Repair dry rotted garage studs?

....get a leveling estimate...that cost may be a lot less than the price of treated wood, or new concrete....then just install plastic vapor barrier to lower half of the wall as you go along to sister the 2x's

....the level floor will be nicer

....and maybe consider to remove 6 inches of old soil from the exterior creating a lower area from the wall t about 4 feet out ....then move out about 8 inches from the wall and till a 4 foot wide strip and add a flower bed, or shrub bed

....add come compost or old leaf mold to the tilled area

.....you could line the wall with a row of cinder blocks, even add a cap row (of 2" x 8" solid pieces) to those to cover the holes in the 8x8 blocks, then the bed will absorb most all moisture and burm away running water.....that is the functional purpose of the bedding area, to absorb and redirect water....by tilling you accomplish two things....1st provide good soil and easy drainage for healthy shrubs and plants, and 2nd, you create an area that easily absorbs water that is away from the wall......(voila! symbiosos :))

Dry rot could certainly cause structural problems if it becomes extensive enough but if the building were in danger of imminent collapse, it sounds like the second inspection would have said so. Failure of one joist should not make a building fall down. I'm not sure exactly why you're worried about this. In one way, you should be pleased that your landlords are doing what they should, which is keeping the building in a safe condition by repairing a fault. They didn't create the dry rot on purpose to annoy their tenants. They did not know, when you moved in, how extensive it was. No one knew. The disruption to the people in the flat below is their problem, not yours. I do not know how much disruption there will be in your flat, but you have been told it won't be significant. Since the work is being done from below, there may be practically none. Whether or not you can or want to stay in the flat while the work is being done is between you and the rental agency according to the landlord/tenant laws where you are. That may be something that can't be decided upon just yet.

As a General Contractor- if a customer asked me for a price to do what you want, I would tell them just to tear down the garage and start over. I realize you don't want to do that. But here is the problem. How are you going to put a lip on the cement pad unless you tear down the walls? I suppose you could brace up the wall,cut out the bad part of the studs and sheating,lay your block on edge of slab, put new bottom plate on block,add sister studs.Yes you can do this-it is a lot of work.

Do it like this. Take a good 2"x12" SYP (southern yellow pine) and screw it about 12" above or higher on the inside of the wall studs in a horizontal line. Screw into each stud. Do only an 8' section at a time. Block up under the ends of 2" x 12" solid. Use a bottle jack to raise up 2": x12" at each end to get some pressure on it. Clean edge of slab off good, take a chipping hammer and chip some of the surface concrete away. Prior to all of this snap a chalk line in about 8" from the inside of all garage walls. This is your measure line so spray over top of it with a clear laquer so you won't wear it off.

Now measure from the chalkline for this section of block - snap the inside line where your block is to lay. Lay a 6" concrete block down this chalkline.

Now to do it right you need to string a dry line across the top plate of this wall you are going to fix. Before you cut sister studs why not make sure your wall is going to not have any sway or sags in it. Put the end of the dry string line at the same place on each end of wall, now use a prybar to raise existing wall stud where it is straight. Install your treated bottom plate on new block - embed anchor bolts in block cores prior. Cut sister studs and nail or screw into existing stud.

Move to next 8' section.It's a lot of work but after the 2nd section, you will get a rythm going.

Get this done, then we will work on fixing the floor.

You could get some quotes to mudjack the floor back to level and replace the lower parts of the walls with a cinderblock layer on top the concrete...mortared in place... and then a bottom plate of 2 X4 or 2 X 6 of treated wood and then sister the studs or cut flush if there's enough remaining stud to do so..