6. Leases 2 Flashcards
Which document allows assignment
licence to assign
key issues to be checked when assigning a lease
- is consent required from landlord
- ## length of the residue of the term
what might a landlord require
references on the prospective buyer,ensuring they are solvent and trustworthy
sources of referees
current landlord
buyer’s bankers
buyers employer
professional person
person/company with whom the buyer regularly trades
3 years audited accounts in case of a co or self employed person
what is a surety
a guarantor
AGA
where buyer guarantees performance of tenant’s covenants by the buyer
when may a landlord require a seller to enter into an AGA
prior to granting consent
does landlord have to be reasonable in requesting an AGA
no- unless the lease did not provide for an AGA
can a tenant impose incoming assignees obligations onto a surety
no good harvest partnership v centaur services
alienation
assignment/parting with possession of the property
what happens where there is an absolute covenant against alienation in the lease (the tenant shall not assign or part with possession of the property)
any assignment is a breach and can lead to forfeiture of the lease
what restrictions are imposed on absolute covenants
not subject to any statutory restrictions, bar the Equality Act 2010
what is a qualified covenant?
permits the tenant to assign, provided that the seller tenant obtains the prior consent of the landlord to the dealing
s19 LTA 1927
non-excludable proviso that the landlord cannot unreasonably withhold consent
procedure for qualified covenant
- L served written notice for consent (must give consent within erasonable time)
- L to serve written notice of their decision on the tenant, stating any conditions (if any)or if the consent is refused, stating reasons for withholding consent
What happens if a landlord breaches his duty under the 1988 act to give written notice
breach of statutory duty, giving a remedy to tenant in damages
when are landlords obligations under 1988 act triggered
upon proper service of the written application for consent
EON UK v Gilesports
landlords statutory duties were not triggered, as application for consent was made via email- irrelevant that the landlord received service
N01 West India Quay
tenants request to assign was not validly served, as it had been sent to an addressed provided by landlord in the sales pack, not to registered office as specified in notices clause
what can the landlord demand in return for consent to assign
a premium
what can the landlord demand of the tenant regarding preparation of the deed of consent
landlord solicitors reasonable charges
SC 8.3 what should a seller do when applying for consent
Seller must apply for consent at their own expense and to use all reasonable efforts to obtain such consent
up to which point may either party rescind the contract
if consent has not been given 3 working daysbefore completion date/or if by that time, consent has been given subject to a condition to which the buyer reasonably objects
what does SCPC 11.3.3 require of the seller
seller must enter into an aga
scpc 11.3.5
if consent has not been obtained by completion date, completion is postponed until 5 working days after seller notifies buyer that consent has been given
what must the seller and landlord refer to in relation to disputes
protocol for applications for consent to assign or sublet
SC 4.1.1; SCPC 7.1.2
seller must provide buyer with official copies of the register and title plan. a copy of the lease must also be provided, and buyer is treated as entering into the contract knowing and fully accepting the lease terms
what happens if there is no deduction of reversionary title
lease may be unacceptable to the buyer and/or lender
s44 LPA 1925 rule
buyer entitle to call for the lease or sublease which they are buying, but is not entitled to call for evidence of any superior title
method of transferring legal title
by deed s52(1) LPA 1925
which form of deed is used to transfer a lease
Form TR1
what happens when a lease of over 7 years (in unregistered land) is transferred
triggers compulsory first registration
what happens if seller is in breach of repair covenant
lack of repair could involve them in liability to the buyer under completion due to implied covenants in the transfer deed- in such a case, express modification is required in the transfer deed
example of modification to the transfer deed
The covenants set out in section 4 of the LPMPA act 1994 will not extend to any breach of the tenant’s covenants in the lease relating to the physical state of the property
box 9 of TR 1
what is implied in relation to assignment of leases granted prior to 1 jan 1996
indemnity covenant from buyer to seller, except in unreg land where value is not given by buyer (s77, LPA)
are sellers automatically released for future liabilities on assignment for leases granted on/after 1 jan 1996
yes unless there is an AGA, following which an express indemnity covenant is to be included
why is an official search to be carried out
to check for any new entries, and gain a priority period within which to register the transfer
additional searches against freehold where it is unregistered
land charges department search against estate owners to check for any incumbrances on the freehold which may affect the leasehold interest
why might apportionment of sums be relevant
seller likely to have paid rent in advance. buyer to reimburse seller for the period from completion until the next rent day
what should seller supply buyer with
completion statement, showing amounts due and how they have been calculated + receipt copies
what happens on completion
buyer pays seller balance of purchase price and other sums due
is SDLT payable on assignment
only on any purchase price charged by the seller
what must be done after completion
notice to be given to landlord of an assignment. recipient to be asked to sign and return the receipted copy to sender
when should a lease be registered at land registry
the transfer within the priority period given by buyer’s pre-completion searches
when does an unregistered lease need to be registered
within 2 months of assignment, or will be void
are lease terms on assignment negotiable
no- the lease is already in existence, so the terms cannot be negotiated
