Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

prop > 9. Contents of lease ii > Flashcards

9. Contents of lease ii Flashcards

1
Q

general exam structure - the 4 Ls

A 
Lease (+ supplementary docs)
Law (statute and case law)
LL's title (freehold issues)
Local Authority (PR, BR)

Consider also:

  • L’s costs (legal/professional) - recoverable?
  • can L demand money as condition?
  • how will consent be documented?
  • what covenants can LL grant?
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

LL’s objectives

A

ensure premises are:

  1. insured
  2. repaired (ensure return on investment)
  3. used only for permitted purpose (retain control)

LL will want ALL COSTS passed to T (avoid its return being reduced by expenses)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

T’s objectives

A
  • NO RESTRICTIONS preventing T using premises for required purpose
  • flexible lease (use, alienation, alteration)
  • rent rises not too steeply
  • no unduly onerous provisions (e.g. unusual service charge, unusual RR provisions)
  • alienation possible
  • lease must be attractive enough to be marketable
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

ALTERATIONS - how to deal with questions

A

deal with each alteration separately

(e. g.
- removal of walls,
- removal of non-structural walls,
- removal of demountable partitioning)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

ALTERATIONS - lease

A

absolute - LL not obliged to consent (and can unreasonably say no) and if consent, can impose any conditions (e.g. premium, recovery of legal/proff costs)

qualified - LL’s consent required

fully qualified - LL’s consent required and can be unreasonably withheld

no restrictions - no consent required but check conditions (e.g. costs, whether T needs to notify LL when works are completed)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

ALTERATIONS - LAW

A

S.19(2) LTA 1927

QC –> FQC

  • APPLIES TO IMPROVEMENTS, this will be an improvement (Lambert v Woolworth)
  • applies only to QC
  • means LL must act reasonably
  • reasonable refusal must be referable to LL+T relationship

Conditions allowed:

  • charge for any legal or other expenses
  • reasonable sum for damage and diminution in value
  • undertaking to reinstate
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Iqbal v Thkrar

A

ALTERATIONS - LAW

LL entitled to reasonably not give consent

Ll had serious concerns as to consequences of works on structure of building

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

alterations - LL’s title

A

what consents are required?

  • check official copies
  • RC requiring PWB consent?
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

alterations - local authority

A

PP? unlikely

BR - LIKELY REQUIRED (consult surveyor for confirmation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

alterations - what if absolute covenant

A

LL can still give one-off consent for that particular alteration

Document one-off consent in:
- LICENSE FOR ALTERATION (LL can stipulate any conditions he wants - not subject to any test of reasonableness)

  • DEED OF VARIATION (if parties agree to permanent change to terms of lease) - usually found in deed packets and document deletion of clauses, additional clauses, and amendment of clauses
    s. 1 LTA 1998 does NOT apply to T’s request to make alterations (so T might want a clause to say consent to alterations may not be unreasonably withheld or delayed)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

change of use - when is this requested?

A

not usually by existing t

usually occurs in conjunction with assignment of lease (if this is the case, can combine 2 licenses or issue separate licenses)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

change of use - lease

A

what kind of clause is it?
is consent required?

usually more than 1 provision of the lease:

  1. clause setting out main wording
  2. definitions (‘permitted use’)
  3. definition might refer to Use Class Order (statute)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

change of use - law

A

s.19(3) LTA 1927

If NO STRUCTURAL ALTERATION and there is a change of use –>

LL CANNOT charge premium for granting consent (e.g. increase rent)

LL CAN charge for:

  • any legal/other expenses incurred
  • any damage/diminution in value of premises

(NB. statute says ‘alterations’ but it means change of use)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

change of use - LL’s title

A

other consent?

  • RC requiring PWB consent if PP needed to be applied for?
  • if yes, determine if PP is required (in detail)
  • and if needed, need PWB consent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

change of use - local authority consent

A

s. 57(1) - PP required for ‘development’
s. 55 - ‘material change of use’ is a development

  • what is use class now?
  • what will it be?
  • does GDPO permit this change of use without formal application of PP?

BR = will be required if T carries out building works

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

service charge = overview

A

All parts of building should be covered by T’s repairing obligations or L’s repairing obligations (no gaps)

  • LL wants FRI lease so upkeep of prop is borne by Ts
  • LL’s repairing obligations will be paid for by T under service charge
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

serivice charge = how to check

A
  1. check definitions of premises
  2. check T’s repairing obligations (what will T do)
  3. check L’s repairing obligation (what will L do)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

service charge - if lease of whole

A

T likely to assume responsibility for repair of the whole building

BUT

T may still have to contribute to some shared facilities (e.g. upkeep of access way/car park) – this will be recovered by way of service charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

service charge - if lease of part

A

T will only be directly responsible for repair of its ‘internal envelope’

BUT

T will be responsible for upkeep of its ‘Premises’ and LL will be responsible for maintenance of the structure and common parts – LL will recover cost of this via a service charge levied on all T in the building

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what should T look out for in service charge provisions?

