5.1 Commercial Lease: T's Os, L's Os, Remedies + Break Clause Flashcards
What O should T have to decorate externally
Only every 3 (try to negotiate up to 5 in line with internal)
Who should NOT determine reinstatement value for insurance
L
When should debt of repair from self-help clause be recoverable as debt (acting for T)
Within 14 days of written demand
What certificate is signed for Service Charge Costs
Service Charge Certificate
What two things should be excluded from repair Os in new build
Latent/Inherent Defects and anything covered under DLP of BC
How can you protect T in service charge regarding their share of the costs to be paid
Reasonable and fair proportion, reasonably determined by L, with a cap
When should a rent suspension clause for damage by IR be triggered
If Property unfit for use/occupation, or Common Parts badly damaged so Property inaccessible/unusable
If T is to carry out alterations, what should S check which T might be able to claim
Position on compensation under Part 1 LTA ‘27
Should L be able to add other risks to ‘Insured Risks’?
Yes, acting reasonably - ensures only insuring against relevant risks
What is it normal for L to be able to charge if T does not comply w/ notice to remove all chattels + alterations from premises
Reasonable proportion of Annual Rent as debt due within 7 days of written demand
What scenarios should be provided for in the case of paying provisional service charge
Provide for what happens if overpaid or underpaid
What covenant should T argue for in terms of alterations
FQC + no unreasonable delay
Is the Code for Leasing Business Premises legally binding?
No - only voluntary
What standard should L use to carry out Services
Good standard
Why limit insurance for reinstatement to cost, not value
Valuing may not be same as actual cost
What can O to repair in new building be (wording cannot be used for old)
Can be ‘put and keep’
When should Break Notice NOT have effect
Material breaches only
For what kind of building should T’s O to repair be by ref to Schedule of Condition
Old building
How can you protect T in service charge regarding provisional SC
Should NOT be considered ‘Rent’
Why should T not pay Insurance Rent based on gross cost of premium before discount
paying more than fair proportion - T should benefit from discount
How can L require payment of Rent by alternative method - change drafting so it says what
If reasonable + w/ written notice
Are costs on indemnity basis acceptable?
No
How should amount of Insurance Rent T should pay be worked out?
Reasonable cost of premium after discount/commission
When will T have to pay Default Interest Rate
if late paying rent
The period for which L is to insure himself for rent suspension must match what
Period of rent suspension for T
What endeavours will T settle for L to use for services
All reasonable if best not agreed
What should definition of ‘Property’ and ‘Building’ make clear
What is within T’s Demise and what is retained by L
What should you ensure break clause is not, in terms of who can exercise
Not personal to e.g. T as defined
What should happen if underpaid through provisional service charge
Payable within X days of written demand
What is the general definition of an Uninsured Risk
Cover not generally available for property of this type, or unreasonable to expect L to get in the circumstances
What two specific clauses should L have for remedies
Forfeiture/re-entry, and self-help
When should T’s O to repair only be to maintain property
If old building
When is VAT payable on ‘Rent’
If L has opted to tax
When is it acceptable for L to charge T through Service Charge the cost of renewing articles
If beyond economic repair
What kind of damage should T never have O to repair
Anything caused by (Un)Insured Risk, unless act of U(T) has vitiated policy
Should T agree to contribute to reserve fund under Service Charge
No
Change any provisions for entry to include what
Reasonable times w/ reasonable notice unless emergency
What should happen if lease not reinstated by end of the rent suspension period (2 ways)
Terminate immediately upon expiry w/ notice, or provide for notice period within rent suspension period
Why will L want to include rent and service charge in annual rent
To use forfeiture w/o needing 146 notice and also CRAR
Example of services which should be excluded from Service Charge as excluded as TO elsewhere
Repairing Inherent Defects or contamination
What two risks should ‘Insured Risks’ cover
Flooding and damage caused by Terrorism as defined in the Terrorism Act 2000
Change ref to ‘immediately’ too?
