Bible Questions Flashcards
What is the difference between a lease and a licence?
a licence does not grant the tenant ‘exclusive possession’ of the property
Name three situations where licences are appropriate for commerical property.
Serviced office space on a short-term basis.
Between a buyer and a seller of a property in the time between exchange and completion.
When a tenant is negotiating a lease but needs early access to a property.
What does the Landlord and Tenant Act 1954 do?
The Act confers protection known as “security of tenure”.
There are two elements
(i) the “statutory continuation” of the tenancy.
(ii) the tenant’s right to apply to Court for a new lease.
When was the Landlord and Tenant Act 1954 last amended?
1st June 2004
To what tenancies does the 1954 Act apply?
Commercial Tenancies in occupation
Name the tenancies to which the 1954 Act does not apply.
Residential Tenancies
Tennancies less than 6 months
Where the lease explicitly states so
What is a “Section 25 Notice”?
It is sent by the landlord to the tenant that sets the termination date for the tenancy.
When can a landlord serve a “Section 25 Notice”?
Between 6 and 12 months before the end of the lease.
What must a landlord’s “Section 25 Notice” contain?
Identification of all parties involved.
Sets out the Termination Date
If its hostile, the reason for not renewing.
If friendly, the proposed term and rent.
What action should a landlord take if he/she requires possession of a property at the end of a lease?
Serve a Section 30 Hostile Notice and state the grounds on which you are not offering a new tenancy.
Explain when tenant’s improvements are disregarded at lease renewal.
If they were carried out without Landlords Consent.
Explain what action a tenant should take if there are 6 months of the lease remaining and he/she wants to vacate at expiry. The landlord has not served a Section 25 Notice.
The Tenant needs to serve a Section 27 notice informing the landlord that they wish to vacate.
What are the key elements of a rent review clause?
- The Machinery
- The basis of valuation.
- Dispute Resolution
What is a “trigger notice”?
Its a written notice that the rent review is to be activated.
What do you understand by the expression “time of the essence”?
timing is material to the performance of the contract.
What is a landmark case in respect of “time of the essence”?
- unless otherwise stated, timing is not of the essence (United Scientific Holdings v BBC).
In what circumstances is it likely that “time is of the essence”?
rent reviews
What are “deeming provisions”?
A clause that explicitly states how something is to be treated or regarded
What assumptions are usually made in determining the rent at review?
- Vacant Possession
- The subject property is fit for immediate occupation and use
- The property is available to let on the open market by a willing landlord to a willing tenant at the market rent
- All the covenants in the lease have been observed by the Tenant
- The property may be used for any purpose permitted under the terms of the lease.
Is the “hypothetical term” more advantageous to the landlord or to the tenant?
The longer the hypothetical term the more advantageous it is to the tenant.
What is the “hypothetical term”?
The Hypothetical term is the term to be valued in the rent review clause.
What are the “usual disregards”?
- Any effect on the rent of the tenant’s occupation
- Goodwill
- Any increase in rental value caused by tenants improvements
- Any licences (such as alcohol) that is personal to the Tenant
Case Law – Ponsford v HMS Aerosols – the lease had no provision for excluding Tenant’s improvements, therefore they were taken into account at rent review
Where do the “usual disregards” originate from?
section 34 of the landlord and tenant act 1954
How may a rent review be resolved if a landlord and tenant cannot reach agreement?
Independent Expert or an Arbitrator.
What are the differences between and expert and an arbitrator?
- A are governed by the Arbitration Act 1995, IE are by the lease.
- A award must be between the two offers, IE uses own knowledge to do whatever.
- A cant be sued unless acted in bad faith, IE can be sued.
- A reasoned reward given to A, One can be given to IE
What is a “Calderbank” letter / offer?
an unequivocal offer to settle save as to costs when there is an arbitrator. (Arbitrators are allowed to award costs)
What must a “Calderbank” letter / offer contain?
- a written offer to settle the rent review.
- A reasonable proposal regarding costs incurred up to the date of the offer
it is open for 21 days.
A tenant has entered into a full repairing and insuring lease of a property in disrepair. The landlord now requires the
tenant to remedy this disrepair. What advice would you give to this tenant?
Read the lease.
