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prop > 7. Security of Tenure > Flashcards

7. Security of Tenure Flashcards

1
Q

first thing to do in SOT question (in your rough notes)

A
  1. who is T
  2. who is LL
  3. CED
  4. Who are you acting for
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2
Q

EXAM STRUCTURE

A
  1. Issue - what does LL/T want to do
  2. Does 1954 Act apply - s.23(1)
  3. excluded lease? (s.43)
  4. contracted out (s.38A)?
  5. Protection given under s.24 (because it is protected under part II LTA 1954)
  6. any other notice been served?
  7. discuss requirements for each specific s.25 (hostile/friendly), s.26, s.27
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3
Q

tenancy

A

Street v Mountford requirements must be established (exclusive possession for a term absolute)

includes: periodic tenancies, fixed term tenancies, oral and written tenancies
excludes: licenses, tenancies at will (terminable at any time by either party)

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4
Q

occupation

A

Tenant must be the occupier of at least part of the premises to obtain protection (and if only occupier of part, only entitled to apply for new lease of the part it occupies)

If tenant underlets all the premises, it loses protection under 1954 Act

Consider: measure of control it exercises over anyone else using the premises

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5
Q

has the lease been contracted out under s.38A?

A

IF YES - SOT does not apply

in exam - “nothing to suggest this but..”

  • should check lease to see if parties contracted out of 1943 Act
  • see if it was a valid contracting out
  • lease should include clause stating s.24-28 LTA 1954 has been excluded and refer to the LL’s warning notice and T’s declaration in relation to this exclusion
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6
Q

Business (s.23(2))

A

business:

  • members of tennis club/charity
  • incidental residential use

not business
- sunday school

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7
Q

protection given under LTA 1954 (s.24)

A

T has 2 layers of protection

ONE - right to hold over (i.e. stay in occupation of leased premises after CED has passed)

TWO - right to apply to court for an order for grant of a new lease of leased premises

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8
Q

S.26 exam struture (after main)

A
  1. discuss strategy (e.g. rents going down, T wants to serve notice ASAP so PCD is as early as possible so T can get new lease ASAP and take advantage of lower rents)
  2. prescribed form + competent landlord
  3. must set out T’s proposals for new lease (s.26(3)) and PCD
  4. can be served before or after CED
  5. PCD = cannot be less than 6m or more than 12m from the date s.26 request is served (AND cannot be before CED - but can be on the day of)
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9
Q

s.25 notice exam structure

A
  1. Discuss strategy
  2. prescribed form + state STD + served by competent LL

3.
a) if hostile - specify s.30(1) grounds (s.25(7)) at least 1

b) if friendly - state proposed new terms (s.25(8)) and attach to s.26 notice
4. STD cannot be less than 6m or more than 12m from date notice is served BUT cannot be before CED (can be on the dat of though) - s.25(4)

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10
Q

grounds of opposition - when talking about it

A

specify at least 1 ground

  • apply to facts
  • identify relevant issues
  • time frames?
  • likelihood of success?
  • consider D first
  • then consider other ones
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11
Q

proposed new terms - when talking about it

A

s.26(3) - must include description of premises, propsoed rent, other key terms

  • good practice: specify proposed length
  • new lease must be based on terms of old lease
  • new clauses must justified by person suggesting changes
  • not binding just starting point
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12
Q

s.27 notice - exam structure

A
  1. explain s.27
  2. immediate LL and at least 3m before date it wishes to leave
  3. result - if T vacates on or before CED, T’s obligations under lease (e.g. paying rent) will end on CED (s.23 requirement not satisfied so T doesn’t enjoy 1954 act protection) BUT FOR CERTAINTY / BEST PRACTICE - T may wish to serve s.27 notice anyway

if notice served: obligations end on expiry of notice

(can’t serve s.26 if s.27 served)

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13
Q

s.27 - what is it

A

served by T

  • used to terminate lease without requesting renewal lease
  • no requirement for notice to be in prescibed form
  • cannot use this to end lease before CED (if T wanted this, should have asked for break clause)
  • only necessary if T does not plan to vacate premises by CED (s.27(1A))
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14
Q

CORRECT PARTIES?

A

S.40 - enables parties to require each other to provide specific info during last 2 years of lease term

  • LL can serve s.40 notice on T requesting info such as details of underlettings (whether it still occupies or all or part of the premises)
  • T can serve s.40 notice on LL to find out identity of freeholder/superior LL
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15
Q

how to serve?

