or break the landlord-tenant relationship for future dealings.

For a CRE broker managing the process, dilapidations involve document-heavy preparation, cross-referencing multiple lease clauses, and coordinating surveyors, solicitors, and clients. This is exactly the kind of workflow where AI adds value — not by replacing professional judgment, but by accelerating the preparation.

The Scott Schedule

The standard format for presenting a dilapidations claim in England and Wales is the Scott Schedule — a tabular document that lists each item of disrepair or breach, the relevant lease clause, the proposed remedy, and the estimated cost.

Preparing a Scott Schedule requires:

• Reading the lease to identify all repairing, decorating, and reinstatement obligations
• Inspecting the premises to document actual condition against those obligations
• Cross-referencing any schedule of condition attached to the lease (which limits the tenant's liability to the condition at lease start)
• Estimating costs for each remedial item
• Categorising items into disrepair, want of decoration, reinstatement of alterations, and statutory compliance

Where AI accelerates the process

Lease clause extraction — AI can parse a commercial lease PDF and identify all clauses relating to repair (typically clause 3 or 4 in a standard institutional lease), alterations, reinstatement, decoration, and yielding up. This saves the initial 60–90 minutes of manual lease review.

Schedule of condition comparison — if a photographic schedule of condition was attached at lease commencement, AI can flag which items in the current inspection report fall below the recorded baseline and which are within the permitted condition.

Cost estimation — for standard items (redecoration, carpet replacement, suspended ceiling tile renewal, mechanical strip-out), AI can apply industry-standard rates from BCIS or similar datasets to produce a first-pass cost schedule. This is not a formal valuation — it is a starting point for the surveyor to adjust.

Document formatting — generating a properly formatted Scott Schedule from raw inspection notes and lease extracts, ready for the surveyor to review and the solicitor to serve.

Where humans remain essential

Physical inspection — AI cannot walk through the premises, tap walls, check plant condition, or assess whether a crack is structural or cosmetic. The building surveyor's site visit is irreplaceable.

Section 18(1) cap — under the Landlord and Tenant Act 1927, damages for dilapidations cannot exceed the diminution in value of the landlord's reversion. Assessing this requires a valuation judgment that depends on the landlord's intended use, market conditions, and whether the building is to be demolished or refurbished. AI can flag the s18 issue; it cannot determine the cap.

Negotiation — dilapidations settlements are commercial negotiations. The opening schedule is a starting position; the settlement figure depends on the parties' relative leverage, the tenant's covenant strength, and whether the landlord actually intends to carry out the works. This is judgment, not computation.

Supersession — if the landlord intends to demolish or substantially refurbish, the tenant may argue that the dilapidations claim is academic. Assessing supersession requires knowledge of the landlord's plans and planning position — context that AI does not have unless you tell it.

Timing matters

The RICS Dilapidations Guidance Note recommends serving a terminal schedule between 18 and 6 months before lease expiry. Serving too early wastes effort (the tenant may do further damage); serving too late weakens the landlord's position and may trigger limitation issues.

For interim schedules during the lease term, the landlord must demonstrate a genuine intention to enforce — not just a tactical manoeuvre to apply pressure.

Practical workflow with AI

A practical workflow for a CRE broker handling dilapidations:

Step 1 — Upload the lease to your AI tool. Extract all repairing, decorating, alterations, and yielding-up obligations. Flag any schedule of condition.

Step 2 — Commission a building surveyor inspection. Provide them with the AI-extracted obligation summary so they know what to look for.

Step 3 — Feed the surveyor's inspection notes back into the AI to generate a draft Scott Schedule with clause references and cost estimates.

Step 4 — Surveyor reviews, adjusts costs, adds professional commentary. Solicitor reviews for legal accuracy and serves the schedule.

This workflow cuts preparation time by roughly 40–60% while keeping professional oversight where it matters.