Alienation Flashcards
What is alienation?
Alienation simply means a disposal of all or part of the tenant’s interest in the lease.
What is assignment?
Assignment is a form of alienation, whereby the existing tenant (assignor) assigns the lease to the new tenant (assignee).
If a lease is silent on assignment, is the tenant free to assign?
Yes, but in practice a commercial lease will likely require that the tenant apply to the landlord for consent.
What will the landlord’s solicitor do at the pre-exchange stage of an assignment procedure?
The landlord’s solicitor will:
-take instructions
-confirm receipt of application
-if client wishes to proceed in principle, draft licence to assign and send to tenant’s solicitor
What will the tenant’s solicitor do at the pre-exchange stage of an assignment procedure?
The tenant’s solicitor will:
-take instructions
-apply for consent
-prepare draft contract and deduce title
-answer pre-contract enquiries
-engross the contract, obtain tenant’s signature and send engrossment to assignee’s solicitor
What will the assignee’s solicitor do at the pre-exchange stage of an assignment procedure?
The assignee’s solicitor will:
-take instructions
-assist tenant’s solicitor if needed
-review draft contract and investigate title
-review and report on lease and licence to assign
-raise pre-contract enquiries and searches
-arrange for assignee to sign contract
Who will draft a licence to assign?
The landlord’s solicitor.
What enquiries will the assignee’s solicitor raise at the pre-exchange stage?
CPSE1 enquiries and CPSE4 enquiries.
How is the process of exchange of a contract for assignment carried out?
-The tenant’s solicitor and assignee’s solicitor exchange in similar manner as for a freehold contract (usually adopting Law Society B)
-No deposit is usually payable for assignment of a rack rental lease
-The contract may set a fixed completion date, or specify that completion is conditional
What will the landlord’s solicitor do at pre-completion stage of an assignment procedure?
The landlord’s solicitor will:
-engross the licence to assign in triplicate, arrange for the landlord to execute one copy
What will the tenant’s solicitor do at the pre-completion stage of an assignment procedure?
The tenant’s solicitor will:
-arrange for tenant to execute one copy of the licence to assign
-prepare and send a completion statement
-respond to requisitions on title
-approve deed of assignment and arrange for tenant to execute
What will the assignee’s solicitor do at the pre-completion stage of an assignment procedure?
The assignee’s solicitor will:
-arrange for assignee to execute one copy of the licence to assign
-obtain funds from assignee needed to complete as per completion statement
-raise requisitions on title and pre-completion searches (OS1 search of the whole of the tenant’s leasehold title)
-draft deed of assignment
What will the assignee’s solicitor do at the post-completion stage of an assignment procedure?
The assignee’s solicitor will:
-arrange to submit SDLT or LTT return and pay as appropriate
-register assignment if necessary
-send formal notice of assignment to landlord’s solicitor
What is underletting?
Underletting is another form of alienation. Unlike assignment, the tenant does not pass its leasehold interest on entirely, but instead grants an underlease to an undertenant.
What will the landlord’s solicitor do at the pre-exchange stage of an underletting procedure?
The landlord’s solicitor will:
-take instructions
-consider application to underlet
-if landlord is happy in principle, request undertaking for costs and issue draft licence to underlet to tenant’s solicitor
What will the tenant’s solicitor do at the pre-exchange stage of an underletting procedure?
The tenant’s solicitor will:
-take instructions
-apply for consent to underlet
-prepare draft underlease
-review draft licence to underlet and send copy to undertenant
-deduce title and respond to any queries on title
-answer pre-contract enquiries
-once agreed, engross the agreement for underlease, obtain tenant’s signature and send counterpart to undertenant’s solicitor
What will the undertenant’s solicitor do at the pre-exchange stage of an underletting procedure?
The undertenant’s solicitor will:
-take instructions
-review draft underlease and agreement for underlease and amend as required
-investigate title and raise any queries on title
-raise pre-contract enquiries
-arrange for tenant to sign counterpart underlease
How is the process of exchange of a contract for underletting carried out?
On exchange of a contract for underletting:
-the tenant’s solicitor and undertenant’s solicitor exchange in similar manner as for a freehold contract (usually adopting Law Society B)
-no deposit is usually payable
-the contract may set a fixed completion date, or specify that completion is conditional
-the agreement for underlease will usually have a draft of the agreed form of underlease annexed to it
What will the landlord’s solicitor do at the pre-completion stage of an underletting procedure?
The landlord’s solicitor will:
-engross agreed form of licence to underlet and circulate for execution and obtain landlord’s execution to licence to underlet
What will the tenant’s solicitor do at the pre-completion stage of an underletting procedure?
The tenant’s solicitor will:
-prepare original and counterpart underlease, obtain tenant’s signature to original and send counterpart to undertenant for signature
-prepare and send completion statement
-obtain tenant’s execution to underlet
What will the undertenant’s solicitor do at the pre-completion stage of an underletting procedure?
The undertenant’s solicitor will:
-arrange for undertenant to sign counterpart underlease
-obtain funds from client needed to complete as per completion statement
-raise pre-completion searches (OS1 search for underletting of the whole, OS2 search for underletting of part and OS3 search where underlease is not registrable)
-obtain undertenant’s execution to licence to underlet
What will the tenant and undertenant’s solicitors do at the post-completion stage of an assignment procedure?
The tenant’s solicitor will send notice of underlease to landlord’s solicitor.
The undertenant’s solicitor will:
-arrange to submit SDLT or LTT return and pay as appropriate
-register underlease if necessary
How is a landlord’s consent to assignment/underletting documented?
in a formal deed being a licence to assign or licence to underlet.
Following an assignment/underlease, when must the assignee/tenant give the landlord formal notice that the transaction has been completed?
The assignee/tenant will be required to give the landlord formal notice within a month that the transaction has been completed.