A

lease provisions

if lease silent - s.23(1)

  • personal service
  • leave at last place of business/abode of relevant party
  • reg./recorded delivery may be used (service deemed to occur on date of posting if evidence or posting is retained) - Railtrack v Gojra
  • other types of service may be effective (e.g. ordinary post) but only if notice actually recieved (service deemd to occur on date of receipt)
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16
Q

Mannai Investment v Eagle Star

A

If notice has an error in it –> valid if it would not mislead a “reasonable recipient”

court considers if notice is sufficiently clear to leave a reasonable recipient in no reasonable doubt as to terms of the notice

slight error in prop address prob won’t confuse most reasonable recipients

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17
Q

corresponding date rule (for calculating expiry of notice period)

A

same date as that on which it was served

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18
Q

“from and including”

“commencing on”

(calculating CED)

A

Lease expires DAY BEFORE that day in relevant year/month

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19
Q

“from”

calculating CED

A

Lease expires on the same day

because if from e.g. 25 March it actually commenced on 26 March

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20
Q

if counting time = not possible because different months have different days

A

last day OF THAT MONTH

e.g. 7m notice
Served on 31 July 2017
Expire on 28/29 Feb 2018

21
Q

common error - not reading this properly:

Q: “last date you can serve the notice for earliest CED/PCD”

A

this doesn’t mean latest date STD/PCD can be on (12m from notice)

  • this means 6m before CED
22
Q

excluded tenancies under s.43

A
  • tenancies of agricultural holdings
  • mining leases
  • service tenancies (e.g. security guard’s flat)
  • fixed term tenancy not exceeding 6m BUT can arise if same tenant occupied for 12 or more months or tenancy renewable beyond 6m
23
Q

when might LL contract out

A
  • short term letting
  • LL wants to be certain of end of lease term
  • ensure it can regain premises at end of lease term
24
Q

when might T contract out

A
  • lower rent
25
Q

normal method for contracting out

A
  1. warning notice on T (states contracting out + no protected tenancy, draft lease attached = good practice, prescribed form) AT LEAST 14 DAYS BEFORE T BECOMES BOUND TO ENTER THE LEASE
  2. T signs simple declaration (received and accepted consequences of notice)
  3. lease must contain wording parties have agreed to exclude SOT and ref to LL’s warning notice and T’s declaration
26
Q

shortened method

A
  1. LL serves warning notice on T
  2. T signs statutory declaration
    - in front of independent solicitor to effect warning notice has been recieved and T accepts consequences
    - 14 day period for notice waived
  3. lease must contain wording parties have agreed to exclude SOT and ref to LL’s warning notice and T’s declaration
27
Q

previous procedure for contracting out (before Reform Order entering force in June 2004)

A

court order (permitted parties to contract out of 1954 Act)

  • obtain court order
28
Q

when contracted out lease expires

A

T might continue to remain in premises and pay rent if suits both parties

DANGER: LL/T deemed to have entered periodic tenancy and 1954 protection from date of old lease expires

SOLUTION: LL should seek express acknowledgement from T before lease expires from T that it will occupy premises as a T at will (to make sure it doesn’t get protection from 1954 Act)

29
Q

2 key differences in procedural steps between s.26 and s.25

A

ONE – counter notice (s.26)

TWO – deadline for application to court (s.25 = STD, s.26 = day before PCD)

30
Q

s.25 notice (hostile) - procedure after service

A
  1. L or T apply to court

L - applying for termination of lease (s.29(2) + establish s.30(1) grounds to court satisfaction, s.29(4))
T - applies for new lease and hope court won’t uphold grounds of termination cited by LL (s.24(1) )

once app made by one party and served on other, other cannot submit (s.24(2A)) - just challenge app

  1. TIMING - any time after service, and by STD (s.29A(2)(a)), failure = T loses right to apply for new lease
    (s. 29B - DEADLINE can extended by agreement in writing between parties - if parties have not agreed after extentino, app must be made at that point)
31
Q

s.25 notice (friendly) - procedure after service

A
  1. court application by LL or T (more likely T or lose right to apply for new lease - L might apply if it wants to settle terms of new lease and ensure court is called to intervene if parties cannot agree)
  2. timing (same as s.25 hostile) - by STD

[can agree extension in writing before STD passes - s.29B)

32
Q

why would LL serve friendly s.25 notice

A
  1. peace of mind - knows T is tied to further term during which LL guaranteed rent
  2. market rent has increased - if T remains in occ under old lease, it pays old level of rent
33
Q

why T serve s.26 request?

