Contents of a lease part 2 Flashcards
What are the four Ls you must work through when advising upon contents of a lease?
- Lease itself
- Law - statute and case law
- Landlord’s title
- Local Authority consents
What part of the code discusses Lease length, break clauses and renewals? What does it recommend?
Part 5 - advises that any break clause should only be exercisable by the T and conditional only on having paid rents owed to point of break and giving up occupation.
If acting for a T what should you try to achieve in the drafting of a break clause?
What needs to be clearly stated regarding option to break?
Pref only exercisable by T, and conditional upon ANNUAL RENT (i.e not Service Charge or Insurance Rent) being paid up and T having vacated.
It must be determined/ clearly stated if the option to break will be at fixed dates, either explicitly stated, or on an anniversary of Term Start Date, or on a rolling basis after a period of occupation has passed.
What should the Rent clause include?
- When Rent is payable - usually every quarter
- Should stipulate if VAT is to be excluded from rent, i.e. payable on top of Rent sum
- LL will want to reserve as many payments as possible under term ‘Rent’ so that remedies for non-payment extend to T’s liability to pay as possible….
e. g. Service Charge, Insurance Rent, VAT and outstanding interest payable…
Why does a LL try to define as many of the payment obligations under the lease as ‘Rent’?
The LL will try to subsume as many payment obligations as possible under the defined term ‘Rent’ (e.g. Service Charge, Insurance Rent, VAT, interest payable) because they then can FORFEIT w/o having to undergo the s.146 procedure!
What are the three levels of qualification that a covenant can be drafted in?
- Absolute ‘shall not’
- Qualified ‘shall not…without the LL’s consent’
- Fully Qualified ‘shall not…without the LL’s consent…such consent not to be unreasonably withheld’
When considering Alterations clauses what do you need to know about each of the four Ls?
Lease: what type of covenant? Absolute, qualified or fully qualified?
Law: s.19(2) LTA 1927
Lambert v FW Woolworth & Co Ltd = improvements construed widely and from perspective of T
Landlord’s title: are there any restrictive covenants? H/e if req consent of PWB this is not the T’s LL, but the owner of the adjoining parcel of land…
Local authority: structural always req planning perms, non-structural will not unless listed building
What does s.19(2) LTA 1927 provide for T and LL?
T: it converts all qualified covs to fully qualified covs where the T desires to make IMPROVEMENTS.
LL: has the right to request payment of reasonable sums in respect of damage or legal fees AND to require as a condition - where reasonable - the T REINSTATE the premises to how they were prior to the alteration.
Any refusal by LL must be REASONABLE and based in the LL and T relationship e.g. issuing out of obligations under the lease.
What type of covenant does s.19(2) NOT have effect on?
Absolute covenants.
What does s.19(2) hinge upon in regards type of alterations? ‘Covenant, condition or agreement against’ what?
IMPROVEMENTS.
What constitutes improvement for purposes of relying on s.19(2) LTA 1927?
Per Lambert v FW Woolworth & Co Ltd -
‘improvements’ are construed widely and from the perspective of the T
What does part 8 of the code recommend re LL’s consent to alterations?
- Should not req T’s to remove permitted alterations at end of lease unless reasonable. and should give 6 mths notice of req pre termination date.
What type of document should be created if consent is permitted to alter?
A Licence to Alter - records form of consent given.
- Also include covenants to carry out work in a particular way.
- Obligation to reinstate at end of term –>
T will request proviso that any alteration will be disregarded at rent review
What will a T want to ensure is included in a Licence to Alter?
A T will want to ensure that a proviso is included to the effect that, at rent review, no increase in rent is incurred as a result of the improvements made by the T.
What must you remember regarding the issue of restrictive covenants and alterations re the PWB?
If consent is required from the PWB, in the case of a lease, this will be the person owning the adjoining parcel of land, not the T’s LL. So if there are any RCs req PWB consent, this 3rd party will need to be located.
