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property practice > alienation (w8) > Flashcards

alienation (w8) Flashcards

1
Q

how does assignment of leases work?

A

existing tenant (assignor) sells/transfers lease to new tenant (assignee)

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2
Q

define alienation

A

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

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3
Q

what happens to the relationship of landlord and tenant during assignment

A

landlord becomes landlord of assignee who is now entitled to exclusive possession of land

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4
Q

can assignor sell lease without consent

A

not always- most commercial leases require landlord consent

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5
Q

what does an absolute covenant against assignment mean

A

means that assignment is not allowed- usually used in commercial leases for part assignments

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6
Q

define a qualified covenant against assignment

A

assignment is only allowed with landlord’s consent, but s19 converts qualified into fully qualified covenant

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7
Q

define a fully qualified covenant against assignment

A

landlord must act reasonably when deciding to withhold consent of tenant selling the lease (within reasonable time (s1))

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8
Q

when is it reasonable for landlord to withhold consent of assignment?

A

-when assignee’s proposed use is against what landlord wants
-when they cannot provide good reference / concerns regarding payments
- when assignee is newly incorporated + cannot produce accounts

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9
Q

does tenant have any claims where landlord does not act reasonably in giving consent for assignment?

A

-tenant may be able to claim damages

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10
Q

true or false?
Landlord and tenant cannot agree to circumstances that parties agree to be ‘reasonable grounds’ and conditions that may be imposed on assignment

A

false. they usually do in commercial leases

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11
Q

define privity of contract

A

parties to a contract can enforce obligations against each other even after contract has been assigned

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12
Q

define privity of estate

A

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

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13
Q

what was the law for old leases for original and new tenant?

A

original tenant remained liable to landlord to perform obligations, only limited obligations automatically passed to new tenant
- new tenant would’ve to covenant directly to landlord

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14
Q

what is the new leases law for original and new tenants?

A

original tenant is released from liability and all of the tenant covenants are passed to the new tenant.

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15
Q

define an authorised guarantee agreement (AGA) when alienating leases

A

mechanism whereby original tenant can agree to guarantee obligations of incoming tenant (keeping them liable like old leases basically)

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16
Q

true or false?
- if there is a subsequent assignment, original tenant’s liability under AGA ends.

A

true. an original tenant only guarantees the next tenant under AGA

17
Q

what is the pre-exchange procedure for assignment?

A
  • get landlord consent
  • tenant’s sol to give undertaking for costs
  • tenant’s sol to ensure there are funds
  • landlord’s sol draft a licence to assign
    -tenant’s sol draft contract
  • tenant’s sol deduce title
  • if not registered (less than 7 year lease) provide landlord’s title
  • assignee’s sol to amend draft contract
  • assignee’s sol to investigate title
  • assignee’s sol to raise CPSE1 enquiries PLUS CPSE4 enquiries
  • assignee’s sol to raise searches
18
Q

define an undertaking for costs

A

a promise by solicitor to pay costs- breach may lead to disciplinary action by SRA

19
Q

how can a lease be varied by landlord for assignee during assignment pre-exchange

A

via a deed of variation

20
Q

what is the exchange procedure during assignment

A

tenant and assignee’s sol to exchange contract (using formula B)

21
Q

what is the pre-completion procedure during assignment

A

-tenant’s sol prepare completion statement for assignee
- carry out pre-completion searches
-OS1 search for whole lease, OS2 search for part lease, OS3 search for unregistered?
- landlord prepare licence to assign in triplicate
- assignee draft deed of assignment - TR1 form for registered lease
- parties to execute lease

22
Q

what is the completion procedure during assignment

A
  • assignee’s sol send tenant’s sol completion monies
    -all sols complete and date licence to assign over phone
  • tenant & assignee’s sol to agree to complete and date deed
23
Q

what is the post-completion procedure during assignment

A

assignee’s sol to:
- pay Land tax (SDLT / LTT)
- register lease if necessary
- send formal notice of assignment to landlord’s sol

24
Q

define underletting

A

another form of alienation where tenant does NOT pass leasehold interest entirely but underleases to an undertenant.

25
Q

what are some requirements for underletting

A
  • under lease must be shorter than actual lease
  • tenant remains tenant to landlord, must pay rent + ensure to meet obligations
  • tenant receives rent from undertenant
  • tenant can enforce under tenant’s covenants to ensure tenant doesn’t fall foul.
26
Q

how do qualified covenants against underletting work

A
  • absolute covenant= tenant cannot underlet
  • qualified covenant= turns into fully qualified, landlord can withhold consent so reasonable decision must be held within reasonable time
27
Q

what are limitations regarding payment to landlord

A

landlord may require that rent is no lower than tenant’s lease

28
Q

who does privity of contract exist within, in underletting

A
  • between landlord and tenant
  • between tenant and undertenant
  • between landlord and undertenant
29
Q

what are under tenant’s liabilities to the landlord when underletting

A
  • landlord is not able to enforce covenants against undertenant, so will want to covenant to be direct to undertenant
  • tenant remains liable to landlord
30
Q

what is the pre-exchange procedure when underletting

A
  • consent from landlord
  • get undertaking for costs before beginning work
  • landlord’s sol prepare draft licence to underlet
  • also see draft under lease to ensure compliance with tenant’s obligations
  • tenant’s sol to draft underlease
  • tenant’s sol draft agreement for underlease if necessary
  • undertenant’s sol to investigate title, searches and enquiries
  • TENANT will deduce title
31
Q

what is the pre-completion procedure when underletting

A
  • prepare completion statement
  • OS1/2/3 search as appropriate
32
Q

what is the completion procedure when underletting

A
  • parties’ sol agree to date and complete licence to underlet
    -UT’s sol sends T’s sol completion monies
  • sol’s to agree completion and date + send completed original and counterpart under lease to each other

property practice (4 decks)

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