Brainscape's Knowledge GenomeTM

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


See full index

Property Practice > Alienation > Flashcards

Alienation Flashcards

1
Q

What does privity denote in contract law?

A

Privity denotes the legal relationship between two or more parties to a contract.

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

What is the relationship between a landlord and tenant?

A

When a landlord grants a lease to a tenant, the arrangement is a contract, and privity of contract exists between them.

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

What is privity of estate?

A

Privity of estate exists between any current landlord and current tenant of the property and lasts only for the period while the lease is vested in the tenant.

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

What happens to privity of contract and estate upon assignment?

A

Upon assignment, privity of contract remains between the original landlord and tenant, but privity of estate no longer exists between them.

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

What governs old leases created before 1 January 1996?

A

Old leases are governed by the old system of rules established by the Landlord and Tenant (Covenants) Act 1995.

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

What is the liability of original parties in old leases?

A

The liability of the original landlord and the original tenant continues for the full duration of the lease term, even after an assignment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the effect of the LTCA 1995 on new leases?

A

The LTCA 1995 abolishes privity of contract for all new leases, meaning original parties are no longer liable for the full duration of the lease term.

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

What does LTCA 1995, s 3 provide regarding lease assignments?

A

It provides for the automatic transmission of the benefit and burden of all landlord covenants to the new owner of the reversion, and of tenant covenants to the assignee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is an Authorized Guarantee Agreement (AGA)?

A

An AGA is the guarantee by an outgoing tenant of the obligations of the incoming assignee.

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

What is the landlord’s choice when an AGA is present?

A

The landlord can sue the current tenant or the outgoing tenant who is acting as guarantor for the assignee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is an indemnity in the context of lease assignments?

A

An indemnity is a contractual obligation given by one party to compensate for loss incurred by another party.

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

What happens in a sublease regarding the landlord’s relationship with the subtenant?

A

There is no direct relationship between the head landlord and the subtenant, meaning the landlord cannot enforce covenants directly against the subtenant.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What does LTCA, s 3(5) allow regarding restrictive covenants?

A

It allows restrictive covenants in new leases to be enforced against any owner or occupier of the premises.

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

What is the effect of a landlord forfeiting the head lease?

A

If the landlord forfeits the head lease, the sublease is also automatically terminated, subject to a claim for relief.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the significance of a tenant’s covenant against assignment?

A

A tenant’s covenant against assignment may be absolute, qualified, or fully qualified, affecting the ability to assign the lease.

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

What does s19(1)(a) of the Landlord and Tenant Act 1927 state?

A

It converts a qualified covenant into a fully qualified covenant, meaning the landlord must act reasonably if deciding to withhold consent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What does s1 of the Landlord and Tenant Act 1988 require?

A

It requires the landlord to give its decision on consent within a reasonable time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What does a tenant’s covenant against assignment of whole mean?

A

It may be qualified, meaning that assignment is only allowed with the landlord’s consent.

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

What does s19(1)(a) of the Landlord and Tenant Act 1927 do?

A

It converts a qualified covenant into a fully qualified covenant, requiring the landlord to act reasonably when deciding to withhold consent.

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

What does s1 of the Landlord and Tenant Act 1988 require from the landlord?

A

The landlord must give its decision on consent within a reasonable time.

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

How does statute affect alienation in leases?

A

The law heavily favors the tenant, as it is unfair to bind a tenant to a lease when there is a willing and suitable prospective tenant.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is considered a ‘reasonable time’ for a landlord to withhold consent?

A

It is dependent upon circumstances but should be measured in days or weeks instead of months.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are reasonable grounds for a landlord to withhold consent?

A

The proposed use of the premises by the assignee, justifiable concerns about the assignee’s ability to pay rent, or if the assignee cannot provide satisfactory references.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What cannot be grounds for withholding consent?

A

Personal dislike of the prospective tenant or their business, and discrimination based on race, sex, or disability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What happens if the landlord does not act reasonably in withholding consent?

A

The tenant may be able to claim damages, including costs for agents and solicitors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What must a commercial lease contain regarding assignment?

A

Circumstances that the parties agree will be reasonable grounds for withholding consent and conditions that may be imposed on assignment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is privity of contract?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is privity of estate?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What was the common law position for old leases regarding liabilities after assignment?

A

The original tenant remained liable to the landlord to pay rent and perform obligations under privity of contract.

30
Q

What changed with the Landlord and Tenant (Covenants) Act 1995?

A

The original tenant is released from liability when a new lease is assigned, and all tenant covenants are passed to the new tenant.

31
Q

What is an authorised guarantee agreement (AGA)?

A

It is a document where the original tenant agrees to guarantee the obligations of the incoming tenant.

32
Q

When is an AGA required?

A

Many commercial leases will require the outgoing tenant to enter into an AGA as a condition of assignment.

33
Q

What happens to an outgoing tenant’s liability under an AGA?

A

The liability only extends to the next tenant, and ends if there is a subsequent assignment.

34
Q

What does assignment mean?

A

It means the existing tenant passing the lease to a new tenant.

35
Q

What is the procedure for assigning a lease?

A

It is similar to a freehold transaction, involving pre-exchange, exchange, pre-completion, and completion steps.

36
Q

What is an undertaking for costs?

A

It is a promise by a solicitor to pay costs, breach of which may lead to disciplinary action.

37
Q

What happens during the pre-exchange phase?

A

The tenant’s solicitor applies for landlord consent and provides an undertaking for costs.

38
Q

What is included in the pre-completion steps?

A

Preparation of a completion statement and conducting pre-completion searches.

