6. Leases: Structure and Content Flashcards
(23 cards)
Which leases must be executed by deed?
Those over 3 years in duration
What is a FRI lease?
Full repairing and insuring lease. Tenant meets all costs.
When can leases commence?
Before, during, or after the completion of the lease.
What is a reversionary lease?
One that commences after the lease is completed.
What does ‘from and including’ mean?
Lease expires the day before specified commencement date at the end of the period.
What does ‘from’ mean?
Lease commences the day after the ‘from’ day and expires on the from day plus lease duration.
What is rack rent?
Market rent
How is rent expressed and paid in a FRI commercial lease?
Expressed yearly, paid quarterly
Traditionally, when do the quarters start?
25th Dec
25th March
24th June
29th Sept
When do modern quarters start?
1st Jan
1st April
1st July
1st Oct
If the lease doesn’t say, is the rent paid in advance or in arrears?
Arrears
What happens if a party completes a lease during a quarter?
Quarter is apportioned.
What is an upwards only rent review clause?
Rent can only go up or stay the same, no matter what the market is doing.
What two things does a valuer consider when deciding on the new rent?
Rent payable for comparable premises and a hypothetical lease
How do the parties record the new rent price?
Memorandum of rent review
What period of rent is SDLT / LTT based on?
5 years.
What are the different types of requirements in the Code for Leasing Business Premises?
Mandatory and Good Practice
Three situations where the Code for Leasing Business Premises does not apply
- Agricultural lettings
- Tenancies less than 6 months
- Where the tenant intends to wholly sublet premises
When must good practice requirements be followed?
In all cases unless there are exceptional circumstances
To whom does the Code for Leasing Business Premises apply?
Members of, or firms / landlords regulated by, the Royal Institution of Chartered Surveyors
What are the Code’s four mandatory requirements?
- Negotiate in a constructive manner
- Inform unrepresented parties about the Code and recommend they seek professional advice
- Ensure the heads of terms comply with the Code before draft lease is circulated (landlord)
- Prepare written heads of terms covering various things
What is good practice in relation to the repairing obligation?
Tenant’s obligation proportionate to lease length and state of repair; for newbuilds they should be protected against inherent construction defects
What is good practice in relation to property damage?
Lease should be suspended if premises damaged by an insured risk.
In the case of uninsured risk, lease should be suspended unless it was the tenant’s fault
