Code for Leasing Business Premises Flashcards
Why does the Code for Leasing Business Premises exist?
1) Improve quality and fairness of negotiations
2) Promote issue of comprehensive heads of terms to make legal drafting more efficient
Who is obliged to take account of the Code for Leasing Business Premises in negotiations?
RICS regulated body
What is the Code for Leasing Business Premises divided into?
1) Mandatory requirements – must
2) Good practice – should
What are the mandatory requirements in the Code for Leasing Business Premises?
1) Negotiations must be constructive and collaborative
2) Unrepresented party must be advised about existence of Code and recommended to seek professional advice
3) Landlord (or letting agent) responsible for ensuring heads of terms is compliant with the Code
What are the mandatory requirements when preparing heads of terms in the Code LBP?
Must include:
- Extent of premises
- Length of term and break rights
- Rent and rent review
- Repairing obligation
- Rights to assign or under
- Permitted use of property
- Rights to alter property and obligations
What is good practice for premises?
Should include plan and list all rights tenants need (e.g. electricity, water)
What is good practice for length of term, and breaks?
Conditions should be fair and clearly stated
What is good practice for rent review?
Tenant must be informed on rent review and rent frequency
What is good practice for landlord’s title?
Landlord should be responsible for obtaining consent needed to grant the lease
What is good practice for repairs?
Repair obligations should match lease length and property condition. i.e., short term tenant should not be responsible for full repairs
What is good practice for insurance?
Rent should be suspended if property is damaged by insured risk. Lease should also cover uninsured risks.
When will RICS members / firms not follow good practice?
If exceptional reasons for not doing so
