5.2: Commercial Lease: RR

Question 1

How to change any assumption that T is in possession/occupation

Answer 1

Replace w/ ref to vacant possession

Question 2

What happens to RR memorandum once signed by both parties

Answer 2

Annexed to the lease

Question 3

How to divide costs of RR between parties

Answer 3

Each party to pay their own costs of RR

Question 4

Why is it unfair to assume that T has not carried out work that has diminished value

Answer 4

Some works are required by statute and still diminish value

Question 5

Why is it unfair to assume that premises are fully fitted out and ready for immediate occupation

Answer 5

No costs are involved, so attractive to T - T would usually ask for rent-free period

Question 6

What does Code recommend for RR

Answer 6

Upwards and downwards

Question 7

What are the two general rules on assumptions at RR, if acting for T

Answer 7

Resist any assumptions that are less restrictive than under actual lease, and ensure hypothetical lease includes similar RR provisions

Question 8

Why is it unfair to assume that T has had benefit of any and all concessions

Answer 8

Surveyor would go straight to rent after concessionary period, which is usually higher for L to recoup losses

Question 9

How to change assumption that all covenants have been complied with

Answer 9

Only T’s covenants have been complied with

Question 10

How to change assumption that T has benefit of PP/other consents

Answer 10

Remove completely

Question 11

Why is it unfair to assume all covenants have been complied w/

Answer 11

Allows L to benefit from any potential breach

Question 12

What does T pay once valuation completed

Answer 12

Pays arrears + interest

Question 13

When is time of the essence for RR

Answer 13

Only when EXPRESSLY included

Question 14

How to change a disregard of alienation restrictions

Answer 14

Remove completely

Question 15

Why is it unfair to disregard RR provisions entirely

Answer 15

Higher rent for no RR as certainty for T

Question 16

What is the most common type of RR

Answer 16

Open market

Question 17

How is open market RR done

Answer 17

Periodically re-valuing rent using comparable + hypothetical lease

Question 18

What kind of rent should surveyor NOT be required to consider in RR clause

Answer 18

Best rent

Question 19

How to change a disregard of only any alterations voluntarily carried out by T

Answer 19

Ensure covers works by predecessors and works in pursuance of statute or BEFORE term

Question 20

How to change an assumption that T has had benefit of any and all concessions

Answer 20

Restrict to concession for fitting out purposes only

Question 21

Why should you assume that any damage caused by an Insured Risk has been fully restored

Answer 21

Insurance monies will be available and L should have O under lease to use monies to fix damage

Question 22

What is the usual pattern for RR

Answer 22

5-year patterns

Question 23

What happens to T’s payments pending valuation

Answer 23

T pays old rent

Question 24

Why restrict an assumption that T has had benefit of any and all concessions to for fitting out purposes only

Answer 24

Rent-free fitting out period is usually offered, but assuming all concessions already given would mean can’t consider L inducing T w/ lower rent

Question 25

Why is it unfair to only disregard alterations voluntarily carried out by T

Answer 25

Also want to exclude those carried out in pursuance of statute, as can be very costly

Question 26

Why is it unfair to NOT disregard T's goodwill at RR

Answer 26

Comes from T's own effort so makes lease more attractive

Question 27

If lease is subject to SDLT and RR after five five years, what happens

Answer 27

Only payable if abnormal increase - \>20% of rent charged to SDLT

Question 28

How to change an assumption that premises are fully fitted out and ready for immediate occupation

Answer 28

Remove completely

Question 29

What is signed once RR completed and agreed

Answer 29

RR memorandum

Question 30

What additional provision should you include when disregarded T's occupation, goodwill or fitting out

Answer 30

Occupation, goodwill or fitting out of any permitted occupier or UT

Question 31

Should L be able to require RR to be determined by arbitrator instead of surveyor?

Answer 31

No

Question 32

Why is it unfair to assume T can recover VAT charged/not disadvantaged by election to waive VAT exemption

Answer 32

Some Ts cannot recover VAT, so in reality VAT makes lease less attractive - wouldn't be reflected in RR

Question 33

How to change an assumption that T can recover VAT charged

Answer 33

Remove completely

Question 34

Why is it unfair to NOT disregard T's occupation at RR

Answer 34

T likely prepared to pay higher rent to stay in occupation

Question 35

How to change assumption that T has not carried out works that have diminished value

Answer 35

State 'unless required by statute'

Question 36

Why is it unfair to assume any damage has been fully restored

Answer 36

Damage may not be + L benefits from potential breach

Question 37

What three things is it unfair NOT to disregard at RR

Answer 37

T's occupation, goodwill and fitting out of premises

Question 38

How to change an assumption that any damage has been fully restored

Answer 38

Damage by Insured Risk to means of access/services enjoyed

Question 39

Why is unfair to assume T's occupation of the premises at RR

Answer 39

No hypothetical T would make reasonable offer for occupied premises + sitting T would pay more

Question 40

Should L be able to serve notice requiring earlier RR?

Answer 40

No

Question 41

What is the frequency of RR called

Answer 41

Patterns

Question 42

Why is it unfair to disregard alienation restrictions in actual lease at RR

Answer 42

Lack of restrictions makes lease very attractive + does not reflect reality

Question 43

Why is it unfair to disregard reinstatement Os in actual lease

Answer 43

Onerous provision which T is required to comply w/

Question 44

Why is it unfair to NOT disregard T's fitting out of the premises at RR

Answer 44

Increase in value is totally attributable to T's efforts

Question 45

Why should surveyor NOT consider 'best' rent

Answer 45

Takes account of special bidders with particular interest.

Question 46

If lease is subject to SDLTand RR during first five years, what happens

Answer 46

Calculate NPV for whole term and then use higher rent for SDLT

Question 47

How to change a disregard of RR provisions

Answer 47

Remove completely.

Question 48

How to change a disregard of reinstatement Os

Answer 48

Remove completely

Question 49

What to do if L will not agree to change so that assumed that only T's covenants have been complied with

Answer 49

State 'all covenants complied w/' but w/ caveat - 'provided L not in persistent/material breach' of covenants

Question 50

Why is it unfair to assume that T has benefit of PP/other consents

Answer 50

Makes lease much more attractive as PP valuable, whilst not reflecting actual state of lease

Question 51

What interest should T NOT pay once valuation complete and why

Answer 51

Default Interest Rate - not due to T's default, so only pay at standard

Question 52

When are there absolutely no SDLT implications at RR

Answer 52

If lease subject to stamp duty