A

SUSPENSION of covenant to pay service charge in event o insured damage (T already paid cost of insurance)

ENSURE T HAS EXPRESS RIGHT TO USE COMMON PARTS (otherwise contributing to upkeep without being able to use it) - i.e. make sure T can use all parts it is paying for

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Recommendation 6 Code

A
  • Encourages LL to be open at outset about service charge
  • let T know extent to which it will need to contribute to major improvements
  • let T know how SC is calculated and divided
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

service charge - what does T want

A
  1. reasonable and proper costs
  2. Only paying for services needed/used
  3. Not paying for unlet premises
23
Q

service charge - what does L want

A
  1. Clear rent
  2. Protect capital value
  3. T pays for all services
24
Q

EXPLAINING SERVICE CHARGE PROVISIONS - definitions (explanation)

A

‘Service Charge’

  • sets out proportion of total SC payable by T
  • proportion usually calculated according to internal area (sq. foot) of premises

‘Services’
- list of services
- carefully negotiated
- usually:
• maintenance and repairing structural parts of the building
• maintenance and repairing common parts
• heating, lighting, air-conditioning, pest-control, providing porterage, landscaping an estate, maintaining estate roads

25
Q

EXPLAINING SERVICE CHARGE PROVISIONS - definitions (check for T)

A

Ensure all services provided are “reasonably necessary” and

Costs and expenses are “reasonably and properly incurred”

Does NOT want it to include items that it will not require (e.g. lift if ground floor T)

Exclude costs towards maintenance of vacant units in LL’s property (void/unlet premises)

  • Service charge is apportioned between T by sq. foot
  • Not fair that if one unit is empty, all T shares are increased
  • Unlet premises should be LL’s responsibility
26
Q

EXPLAINING SERVICE CHARGE PROVISIONS - T’S COVENANTS

A

HOW IS IT PAID?
Usually:
- LL estimates annual cost of maintaining/providing services to whole building (based on previous year figures and/or estimates by LL’s surveyor acting as expert)

  • T pays for a quarter of their contribution on each rent payable day (usually on Quarter Days)
  • LL pays for services as costs arises (using service charge money)
  • AT END OF YEAR - LL confirms actual cost of providing services during the time

if more than estimate: further payment due from T usually on demand

if lower: surplus is carried forward as credit to next service charge year (if end of term, surplus repaid to T)

27
Q

EXPLAINING SERVICE CHARGE PROVISIONS - L’S COVENANTS

A

T needs express covenant by LL to provide ‘Services’

LL may resist absolute obligation to provide services – preferring obligation to provide service “as and when required” = unacceptable to T

T: “LL will provide Services, to a reasonable standard and at reasonable cost”

L: may dilute this to “best/reasonable endeavours” to provide services

28
Q

what will L usually do with service charge?

A

reserve it as ‘Rent’ (so no s.146 notice req. for forfeiture)

29
Q

recording consent - for alterations

A

LICENSE FOR ALTERATIONS

  • LL’s solicitor prepares
  • ensure correct parties
  • ensure compatible with lease
  • UT usually requires consent of immediate LL (T) and superior LL

LL considerations:
if works go beyond extent of premises demised to T:
- i.e. beyond ‘internal envelope’ as it affects structure
- LL should require lease covenants extent to alterations outside premises (otherwise T has no duty of repair re: them)

T considerations:
- alterations deemed to be T’s improvements will be disregarded on any RR (otherwise paying twice over - alteration and higher rent)

MORTGAGEE’S CONSENT TOO?

DEED OF VARIATION INSTEAD if permanent change of terms of lease (e.g. allow structural alterations any time during remainder of term)

30
Q

license for alterations - what covenants by T?

A
  • To carry out the ‘works’ (defined by ref. to plans attached to licence if possible) in accordance with LL’s requirements – i.e. to good standard with good quality materials (regarding quality of materials and workmanship and compliance with safety matters)
  • To obtain all relevant and necessary consents/permissions for works (e.g. PP, BR consent)
  • To reinstate the premises (and any structure which has been affected at the end of the term of the lease – usually means removing alterations)
  • To pay LL’s cost and expenses in dealing with T’s application for LFA
31
Q

recording consent - for change of use

A

LICENSE TO CHANGE USE

  • use if change of use envisaged by parties in lease
  • usually in T covenants referred to Definitions (which has QC for certain things)

DEED OF VARIATION

  • use if change of use NOT envisaged by parties in lease
  • absolute prohibition in lease so require DOV
  • can incorporate variations in terms of license if made by deed (but since it varies lease, when lease is registered, variation must be reg too)

BOTH WILL CONTAIN CLAUSE STATING T MUST ENSURE IT HAS NECESSARY PP (and oblige T to pay for any increase in insurance premiums resulting from change)

32
Q

deed of variation increasing extent of premises

A

effect of deed:
IMPLIED SURRENDER of existing lease AND REGRANT of new lease

SOLUTION:

(1) separate supplemental lease for additional land
(2) OR check if premises can be varied under lease (usually not - so must use deed of variation)

33
Q

deed of variation extending extent of term

A

effect of deed:
IMPLIED SURRENDER of existing lease AND REGRANT of new lease

SOLUTION:
(1) grant reversionary lease instead (takes effect at end of term of current lease as long as it commences no later than 21 years from date it was granted)

