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Property Conveyancing > Conveyancing Transactions > Flashcards

Conveyancing Transactions Flashcards

1
Q

What are the stages in a conveyancing transaction?

A

6 Stages.

  1. Pre-market (Seller obtains EPC / Mostly Estate Agent Role)
  2. Pre-exchange (Take instructions, draft contract, deduce title, investigate title, searches, enquiries, valuation, mortgage)
  3. Exchange (Exchange contracts, pay deposit, contract becomes binding, beneficial ownership and risk passes to the buyer, recommend insurance)
  4. Pre-completion (Pre-completion requisition and searches, Sign transfer deed, Redemption statement, undertake to discharge, certificate of title)
  5. Completion (Completion date, completion method, transfer funds, date transfer deed and mortgage deed, possession/keys)
  6. Post-completion (Discharge mortgage, pay net proceeds, pay SDLT, Registration)
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2
Q

Agreeing to use the Law Conveyancing Protocol automatically implies the use of the latest…

A
  1. Standard Contract of Sale
  2. Law Society Property Forms
  3. Law Society Formulae for Exchange
  4. Law Society Code for Completion by Post
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3
Q

What are advantages of using the Law Conveyancing Protocol?

A

Speed
Transparency
Efficiency

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4
Q

What is a disadvantage of using the Law Conveyancing Protocol?

A

Obligation to keep the other side informed about the situation of any related sale.

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5
Q

Why are pre-exchanges enquiries needed?

A

Because the risk passes to the buyer on exchange (caveat emptor)

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6
Q

What are key exceptions to the principle of Caveat Emptor?

A
  1. The seller’s implied duty to disclose latent defects in the title
  2. The seller’s contractual obligations to disclose
  3. The contract provides otherwise
  4. The buyer has been induced to enter the contract by fraud
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7
Q

What is a TA6 form?

A

A document that raises standard questions, providing various details about the property. Known as a Property Information Form.

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8
Q

What is a TA10 form?

A

Fitting and contents form.

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9
Q

The Pre-Exchange, what is the role of each solicitor?

A

Buyer’s solicitor: investigates the property and raises inquiries
Seller’s solicitor: deduces title and replies to inquiries

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10
Q

How do you deduce title for registered land?

A

The seller should produce the official copy of the title register. Register of title and title plan are officially registered documents providing proof of ownership.

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11
Q

How do you deduce title for unregistered land?

A

Seller should produce an epitome of title showing a good root of 15 years followed by an unbroken chain of ownership to the present.

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12
Q

What is the impact of a broken chain or short root for an unregistered title?

A

A buyer who accepts this position risks being bound by unknown burdens and may not have first registration at the Land Registry with title absolute and a mortgage is likely to be refused.

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13
Q

What are the key mandatory pre-exchange searches?

A

For registered land: application for Official Copies
For unregistered Land: Index map search and Land Charges search on the name of the seller

For all transactions:

  1. Energy Performance Certificate
  2. Local Land Charges Search (planning permissions, listed buildings, planning agreements)
  3. Local Authority Search (shows planning and building regulations consent, public rights of way etc.)
  4. Drainage and Water Search
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14
Q

What are examples of specific searches that are conducted pre-exchange depending on the nature of the transaction?

A
  1. Bankruptcy Search: if acting for lender must be carried out on buyer and guarantors
  2. Environmental search
  3. Companies House search: if seller is a company
  4. Coal Mining Search
  5. Chancel Repair Search: where property is near an old church
  6. Noise map
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15
Q

What are the 3 different types of property surveys?

A

Level 1: cheapest for modern properties in good condition
Level 2: most common mid-level for properties that are in a reasonable condition
Level 3: most expensive and thorough for buildings that are more than 50 years old

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16
Q

What should you do after you receive the results of the pre-exchange searches and inquiries?

A
  1. Consider whether any issues raised in the investigation need to be clarified
  2. Report on the title and search results
  3. Check whether the search results are satisfactory before exchanging contracts having regard to the Client’s instructions and requirements.
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17
Q

What are the two ways co-owners can hold property?