39
Q

What occurs on completion of the assignment?

A

The assignee’s solicitor sends completion monies, and the license to assign and deed of assignment are dated.

40
Q

What happens post-completion?

A

Payment of SDLT and registration of the lease, if appropriate.

41
Q

What is underletting?

A

Underletting is a form of alienation where the tenant grants an underlease to an undertenant without passing on the leasehold interest entirely.

42
Q

What is required for an underlease?

A

The underlease must be for a shorter term than the lease itself, even if only a day shorter.

43
Q

What obligations does the tenant have after underletting?

A

The tenant remains liable to the landlord for rent and other obligations, even after underletting.

44
Q

Why might a tenant choose to underlet?

A

A tenant may underlet if they are not using all of the premises, do not need them at the moment, or cannot find a willing assignee.

45
Q

What happens if the lease is silent on underletting?

A

If the lease is silent, the tenant is free to underlet. However, commercial leases typically require landlord consent.

46
Q

What is a qualified covenant against underletting?

A

A qualified covenant against underletting means underletting is only allowed with the landlord’s consent.

47
Q

What is privity of contract?

A

Privity of contract is the ability of the original parties to enforce obligations against each other, existing between the landlord and tenant, and tenant and undertenant.

48
Q

What is privity of estate?

A

Privity of estate is the ability of the landlord and tenant to enforce lease provisions against each other, existing between the landlord and tenant, and tenant and undertenant.

49
Q

What is the landlord’s concern regarding the undertenant?

A

The landlord is concerned about the undertenant’s ability to pay rent and perform lease obligations, as the undertenant may become a direct tenant.

50
Q

What are common restrictions on underletting?

A

Restrictions may include preventing underletting with non-landlord property, lump sum payments, and requiring the underlease to have no lower rent than the tenant’s lease.

51
Q

What is the typical process for underletting?

A

The process involves applying for landlord consent, drafting the underlease, and completing the transaction.

52
Q

What is required during the pre-exchange stage of underletting?

A

The tenant’s solicitor applies for landlord consent and provides an undertaking for costs before the landlord’s solicitor prepares the draft licence to underlet.

53
Q

What happens during the exchange of an agreement for underlease?

A

The tenant’s and undertenant’s solicitors exchange agreements, usually without a deposit, and the agreement may set conditions for completion.

54
Q

What is a direct covenant in the context of underletting?

A

A direct covenant is a requirement for the undertenant to covenant directly with the landlord, as there is no privity of contract or estate between them.

55
Q

What is the purpose of a licence for assignment or underletting?

A

The licence formalizes the landlord’s consent to the assignment or underletting, reducing the risk of inadvertent consent.

56
Q

What are the post-completion steps after underletting?

A

Post-completion involves payment of SDLT, registration of the underlease if appropriate, and serving notice of underletting on the landlord.

57
Q

What should a licence for assignment of an old lease contain?

A

The licence should contain a direct covenant by the undertenant to the landlord to comply with the tenant covenants in the tenant’s lease. This covenant will normally be for the remainder of the term of the lease.

58
Q

Is a direct covenant to the landlord necessary with the assignment of a new lease?

A

A direct covenant to the landlord is not strictly necessary with the assignment of a new lease, but the landlord may want it anyway.

59
Q

What does the landlord require for an underletting?

A

The landlord will require a direct covenant from the undertenant as there is otherwise neither privity of contract nor privity of estate.

60
Q

What happens to liability under the covenant if the undertenant lawfully assigns the underlease?

A

Liability under the covenant will end if the undertenant lawfully assigns the underlease.

61
Q

What is an authorised guarantee agreement?

A

If the outgoing tenant on an assignment is giving an authorised guarantee agreement, then this may be contained in the licence to assign, or it may be a standalone deed.

62
Q

What are common provisions in a licence to assign and underlet?

A

Consent for limited time and specific transaction, tenant agrees to pay landlord’s costs, assignee of an old lease covenants directly with the landlord, assignee of a new lease may covenant with the landlord, and underlessee covenants directly with the landlord.

63
Q

What is required following an assignment or underletting?

A

The assignee or tenant will be required to give the landlord formal notice within a month that the transaction has been completed.

64
Q

Is there usually a fee for the landlord’s solicitors receipting the notice?

A

Yes, there will usually be a fee for the landlord’s solicitors receipting this notice.

65
Q

Can a long residential lease be freely assigned or underlet?

A

Yes, it is often the case that a long residential lease may be freely assigned or underlet without landlord’s consent, but notice of dealing is usually required.

66
Q

What is a charge in relation to a lease?

A

A tenant may create a charge over their lease, similar to how a freeholder charges their interest to a mortgage lender.

67
Q

What is the purpose of sharing occupation without creating an underlease?

A

A tenant may want to share occupation with a third party, usually allowed in commercial leases with group companies.

68
Q

What does the 2020 Code for Leasing Business Premises require regarding alienation?

A

The Code requires leases to allow tenants to assign or underlet the whole of the premises with landlord’s consent not to be unreasonably withheld, share with group companies without consent, and charge the lease to a bank without consent.

69
Q

What is documented in a formal deed for assignment or underletting?

A

The landlord’s consent to assignment or underletting is documented in a formal deed being a licence to assign or licence to underlet respectively.

70
Q

What may a licence to assign a new lease contain?

A

A licence to assign a new lease may also contain an authorised guarantee agreement.

71
Q

What are other forms of alienation besides assignment and underletting?

A

Other forms of alienation include charging a lease or sharing occupation.

Property Practice (9 decks)

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