34
Q

consequences of implied surrender and re-grant

A
  1. SDLT due on new lease if premium paid (calculated by full length of term and annual rent - if 12 years into term and grant variation on 15 year lease, like new 15 year has been granted, SDLT for full 15 year period)
  2. If original lease reg, must do formal app to close title and open new one at LR
  3. old lease ends and ‘new lease’ granted for purpose of LTCA 1995
35
Q

pre-completion steps (LL)

A
  1. exchange agreement for lease (no deposit if no premium)
  2. reply to completion information form
  3. prepare engrossments of original and counterpart
  4. prepare for completion (get L to sign original)
  5. receive counterpart lease and completion monies
36
Q

pre-completion steps for T

A
  1. exchange agreement for lease (no deposit if no premium)
  2. send completion information form (usually TA13) - e.g. how much rent, service charge, insurance rent due on completion of lease
  3. completion searches (OS2 if lease of part, company search)
  4. prepare for completion (get T to sign counter part, make sure completion monies are ready)
  5. receive original lease and send completion monies
37
Q

post-completion steps for T

A
  1. Pay SDLT (HMRC) within 30 days of effective date (usually completion)
  2. register lease at LR (LR) within priority period of OS2 search (30 working days)
38
Q

what docs to send with SDLT payment

A

SDLT1

SDLT Payment

39
Q

consequences if not pay SDLT

A
  1. PENALTY + interest payable

2. cannot register lease at LR without SDLT5

40
Q

when do you need to register lease

A

if lease is more than 7 years (or more than 7 years remaining on term on date of assignment)

41
Q

what docs to send with registration of lease at LR

A
  • AP1 (or FR1 if previously unreg)
  • fee

certified copies of:

  • the lease
  • mortgagee’s consent
  • SDLT5
42
Q

consequences if not registration of lease at LR

A

lease only equitable lease (not legal lease until reg)

T takes subject to any new entries/interest in the register made after date of OS2 search

43
Q

quarter days

A

25 MARCH
24 JUNE
29 SEP
25 DEC

44
Q

Breack clauses

A

Term may be subject to an option to end the lease before its expiry date (“break clause”)

  • This can benefit LL or T (or both)
  • will specify conditions for operation of break (e.g. T paid all rent due or performed all covenants)
  • if break clause condition on T complying with covenants, basically impossible for T to do it (standard of repair will unlikely ever be perfect to eyes of LL) - so as few pre-conditions as possible if T
45
Q

Code (Recommendation 3)

A

Deals with length of term, break clauses, renewal rights

  • Suggests only pre-conditions to T exercising break clause = (1) up to date with annual rent (2) give up occupation, (3) leave behind no continuing underleases
  • Disputes about condition of premises (or what has been left behind or removed) should be settled later (as with normal lease expiry)
46
Q

rent - t might try to reduce rent in various ways

A

ONE - deduction of costs (L breaches repairing obligations and T does repair itself, tries to reduce payment of rent accordingly)

TWO - set off (LL breaches covenants causing loss to T, T reduces rental payment to recover loss)

LL may try to stipulate rent is ‘without deduction or set off’ (to counter any rights T may have to reduce rent payable

47
Q

rent clauses

A

lease should set out

  • amount payable, manner of payment,
  • payable in advance or arrears
  • grace period
  • reserve as many payments as ‘Rent’ as possible
  • LL can charge VAT on rent
  • T should not have to pay rent if premises (or access to it) is destroyed/damaged by Insured risk
  • payable usually on Quarter Days
48
Q

CODE = Recommendation 8

A

Recommends LL’s control over alterations and changes of use should not be more restrictive than is necessary to protect the value (at the time of application) of the premises and any adjourning or neighbouring premises of LL

49
Q

change of use - why positive covenant is rarely used

A

PC: ‘To use as X’

  • this is a keep open clause
  • non use will be in breach
  • forces T to keep premises open and use as X

better:
‘Not to use, other than as X’

50
Q

statutory compliance clause

A

requires T to comply with all legislation affecting the premises demised

  • in most commercial leases
  • reasonable to expect T to do this but can extend to liability not contemplated
  • E.g. cleaning up contamination (under environmental legislation)
  • E.g. making costly alterations to the premises (complying with disability discrimination provisions in Equality Act 2010)
51
Q

common lease provisions relating to alterations

A
  1. consent not unreasonably withheld (and consent not unreasonably delayed)
  2. require T to obtain necessary statutory consent (e.g. BR)
  3. require T to obtain PP for alterations (and only apply for this with LL consent)
  4. decorating covenants
  5. restrictions on display of signs/name boards

NB. STATUTE SOMETIMES INTERVENES LL’S CONTROL even if absolute covenant (e.g. Equality Act)

52
Q

how does LL usually control altreations

A
  1. limiting types of alterations permitted
  2. requiring LL approval or consent to do alterations
  3. requiring reinstatement/alterations at end of term
53
Q

restrictive provision on alterations - effect on rent?

A

depressing effect

  • might affect rent at RR
  • if T has more free rein = higher rent

prop (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions