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Wrapped: Property and Conveyancing > 12. Leases - Common provisions > Flashcards

12. Leases - Common provisions Flashcards

1
Q

What are the four types of rent?

A

Best rent
Rack rent
Ground rent
Peppercorn rent

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2
Q

What is best rent?

A

The highest rent that can reasonably be obtained (also called “market rent”);

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3
Q

What is rack rent?

A

A rent of the full annual value of the property at the start of the lease;

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4
Q

What is ground rent?

A

The rack rent for the premises less any premium which has been paid;

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5
Q

What is peppercorn rent?

A

A nominal rent.

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6
Q

What else could be treated as rent in a contract?

A

Insurance fees
Service charges

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7
Q

Is rent usually paid upfront or in arrears?

A

Rent is always paid in arrears, unless it is expressly stated.

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8
Q

If the rent is not certain, what will happen?

A

There must be some method by which it can be calculated with certainty - it cannot be uncertain or else the contract will be void.

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9
Q

Which part of the Landlord and Tenant Act 1985 imposes an obligation on a landlord to keep the structure and exterior of a short-term residential letting in repair?

A

s11 LTA 1985 - must keep in repair

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10
Q

What is the difference between ‘keep’, ‘leave’ and ‘put’ in repair?

A

Keep - maintained in repair
Leave - end the leave in repair
Put - start the lease by repairing

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11
Q

How are repairs different to improvements or renewals?

A

Repairs = restoration to original or similar
Improvement = making something better than it was
Renewals = reconstructing completely

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12
Q

What are the three tests to figure out whether something might be a repair or a renewal?

A

Whole or part
Change of character
Cost of works

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13
Q

Explain the ‘whole or part’ test for whether the alteration is within the covenant to repair?

A

The test asks whether the alterations went to the whole of the structure or only a part. E.g. a wall in a house = part = repair, but a rotting timber frame = whole = renewal.

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14
Q

Explain the ‘change of character’ test for whether the alteration is within the covenant to repair?

A

The test asks whether the effect of the alterations was to produce a wholly different character from that which had originally been let.

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15
Q

Explain the ‘cost of works’ test for whether the alteration is within the covenant to repair?

A

The test asks what the cost of the works are in relation to the previous value of the building. The closer the figures are, the more likely the work will be regarded as a renewal.

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16
Q

Does a repairing covenant involve an obligation to replace an inherent defect? What if it is the best means of remedying disrepair?

A

No, it does not. If the best means of remedying disrepair is by replacing an inherent defect, the landlord will be liable.

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17
Q

When considering the standard at which the landlord or tenant must repair, what are the three things that the courts take into account?

A

The age of the premises (the older it is, the more it is likely to be in disrepair, so the lower standard will apply)
The character of the premises (is it a palace or a cottage? If a cottage, the lower standard will apply)
The locality at the time of the grant of the lease. (If a palace is converted to lower market flats, it would need to be repaired as if it was a palace.)

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18
Q

Is ‘fair wear and tear’ implied in the covenant to repair?

A

No, it will need to be expressly stated in the contract that ‘fair wear and tear’ is excepted from the obligation to repair.

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19
Q

What is the extent of ‘fair wear and tear’?

A

Reasonable use can cause fair wear and tear, but if further damage is likely to flow from the damage, the repairer must do such repairs as are necessary to stop that further damage.

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20
Q

What is a right of entry?

A

A right of entry entitles a landlord to enter property during the term for any express purpose set out in the covenant.

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21
Q

Can a tenant stop a landlord from entering their property?

A

Not if it is expressly reserved in the contract. Failure to observe a right of entry can result in a breach of contract.

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22
Q

What is the difference between an absolute covenant and a qualified covenant?

A

Absolute: gives no wiggle-room, e.g. the tenant may not sub-let.

Qualified: is conditional on the granting of consent, e.g. the tenant may not sub-let without the landlord’s consent.

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23
Q

Why might a landlord choose to include a qualified covenant instead of an absolute covenant?

A

Leases containing absolute covenants will typically be harder to let and will attract a lower rent. Landlords, therefore, may have to balance the certainty of an absolute covenant for the marketability of a lease with a qualified covenant.

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24
Q

What might a tenant do if the landlord refuses to grant consent?

A

The only options are to either:
seek a declaration in advance, or;
proceed with the action and then defend any subsequent claims by the landlord.

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25
Q

What issues do s19(1) and s19(2) Landlord and Tenant Act 1927 deal with?

A

s19(1) applies to alienation covenants; and
s19(2) applies to improvement covenants.

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26
Q

What is alienation?

A

Alienation is when a tenant parts with their interest to a third party, e.g. assignment or sub-letting.

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27
Q

What is an assignment?

A

An assignment will occur if the tenant transfers the whole of their interest in the lease to someone else with the intention of having nothing more to do with it.

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28
Q

What does ‘parting with possession’ mean?

A

When someone other than the tenant is given exclusive possession. It includes both assignment and sub-letting, but does not include the granting of a licence.

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29
Q

Which part of legislation provides the rules on landlords and qualified covenants?