Assuming that there is a SOC.
Refer that to the landlord.
What lease terms affect the rent at renewal?
The rent review clause itself - definiton of rent, assumptions we need to make, and matters that are disregarded
The frequency of review (the longer the period between reviews, the higher the rent)
Restrictions on user/alienation, insurance provisions, repairing liability etc
Overall, the more flexible a lease is, the higher the rent
Protected tenancies (inside 1954 act) should demand higher rent - T has security at lease expiry
What advice would you give to a tenant wanting to take a full repairing and insuring lease of a property in disrepair but suiting his business.
What action can a landlord take when a tenant is in breach of repairing covenant?
Jervis v Harris Clause in the lease.
What action can a tenant take when a landlord is in breach of repairing covenant?
Tenant can request LL carries out repairs
Can get injunction from court compelling LL to carry out repairs
Last case - T could carry out repairs themself and then recover the cost by witholding rent for that amount (EG repairs £30k so withold £30k of rent)
T would need to put this in writing to LL - reasonable behaviour
T needs to give the LL a reasonable timeframe to get works done,
T can then send through quotes and explain they will do it themself
LL needs a reasonable opportunity to remedy disrepair, and then the T needs to give notice that they intend to do repair themself
What does the Jervis v Harris case mean to you?
A clause in a lease or tenancy agreement which allows the landlord to serve a notice on a tenant to carry out repairs. Where a tenant fails to do so, the landlord may enter, carry out the works itself and recover the costs from the tenant as a debt.
How are damages assessed when a tenant is in breach of repairing covenant?
Schedule of Dilapidation’s
How are damages assessed when a landlord is in breach of repairing covenant?
The amount of damages is limited to the diminution in value to the Landlord’s reversion caused by the breach. It is generally accepted that the cost of the works is the diminution to the reversion.
Explain the provisions of Section 18 of the Landlord and Tenant Act 1927.
This provision limits damages for breaching repair covenants in a lease to the amount by which the property’s value is reduced due to the breach.
No damages are allowed if repairs would be pointless because the property is set to be demolished or altered soon after the lease ends.
Explain difference between a “Schedule of Condition” and a “Schedule of Dilapidation’s”
Schedule of Condition is attached to the lease before the lease starts. Dilaps is after the lease has ended and assess the damage.
Explain the difference between an “Interim” and a “Terminal” Schedule of Dilapidation’s.
interim - three years more
Terminal - in final three years.
*What is a “Scott Schedule”?
This is an extended version of the Schedule of Dilapidation’s which enables the tenant’s surveyor to respond to the Schedule.
Your tenant client wishes to extend an industrial property. Explain the factors that need to be considered and the action
that needs to be taken.
T would need to apply for an LTA.
You are managing a property for your landlord client and have received a request from a tenant to carry our
improvements. The tenant has requested that improvements are “registered” under the 1927 Act. What advice would you give to your client?
- T must serve L notice of the works with detailed plans.
- L has three months to refuse or do works themselves.
- If no response from L, T is entitled to go ahead with works in the agreed time frame.
If L, disapproves of the work - the Court must decide.
How is compensation for tenant’s improvements calculated?
What lease terms are implied under Section 19 of the Landlord and Tenant Act 1927?
Where LL consent can be given, it should be unreasonably withheld.
Explain the legislation needs to be considered in an assignment of a lease?
1927, 1988 and 1995
What do you understand by the expression “authorised guarantee agreement” or “AGA”?
Entering the Authorised Guarantee Agreement (AGA) as the outgoing tenant means they will act as guarantor for the party to whom they are assigning their lease (guaranteeing that the assignee will comply with the terms and payments)
In what circumstance is it appropriate to have restrictive user clauses in leases?
To stop a pub from letting people drink outside where there is residential properties nearby - to save noise.
What do you understand a “conditional break clause” to be?
When you can only activate the break clause if certain conditions are met.
What “conditions” are usually attached to break clauses?
pay all the rent etc,
property is in good order.
Essentially just complied with all the lease terms up to that point.
What are the likely consequences if a tenant serves a break notice giving the correct time period but the notice expires one day before it should?
The notice is not valid.
Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997]
Name grounds under the s30(1) of LL & T Act 1954 under which a LL can obtain possession
a. T has failed to carry out repairs
b. T has persistently delayed paying rent
c. T is in substantial breach of some other covenant
d. L offers suitable alternative accommodation (LL doesn’t have to own the property, so long as they can secure another space)
e. Where the tenancy was created by a sub-tenancy and the building let as a whole would produce a higher rent than from separate lettings
f. L intends to demolish or substantially reconstruct the premises and cannot do so without obtaining possession
g. L intends to occupy the premises for his own purposes (LL must have been LL for minimum of 5 years - S30(2))
How would you serve a break notice?
Under section 196 of the law of property act 1925 states that it must be served in one of the following 3 ways.
- By hand
- By registered post
- By personal agent
How would you deal with an assignment or sub-letting?
Read the lease
Get undertaking for costs from assignee
Check covenant strength of proposed assignor or sub-tenant
Check proposed rent - more, the same as, or less than the market rent
Sometimes, lease may say you cannot sub-let at less than passing rent
Chech whether there reasonable grounds to refuse consent
Bad tenant covenant, illegal use etc
Must deal with application promptly (as per LL & T Act 1988)
If agreed, Licence for Assignment / Sub-letting will need to be drawn up
Check what the impact would be on on investment value of the property
Usually assignment has negative impact, as insinuates the original Tenant does not want to be there
What phrase it included in a Calderbank Offer?
Without prejudice to save as to costs
Whats the equivalent of a Calderbank offer in a lease renewal?
Part 36 offer
What can a landlord do if they cannot agree a lease renewal and they are missing out on rent in the short term.
apply to court for an INTERIM RENT
What is Section 23
Defines a tenancy to which the Act applies
What is Section 24 a
Application to Court for an Interim Rent
What is Section 25
Ls notice of termination
What is Section 24
Gives Ts security of tenure: L or T can apply to Court to determine the terms of the new tenancy
What is Section 26
Ts request for a new tenancy
What is Section 27
Ts notice of termination
What is Section 28
Agreement for a new tenancy results in existing tenancy losing protection
What is Section 29
Time-scales for application to Court
What is Section 30
Seven grounds upon which L may object to a new tenancy
What is Section 31
Court will dismiss Ts application where L successfully opposes a new tenancy
What is Section 32
Property to be comprised in the new tenancy
What is Section 33
Court has power to grant new tenancy for a term not exceeding 15 years
What is Section 34
Assumptions to be made the and matters to be disregarded in assessing the rent under the new tenancy
What is Section 35
Other terms of the new tenancy
What is Section 36
Carrying out the order for the new tenancy
What is Section 37
Compensation where new tenancy not granted on certain grounds
What is Section 38
Contracting out of Sections 24 to 28
What is Section 39
Saving for Compulsory Acquisitions
What is Section 40
Duty to give information
What is Section 43
Defines a tenancy to which the Act does not apply
What is a net effective rent?
Rent - any rent free periods
How would you CRAR an inclusive rent?
Deduct the S/C, Rates, insurance from the rent outstanding and chase this
What are dilapidations?
Note of preserved breaches in repairing covenants issued by the LL surveyor and negotiated with tenant’s counterpart
How do you contract out of the Landlord and Tenant Act 1954
Serve a notice under the regulatory reform order 2003 to contract out of the 54 act.
A simple declaration is signed if 14 or more before the start of new lease or a Statutory declaration is signed & witnessed by Solicitor if less than 14 days before the lease commences.
How does the Leasehold Property Repairs Act 1938 relate to Section 146 notices
o The Act protects tenants from onerous interim schedules of dilapidations.
* The Act states that if a Landlord wants to enforce a repairing covenant and serves a section 146 notice, if the Lease is for more than 7 years and has more than 3 years left to run, then they must also inform the tenant of their rights under the Leasehold Property Repairs Act 1938.
* The tenant has 28 days to serve a counter-notice and if they do then the matter will be referred to the courts to decide if the Landlord can enforce the repairing obligation.
* Can only permit enforcement of repair obligations if:
o Remedy is necessary to prevent substantial diminution in value
o Remedy is needed to comply with current legislation
o Effecting the interests of another occupier
o Remedy is of a low cost compared to consequences
