Case Study Questions Flashcards
What did you do in respect to Terms of Engagement, Anti Money Laundering Checks and Conflict of Interest checks?
In respect to Terms of Engagement, my director drafted them and I reviewed before issuing to the client. Our ToE included our fee and how this was calculated, a copy of our PII levels, a copy of my firms CHP and the details of the instruction.
In respect to Anti Money Laundering checks, I carried out Customer Due Diligence ensuring that I had a copy of all the directors passports and proof of address.
Conflict of Interest checks involved me writing to the firm requesting if anyone had any conflict of interests with this Client and whether we had an COI with our clients which we did not.
What is your view of efficient management ?
In my eyes, efficient management is to ensure the day-to-day running of the property is carried out to the highest standards and me as the property manager ensure daily tasks are carried out professionally.
As well as ensuring the property is safe for its occupiers and visitors.
“Efficient management should involve preparing a building for a potential sale”
What do you mean by “SME”?
Small to medium sized enterprises.
What is your knowledge of RICS Service Charge handover procedures?
In accordance with the RICS Professional Standard Service Charges in Commercial Property (Effective April 2019):
The onus should be on the seller or managing agents to provide the buyer or their managing agents all the necessary information about the service charge in a timely manner including:
- The reconciliation of any outstanding closed service charge years.
- The handover of any credit balance on the service charge account.
- The recovery of any shortfall or arrears, including specifically which party (buyer or seller) can pursue the arrears.
- Adequate records and information to provide continuity in the management.
How frequently was the rent demanded?
Quarterly unless specifically stated otherwise, some tenants had agreed previous to pay in monthly instalments.
Did you deal with any disputes?
Yes, one tenant had disputes with the service charge under the previous managing agents and thus did not pay service charge demands for a time period during my management. I met with the tenant face to face to resolve this. The main dispute was over the cleaning of the property.
How is the service charge proportioned?
Allocated fairly across three schedules from floor areas.
Did you undertake the same floor areas from the previous managing agents in terms of service charge budget?
No - to ensure its validity, I undertook my own measurements in conjunction with my director to ensure the information we had been provide was accurate.
What arrangements did you make prior to inspecting the property and how did you ensure your safety as well as the safety of others?
I carried out a dynamic risk assessment, took with my the necessary PPE equipment, analysed the notes of the building given to me by the previous managing agents and I was always aware of my firm’s lone working policy when inspecting by myself.
What is your understanding of the new use classes?
Classes A1, A2, A3, D1, D2 are now under Use Class E
Certain uses do not fall within any use class are considered ‘Sui Generis’ examples include nightclub & theatres.
What use class did the sub-tenant come under, was it in line with the use provision in the original lease?
Yes the use class was in line with the original lease, which was under A1
What was the outcome of Faiz v Burnley County Council 2021?
Lewison LJ decided that it would waive the right to forfeit for that breach.
What was the rateable value of both 5 & 6 Station Parade?
5 Station Parade - £32,750
6 Station Parade = £34,250
What was the size of both units ?
5 Station Parade = 548 sq.ft
6 Station Parade = 581 sq.ft
Can a Licence become a Lease?
Yes, if not administrated properly.
Why would the capital value of the asset decline ?
Due to the leasehold interest expiring in 2031 it was a depreciating asset - in most cases these assets start declining after 80 years and the ground rent had increased.
What do you mean by seeking better lease terms on renewal?
Our client if renewed the lease would be in a position to seek better terms with the current sub-tenants who’s leases expire in conjunction with the head lease (client cannot demand rent after the head lease expiry)
Does your client have a right to renew in 2031?
No, the Head Lease stated that our client (the tenant) had no rights to renew.
Why is acting in line with the RoC relevant to surveyors?
It is an integral part of a surveyors role not only in business but how they act, carry themselves and treat others.
Was there an outcome of the instruction?
There was an outcome, the feedback from the client demonstrated that I had met there requirements by ensuring the property was managed efficiently. The service charge arrears had reduced significantly for which I played a part in assisting our in house accounts team.
I had a fair happier client in February 2024 then I did back in January 2022 which I believe to be an outcome I can be proud of
What was the first thing you did when your company was approached to take over the management of the property?
Conflict of Interest checks alongside my director.
Review Terms of Engagement alongside my director
Undertake an internet search of the client - companies house.
Undertake an internet search of the property - CoStar, Google Maps.
What due diligence did you do when the lease was assigned to Carding Ltd?
Undertook Customer Due Diligence to ensure directors were in line with what was informed to me and ensured.
Undertook Anti Money Laundering checks on Carding Ltd
Once the above was completed, new terms of engagement were issued for Carding Ltd.
Talk me through your anti money laundering checks.
As Carding Ltd were not Politically Exposed Person (PEP) I, alongside my director, undertook Customer Due Diligence. However, given Carding Ltd and Eatonland had the same directors, I contacted the client to confirm that the identification (Passport & Driving Licence) we had on file was the most up to date. Which both directors confirmed was the case.
I then, alongside my director, verified source of funds and also verified Carding Ltd via Companies House. Proof of registered address and persons of significant control.
Use of CreditSafe - online tool that provides a score in relation to the likelihood of the company becoming insolvent.
How did you check there were no personal conflicts of interest?
I alongside my director, checked our internal property database, it was present but this was because my company were previously managing the property under the previous owner Eatonland. Given Carding Ltd was under control by the same directors and Eatonland and the head lease was simply being assigned to Carding. There were no personal conflicts of interest and I let my company aware of this and we accepted the instruction.