ASAP
If L is able to require T w/ notice to remove all chattels and alterations, what should you draft in to restrict L’s right
Must be reasonable for him to so require
Should services by L be conditional on T paying service charge?
No
What is it normal for T to be able to install/remove w/o L’s consent
Internal demountable partitioning, as long as making good damage caused
How should L exercise any discretion under Services
In the interests of good estate management
What should T’s O to replace articles be limited to
Similar articles if beyond economic repair
If L has rejected T’s rent, what interest should T pay
Normal interest rate, not Default
If L is able to insure against other risks, what connecting word should be used to ADD this discretion to the list
‘And’, not ‘or’
Case on self-help
Jervis v Harris
When might T be able to claim compensation for alterations
If statutory procedure followed + no O to reinstate
What is self-help
L can recover cost of repairing when T in breach as debt
Jervis v Harris ratio
Self-help
What should happen at RR regarding T’s alterations
Disregard
What express clause should be included in break clause
Refund proportion of rent + VAT overpaid to next Rent Payment Date
Should provision of services be subject to L not being obliged to apply insurance monies to damage caused by IR?
No
How to work out what is T’s fair proportion of Insurance Rent
By metre squarage of premises
Why is it important break clause isn’t personal
Harder to assign lease
What should happen if overpaid through provisional service charge
Credit to next payment
If L is able to decide to change Services, what may T ask L to do
Require T’s consent (but may be refused)
M&S v BNP showed what
Need express clause to recover overpaid rent when exercising break clause
Example of cap on any single service, e.g. MA fees
10% of Service Costs for single service
If lease states T to assume VL for contractors, do what?
Limit to (U)T only to reduce exposure to risk
Should T agree to comply w/ recommendations of service suppliers?
No - not statutory O
Insurance for reinstatement should be limited to what
Reinstatement COST, not value
What statutory O should T explicitly exclude any liability for
Liability for remedying contamination not caused by T
What might the effect be if one side takes advantage of other side’s mistake
Rectification or agreement being a nullity
Does L HAVE to insure property?
Yes - should be obliged to
M&S v BNP ratio
Express rent refund
How can you protect T in service charge regarding excluding L’s ability to recover VAT
Exclude VAT if capable of recovery, not just if recovered
What should lease state if L does not recover enough money from insurer to repair damage by IR
Cannot be recovered as Service Charge
What should T obtain if new build
CWs from Professional Team
If consent/approval to be obtained from other party, what amendment should be made
Not to be unreasonably withheld or delayed
Who draws up lease from Hot
L’s S
What should Default Interest Rate be
4/5% above Interest Rate and no more
Who should sign Service Charge Certificate
Independent accountants/auditors who are suitably qualified
If there is an undertaking to do a specific endeavour, what should it say
Use reasonable endeavours
Example of cost which L is entitled to be reimbursed from another source, so should not claim from Service Charge
Payments from insurers for damage by Insured Risks
What can L’s O to insure the property be subject to
Insurers’ exclusions
Change any ref to ‘cost’ too?
Reasonable and proper costs, cap to X figure
What defects will need to be defined for repair Os in new build
Latent and Inherent Defects
Change ‘discretion’ to?
Reasonable discretion
What endeavours should T argue for L to use for Services
Best
Change ref to ‘on demand’ too?
Within X days of receipt of written demand
Why argue that consent to alter should also not be unreasonably delayed - why is it important
S.1 LTA ‘88 does not imply
Why can’t one side take advantage of other side’s mistake
Against Principle 2
Express rent refund case
M&S v BNP
What services should be excluded from Service Costs
Any services T will not benefit from, services T has excluded as TO elsewhere, or costs L is entitled to reimbursement from other source
What should forfeiture not affect
Rights/remedies in event of breach of either party
What does the Code state about damage by Uninsured Risk + termination
T should have right to terminate unless L willing to rebuild
When should there be no O for T to decorate again
If already decorated in 24-month period, and not before end of term if SoT under ‘54 Act
What O should T have to decorate internally
Only every 5 years
If a decision of L might affect T, what should L act in
Interests of good estate management