A
  1. rental negotiation (market rent has fallen below contract rent)
  2. pre-empting LL’s s.25
  3. wants to improve premises and wants new lease to be certain of continued occupation before incurring expenditure
  4. wants to assign so wants certainty of occupation if CED approaching
34
Q

s.26 procedure after service

A
  1. LL serves counter notice (2m of s.26 request) to oppose app
    - otherwise lose right to oppose
    - might do it if does not oppose so parties can move on
    - if oppose - LL must state s.30(1) grounds it wants to rely on
  2. court app by T or L after LL serves counter notice or 2m if LL fails (deadline = day before PCD, can be extended in writing)
    - T more likely to make it (or lose right to apply to renew lease)
    - apply even if LL agrees (fall back provision, if LL backs out or can’t agree terms)
    - L can apply for new lease (fall back) or to order no lease be granted (if served counter notice) by providing s.30(1) grounds set out in counter notice
  3. withdraw court app if L and TT negotiate and come to agreement on terms
  4. protect court application so any 3P purchasing LL’s freehold = bound (UN1 unilateral notice on LR or pending land app if unreg)
35
Q

implications if original lease was a lease where stamp duty was paid

A
  • NO SDLT in holding over period (unless some other event like deed of variation)
36
Q

implications if original lease is one SDLT was paid on

A
  • holding over period counts as extension of new lease
  • recalculate net present value at beginning of every year T holds over
  • if further SDLT due, T must submit return and make payment
37
Q

s.30(1)(d) - alternative accomodation

A
  • L must have made an offer of suitable alternative accommodation
  • Must be reasonable in all circumstances having regard to T’s business/goodwill/etc.,
  • If currently in town centre, accommodation in outskirts would likely not be suitable
  • Size is irrelevant if location is unsuitable
38
Q

s.30(1)(f) - intention to demolish

A
  • firm and settled (e.g. PP/commercial contracts obtained)
  • to demolish/reconstruct or carry out substantial works of construction
  • could not do it without obtaining possession
  • cannot be minor works
  • possession of whole required
39
Q

s.30(1)(g) - occupy premises itself

A
  • firm and settled

- only if LL purchased reversionary interest more than 5 years period to STD set out in s.25 notice

40
Q

s.30(1)(a) - repairing obligation

A

must be serious

41
Q

s.30(1)(b) - rent

A

must be serious + persistant
look at length of delay
look at occasions of default

42
Q

s.31(2) - near miss

A

If LL fails to prove (d), (e), or (f) at court BUT can show he could prove if termination date in s.25/s.26 had been up to 12 months later, court MUST refuse T’s application for new lease (s.31(2))

43
Q

when is comp avaliable

A

if LL cites grounds (e), (f), (g)

if LL proves a comp ground and a non-comp ground = no comp avaliable

44
Q

amount of comp

A

s.37

rateable value = set by local authority

multiplier = set by statutory instrument (1)

If same business occupied premises less than 14 years (s.37(2)b):
(multiplier) x (rateable value)
1 x (rateable value)

If same business occupied premises for 14 years or more (s.37(2)a, s.37(3)):
(multiplier) x (2 x rateable value)
1 x (2 x rateable value)

45
Q

other compensation - misrep

A

s.37A
• Landlord falsely relies on a ground that does not apply to his situation

• AND: either court refuses new lease or tenant does not make an application to court at all or withdraws his application

46
Q

exclusion of statutory compensation under s.37

A

s. 38(2) - agreement is void UNLESS
- T only in occupation for less than 5 years

or

  • Agreement entered into after right to comp has accrued
47
Q

new lease - terms?

A

s.32-35

premises - holding at date of court order

term - discretionary (not more than 15 years)

rent - market rent, valuation formula in 1954 Act (consider assumptions and disregards and comparables)

term commencement date - date current lease ends

  • if no app to court - ends on STD or PCD (s.25/s.26)
  • if app made - lease ends 3m and 21 days after order for grant of new lease made by court (new lease commences folllowing day)
48
Q

O’May v City of London

A
  • Current tenancy is the starting point
  • It is for the party who wishes to change existing terms to justify the change by reference to changes of circumstances
  • Court will consider proposed amendments
  • Court will decide terms of the new lease according to justice and fairness having regard to all relevant circumstances
  • Court should NOT try to freeze terms of current lease (some terms may be out-of-date or unsuitable)

prop (12 decks)

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