How did you identify the unauthorised sub lettings?
I noticed upon an inspection of kiosks that had been installed by two tenants. When I approached the tenants, they informed me that they had nothing to do with the head tenant and it was a separate business being used as a convenience store.
When I returned to the office I referred to the leases & wrote to my client to inform him of my inspection and conversation with the tenant and whether they had received a request from the head tenants to install separate kiosks. My client confirmed in writing that no notice or information had been provided and as such recognised that this was a sub letting. From gathering information from the tenant on business name, I undertook a search on Companies House and directors were different to those of the head tenant.
What is Class A1 of the Town & Country Planning Use Classes Order 1987?
Planning Use Class A1 included;
Shops
Retail Warehouses
Post Offices
Ticket and Travel Agences
Sale of cold food for consumption off premises.
Why did you consider forfeiture?
Head tenant has breach terms of the lease by sub letting without consent.
Could be an opportunity to secure a stronger tenants by marketing the units thus maximising income inline with Client’s objectives
What benefits, if any, did you consider there were to taking back possession?
Reletting the premises on potentially improved terms as the market suggested at the time of consideration.
Why did you advise your client to seek legal advice if they wanted further clarification on acceptance of rent?
This was outside of my scope of experience and in the clients best interest, I thought it was prudent for the client to seek legal advice for further clarity.
Why did you need to establish whether the tenants had cash flow issues?
If the tenant had cash flow issues it could lead to non payment of rent & service charge which would cement a decision to look to remarket the property.
What were you looking for on their balance sheets?
A low debt to equity ratio and a strong net asset position.
High value of assets especially current assets such as cash.
Why did you consider a licence rather than a lease to regularise ?
For short term, temporary arrangements as our client to not want to grant exclusive possession of the kiosks.
Why did you recommend regularising the situation?
In the clients best interest.
Best practice
If the tenants had payment or cash flow issues, how would you have advised your client?
If it was the head tenant, I would have recommended CRAR.
For the licence, either establish an agreeable payment plan or terminate the licence at the earliest opportunity, enforce a debt collector to seize goods.
Why would the capital value decrease as the leasehold term got less?
Reduced attractiveness for buyers.
increase ground rent payable.
Right to use the property for a specified period diminishes over time.
Potential buyers are less keen on a property that requires costly lease extensions.
How would you value your clients leasehold interest in the property?
Comparable Method
Similar attributes and lease terms.
Why did you consider seeking legal advice rather than simply let the head lease expire?
I consider seeking legal advice if the client wanted to renew the head lease, given the clients objectives remain unclear in this instance, seek advice has not been seeked.
If this changes than legal advice may assist my client in achieving better lease terms on renewal.
How would a PPMP minimise a claim for dilapidations?
Undertaking work required over a longer period of time rather than receiving a larger claim closer to lease expiry.
If we go back to the lease that was entered into in 2008 with a 15 year term, how would that be dealt with a lease expiry?
If the lease was for a fixed term - it would have automatically ended and the and the leaseholders right to occupy the property reverted to the freeholder.
What would happen at head lease expiry if you still had a tenant in situ?
Sub-tenant would retain rights to remain in occupation of the property and becomes a direct tenant of the superior landlord.
How did you established the cause of water ingress?
I approached professional contractors specialising in roof works to confirm the source of the water ingress and it was visibly clear water was coming from the hatch located in the gentleman’s WC.
How did you select a suitable contractor?
I contacted my network of contractors specialising in roof works and requested quotations after an inspection was carried out.
How did you assess whether the detail within the RAMS was suitable?
Cross referencing the RAMS with risk identified, method statement and ensure access details are correct.
Information on the property was checked over to ensure correct.
How did you determine that the works had been completed satisfactorily?
Inspected the property alongside my director post works and maintain consistent monitoring of the repair work for a period of time after completion to ensure works carried out had achieved what was set out.
It looks like the property is over the railway lines, what issues does this create when undertaking maintenance and repairs?
This only affects maintenance and repairs to the roof. In this case, contractors didn’t need to access the roof but if they needed to, they would need to prepare a method statement, RAMS, licence for working at height, safety net to catch lose materials, work permit, scaffolding licence, cherry picker licence.
What would you do differently next time?
Insurance claim - act quicker in respect to providing documentation to insurance brokers.
How did you act ethically?
Ensured client was updated throughout.
Did not participate in taking a bribe.
Report costings transparently
What were your key achievements?
Undertaking emergency repairs diligently and to a high standard.
Delivery professional and diligent advice throughout the instruction.
CPD RECORD - What do you think are the current hot topics for 2025?
ESG
Rise of Technology (AI)
New government
CPD RECORD - Tell me about your firms new property management software?
Re-Leased - incorporates a cloud based property management and accounting software which is compatible with Xero which we have found to be a huge boost in synergy between my companies accounts department and our client’s accountants who majoritly use Xero.
Provides excellent inspection tools for property managers and can be accessed anywhere via iPhone apps etc.
Tell me about some Japanese Knotweed case law?
Davies v Bridgend County Borough Council UK SC 2015
Supreme Court ruled that a property owners claim for damages related to JK encroaching from council land was rejecting, focusing on causation and demonstrating a continuing nuisance.
What does dry rot look like ?
Dry Rot is caused inside by fungal attack. Signs included fungus, known as mycelium which spreads across the wood in fine and fluffy white strands and large often orange mushroom like fruiting bodies. It can destroy timber and masonry.
