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PLP 1 > 8 Alienation > Flashcards

8 Alienation Flashcards

1
Q

Who is the assignee?

A

New tenant

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2
Q

Who is the assignor?

A

existing tenant

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3
Q

What is the meaning of alienation?

A

a disposal of all or part of the tenant’s interest in the lease.

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4
Q

What is the meaning of assignment?

A

When a lease is assigned by the existing tenant (assignor) to the new tenant (assignee).
- the NEW tenant is now entitled to exclusive possession of the premises, and is obliged to pay rent and perform covenants

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5
Q

Why an assignment?

A

A tenant may want to assign the premises if they no longer need them for the purposes of their business or cannot afford to keep paying rent
- if the lease is silent, then the tenant is free to assign

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6
Q

What does an absolute covent in relation to assignment mean?

A

assignment is not allowed

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7
Q

What is privity of contract?

A

the ability of the original parties to a contract to enforce the obligations against each other, even after the contract has been assigned

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8
Q

What is privity of estate?

A

the ability of the landlord and tenant for the time to enforce the provisions of a lease against each other

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9
Q

What is an Authorised Guarantee Agreement (AGA)

A

document whereby the original tenant can agree to guarantee the obligations of the incoming tenant

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10
Q

What is an undertaking for costs and who will ensure that they are funded?

A
  • A promise by the landlord’s solicitor to pay costs
  • The tenant’s solicitor
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11
Q

Who’s solicitors are party to exchange in an assignment of a lease, landlords, tenants or new tenants?

A

Tenant and New tenant’s solicitors

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12
Q

Who’s solicitor, Landlord or Tenant, deduces title to the new tenant in the process of assignment of a lease?

A

Tenants solicitor (will provide leasehold title, copies of lease etc to new tenants solicitor)

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13
Q

Who’s solicitor, in the process of assignment, drafts the licence to assign? Landlords, Tenants or New Tenants?

A

Landlords solicitor

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14
Q

What is the assignee’s solicitor’s tasks on completion of the assignment process?

A
  • arranges to submit SDLT or LTT and pay if necessary
  • registers assignment if necessary
  • sends formal notice of assignment to landlord’s solicitor
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15
Q

What is the meaning of underletting?

A
  • When an under lease is granted to an under tenant
  • the tenant becomes the landlord of the under tenant
  • shorter term than the lease itself, can be a day or shorter
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16
Q

Why would a tenant underlet his premises?

A
  • they are not using all of the premises, and it is possible to underlet part they are not using
  • they do not need the premises atm
16
Q

Meaning of a qualified covenant against underletting

A

underletting is only allowed with the landlord’s consent

16
Q

in what type of lease can a landlord be able to restrict an underletting? and why?

A

commercial lease, because it will impose a requirement of consent

17
Q

Does a privity of contract exist between a landlord and an under tenant?

A

No

18
Q

Does a privity of estate exist between a landlord and an under tenant?

A

No

18
Q

Where can a direct covenant be given by the undertenant to the landlord?

A

License to let

18
Q

Who’s solicitor drafts the underlease in the process of underletting, Landlords, Tenants or undertenant?

A

Tenant’s (should be in line with the conditions of their original tenancy agreement with their landlord)

19
Q

What will the landlords solicitor draft on pre-exchange in the process of underletting?

A

A draft licence to underlet

20
Q

What searches are carried out for underletting? (OS1 or OS2 or OS3)

A

unlike assignment where it’s only OS1, underletting the normla rules apply.

So OS1 if underletting of whole of the tenants interest
OS2 if its part of the tenants interest
OS3 if unregistered title

21
Q

On post completeion of underletting, who’s solicitor serces notice of underletting to landlord, Tenant or undertenant?

A

Tenant

22
Q

In underletting of a lease, who pays the rent and ensures other obligations are performed? Tenant or undertenant?

A

Tenant (but tenant recieves a rent from undertenant)

23
Q

Following assignment and underletting, who gives notice to the landlord that the transaction has been completed? (hint, it’s a different party for each one)

A

Assignment = new tenant (assignee)
Underletting = Tenant

24
Q

You act for an individual landlord who has received an application to underlet one of their units to a sole proprietor. The sole proprietor has a successful business, plenty of capital and excellent tenant references and credit score. However, the landlord knows the sole proprietor from a club that they both belong to, and they have had a falling out. For that reason alone, the landlord does not want to grant the consent.

How do you advise the landlord?

A. The landlord cannot unreasonably withhold consent, but it is reasonable to withhold consent to a sole proprietor as their covenant strength is less than a company’s.

B. The landlord can unreasonably withhold consent as it is only a qualified covenant.

C. The landlord is required to act reasonably if withholding consent, and personal feelings are not a reasonable ground for withholding consent. The landlord may, however, stall for time and hope that the proposed underletting falls through.

D. The landlord is required to act reasonably if withholding consent, and personal feelings are not a reasonable ground for withholding consent. The landlord will likely have to give consent within a reasonable time.

E. The landlord cannot unreasonably withhold consent, but given that the underlessee might end up being the direct tenant of the landlord, it is reasonable to take their personal relationship into account as it might make their business relationship unworkable.

A

D

25
Q

A tenant, A Ltd, has applied for consent to assign a five year lease to the assignee, B Ltd. The lease is dated after 1 January 1996.

You act for the landlord, who has asked you to advise who would be liable for the obligations of the lease after the assignment. How would you advise?

A. The incoming tenant if the landlord requires an authorised guarantee agreement; otherwise the outgoing tenant retains liability.

B. Both the outgoing tenant and the incoming tenant as it is a new lease.

C. The incoming tenant provided that they give a direct covenant to the landlord to observe the obligations of the lease.

D. The outgoing tenant unless they enter into an authorised guarantee agreement, and the incoming tenant automatically on taking the assignment.

E. The outgoing tenant if they entered into an authorised guarantee agreement, and the incoming tenant automatically on taking the assignment.

A

E

PLP 1 (5 decks)

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