A

s19(1)(a) Landlord and Tenant Act 1927.

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30
Q

What does s19(1)(a) Landlord and Tenant Act 1927 state?

A

That the landlord cannot unreasonably withhold consent for alienation.

31
Q

What is the difference between s19(1)(a) and s19(1A) LTA 1927?

A

s19(1)(a) = any consent required to alienate/part with possession will not be unreasonably withheld.
s19(1A) = only for business tenancies, allows parties to specify in advance the circumstances in which a landlord would not be seen as being unreasonable.

32
Q

Under s1(6) Landlord and Tenant Act 1988, whose responsibility is it to show that the consent is either reasonable or unreasonable?

A

It is the landlord’s responsibility to show that consent has been reasonably withheld.

33
Q

What are the three overriding principles condensed from International Drilling Fluids [1986] in Ashworth [2001], then again in Sequent [2019]?

A

(1) A landlord is not entitled to refuse consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant.
(2) The question whether the landlord’s conduct was reasonable or unreasonable will be one of fact to be decided by the tribunal of fact.
(3) The landlord’s obligation is to show that his conduct was reasonable, not that it was right or justifiable.

34
Q

If covered by a qualified covenant, can a landlord refuse an assignment if the new tenant has unsatisfactory references?

A

Yes, that is a reasonable ground for refusal.

35
Q

If covered by a qualified covenant, can a landlord refuse an assignment if they have an unfounded belief that an assignee might commit a breach of covenant at some time in the future?

A

No, they cannot, as that is unreasonable.

36
Q

If covered by a qualified covenant, can a landlord refuse an assignment if the new tenant has no established financial standing?

A

Yes, that is a reasonable ground for refusal.

37
Q

Which piece of legislation imposes a statutory duty on the landlord to consider an application for consent within a reasonable time?

A

The Landlord and Tenant Act 1988.

38
Q

What happens if the landlord does not get back to the tenant regarding the application for consent within reasonable time

A

If the landlord does not respond within a reasonable time, consent is deemed to be withheld unreasonably, and they lose the chance to rely on good reasons for refusal.

39
Q

Can a landlord give a written notification with reasons to the tenant for refusing consent and then add more in the future?

A

No, they can not think up new reasons for refusal later or rely on refusal for reasons that arose after the written notification. They must rely on the original written response.

40
Q

At what point does the reasonable time start?

A

When the tenant makes a valid application for consent (not informal conversations).

41
Q

What would be a reasonable period of time to give a written response to the tenant about consent?

A

Three weeks was held to be reasonable, three months was held to be unreasonable.

42
Q

What new remedy does LTA 1988 provide to the tenant?

A

Where the landlord is in breach of their duty under s1(3), they are open to a claim by the tenant in statutory tort (s4).

43
Q

What is the difference between an alteration and an improvement?

A

Improvement: any alteration that makes the tenant’s occupation more pleasant.
Alteration: a change in the form/structure of the building

44
Q

Which piece of legislation is around improvement covenants?

A

s19(2) LTA 1927

45
Q

What does s19(2) LTA 1927?

A

Consent must not be unreasonably withheld by the landlord + the landlord can claim a ‘reasonable sum’ for expenses connected to the application.

46
Q

Does s19(2) LTA 1927 apply to both improvements and alterations?

A

No, only to improvements.

47
Q

What types of fees (or other) could the tenant be liable for under s19(2) LTA 1927?

A

Compensation for damage to or reduction in the value of the premises.
Payment of expenses incurred due to the consent.
Not fees, but an undertaking to reinstate the premises to their previous condition on the termination of the lease

48
Q

Unlike s19(1) LTA 1927, who does the burden of proof sit with for s19(2)?

A

The tenant must prove that the landlord’s withholding of consent is unreasonable.

49
Q

When would the County Court modify covenants that prevent alterations from being carried out?

A

s190 Equality Act 2010 (EA 2010) provides that where the tenant, or anyone living in the tenant’s home as their main residence, is disabled, the tenant can apply to the landlord in writing for consent to make improvements.

50
Q

For qualified covenants not regulated by the Landlord and Tenant Act 1927, what happens?

A

Common law still applies - the courts would decide whether the consent is reasonable via Sequent (2019) as in Ashworth [2001].

51
Q

What are the ‘prescribed clauses leases’?

A

Leases created after 2006 contain mandatory clauses to register the land from Land Registration Rules 2003 (from the 2005 amended version). The clauses must be at the beginning of the lease or straight after the front cover page.

52
Q

When is the date of the lease inserted?

A

It will be inserted when the lease document is completed.

53
Q

What are the key parts (LR1-14) to a lease?

A

LR1: Date of lease
LR2: Title number
LR3: Parties to the lease
LR4: Description of property (+plan)
(LR5: Prescribed statements)
LR6: Term for which the Property is leased
LR7: Premium
LR8: Prohibitions or restrictions on disposing of the lease
(LR9: Rights of acquisition)
LR10: Restrictive covenants given in this lease by the Landlord in respect of land other than the Property
LR11: Easements
(LR12: Estate rent burdening the Property)
LR13: Application for standard form of restriction
LR14: Declaration of trust (where there is more than one tenant)

54
Q

What kind of easements reserved and granted will be for a lease of a part of a building?

A

The tenant should be granted a right to use those parts of the building which have been retained by the landlord, for example, the entrance lobby, hallways, stairways and lifts inside the building and outside over the external paths, driveways, yard, garden, shared car parks, refuse area and surrounding grounds.

They should have also been granted essential services,which may include water, electricity, gas, drains, telephone, television aerial and computer cabling which run through other parts of the building.

The easements reserved should be the corresponding rights reserved by the landlord in favour of them and their other tenants.

55
Q

Can the lease start earlier than the date it is signed?

A

Yes, because the landlord may want to have the anniversary date be the same for all the tenants, or the rent may be due on a certain anniversary date.

56
Q

What does ‘demise’ and ‘demised property’ mean?

A

Demise means to transfer by lease, so a demised property is property which has been subject to the lease.

57
Q

Which parts of a flat are usually excluded from a lease? Look at walls, floors/ceilings/roofs, windows, pipes/cables.

A

Walls: structural walls and other side of internal walls are excluded
Floors/ceilings/roofs: often excluded
Windows: in exterior walls are often excluded
Pipes/cables: ones that serve other flats are often excluded, the ones that only serve the flat are often included.

58
Q

What are the two types of covenants that may be restricting alterations and improvements in a lease?

A

Not to allow the tenant to make any EXTERNAL or STRUCTURAL alterations to the property. (Absolute covenant)
Not to allow the tenant to make any INTERNAL, NON-STRUCTURAL alterations to the property, without first asking for consent. (Qualified covenant)

59
Q

What are the two options for insuring the property in a lease?

A

Make each tenant responsible for insuring their part of the building.
The landlord insures the whole block and passes the cost of the insurance premium to the tenants.

60
Q

What needs to be considered when looking at insurance?

A

Risks covered (e.g. fire, flood)
Amount of cover (e.g. sufficient money to reinstate the property)
Application of insurance money (promise to reinstate the property

61
Q

If there is nothing in the lease, can a tenant assign or sub-let?

A

Yes, a tenant is free to dispose of their lease unless there is a contrary clause in the lease.

62
Q

When would landlords include restrictions on assigning or sub-letting part of the residential property?

A

Because they may be concerned that the value of a block of flats would be affected by subdividing the building into even smaller areas.

63
Q

What is a ‘fully qualified’ covenant and why is that different to a qualified covenant?

A

A qualified covenant is one that requires consent from the landlord. A fully qualified covenant is a covenant that still requires landlord consent, but that consent cannot be unreasonably withheld, meaning the tenant is almost certainly going to be able to carry out the request. s19(1)(a) LTA 1927 converts a qualified covenant into a fully qualified covenant (meaning there are limits on landlords to be reasonable).

64
Q

What is a management scheme?

A

A scheme that manages the property and takes day-to-day charge of repairing common areas, insurance, maintenance of lifts, gardening, entry phone system, etc. They can be set up by the landlord or all the flat owners themselves. This is often covered in the service charge.

65
Q

What are the landlord’s repairing obligations if the lease is silent?

A

Every part of the building should be covered by an express repairing obligation. It is not mandatory for the landlord to repair the property if it is not expressly outlined in the lease

66
Q

Which two covenants sould there be for mutual enforcement of covenants?

A

That the landlord will impose the same covenants in all the flat leases;
That the landlord will enforce all the covenants in the lease against another flat owner on the request of another tenant. (This will be at the tenant’s expense and only if the landlord has judged that such action is justifiable.)

67
Q

What is the HMLR document that deals with lease plans?

A

HMLR Practice Guide 40 (PG 40)

68
Q

Why is it important to have a lease plan?

A

Lease plans tend to be more detailed particularly in relation to a flat or apartment in a building because the demised premises will be the flat within a larger block. The tenant’s title plan might only show the entire building edged red, as opposed to the individual flat to which the lease relates within the building.

69
Q

What does red edging mean on a lease plan?

A

Boundary of registered land (although it may only show the outline of the whole building, rather than the flat itself).

70
Q

What does green edging mean on a lease plan?

A

A boundary of land removed from the title.

71
Q

What colour is a right of way coloured for the registered land and the other land?

A

Registered land’s right of way over other land = orange (or orange stripes)
Other land’s right of way over registered land = blue (or blue stripes)

72
Q

What does a drain/cable look like on a lease plan?

A

Blue dotted line.

73
Q

What is the colour of land that is within the boundary but excluded from the title?

A

Green.

74
Q

What did HMLR change their approach to the creation of leasehold title plans and why?

A

In October 2014, they changed their policy for creating title plans for leasehold floor level registrations to now only show the whole building instead of the individual flat. This is because most lease plans are now digitally produced and they are unable to produce title plans that reflect such intricacies on the smaller scale Ordnance Survey maps they use.

Wrapped: Property and Conveyancing (16 decks)

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