A

Joint-tenants and tenants in common

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18
Q

What does ownership as joint tenants mean?

A
  1. All joint tenants collectively own the property; they all have equal rights
  2. On death of a co-owner property automatically passes to the other (survivorship)
  3. Either party can sever the joint tenancy without further actions
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19
Q

What does ownership as tenants in common mean?

A
  1. Each tenant owns a specified share of the property. Shares are fixed at the outset or vary according to financial contributions.
  2. At the death of one owner, the property does not automatically pass to the co-owner. It will pass under the deceased will or intestacy.
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20
Q

What is a declaration of trust?

A

If the client wishes to hold the property as tenant in common it is always advisable for co-owners to enter into a declaration of trust. It formally records that the co-owners hold the property as tenants in common and sets out the respective shares in the property.

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21
Q

How do you know if there is a declaration of trust from the Official Copies?

A

Look for a Form A Restriction in Section B “Proprietorship Register” that states “No disposition by a sole proprietor of the registered estate (Except a trust corporation) under which capital money arises is to be registered unless authorized by order of the court.

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22
Q

What does overreaching mean?

A

Equitable rights in land are transferred to the purchase money that has been paid as long as the buyer pays the purchase price to two trustees or a trust corporation. Where the beneficial interest is overreached, the buyer will acquire good title.

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23
Q

If there is more than one surviving tenant in common do you need to appoint a second trustee to overreach?

A

No, there are sufficient survivors to overreach.

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24
Q

What documents should you verify when there is overreaching?

A

The deed of appointment of a second trustee

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25
Q

How to confirm that a PR has the capacity to transfer property?

A

Check the grant of representation

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26
Q

What are considerations to note when buying from a PR?

A

They may only be able to give a limited title guarantee, and may not be able to provide full replies to enquiries.

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27
Q

What does section 101 of the LPA 1925 provide?

A

A statutory power of sale for a mortgagee

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28
Q

What should a prudent buyer check when buying from a Mortgagee?

A
  1. Whether the power of sale exists
  2. Whether the power has arisen
  3. Whether it is exercisable
  4. Whether the seller is the first ranking mortgage
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29
Q

Describe the seller’s duty to disclose latent defects?

A

The seller has an implied duty to disclose any latent defects in the title (i.e., ones which the buyer could not have discovered by any reasonable inspection of the property). The duty only requires the seller to disclose matters about which the seller knows, or the seller has the means to know if acting reasonably and diligently.

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30
Q

Can the seller’s duty to disclose latent defects be excluded by contract?

A

No.

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30
Q

Can the seller’s duty to disclose latent defects be excluded by contract?

A

No.

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31
Q

When is planning permission required?

A

When the works fit within the statutory definition of development. Some works are deemed to have automatic approval.

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32
Q

What is the enforcement time limit for unauthorized operations (building, engineering, mining)?

A

4 years

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33
Q

What is the enforcement time limit for an unauthorized change to a single dwelling house?

A

4 years

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34
Q

What is the enforcement time limit for other breaches of planning controls (e.g., change of use)?

A

10 years

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35
Q

What is the enforcement time limit for a listed building regime?

A

No limit

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36
Q

What are the relevant enforcement time limits for breaches of the building regulations?

A

Enforcement notice to be served within 12 months / Injunction at any time

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37
Q

When a buyer advises you that they intend to make an alteration to the property, what are things you should consider?

A

Whether planning permissions and building regulations consent are required
Highlight the risk that where they are not obtained, clients may be prevented from carrying out their plans.

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38
Q

How to mitigate the risk of planning permission being rejected, before committing to purchase?

A
  1. Consider making an outline planning permission application
  2. Consider making the offer conditional on getting a planning permission
  3. If the client intends to alter the property structurally, advise a Level 3 Survey
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39
Q

Why should you check for any past development or changes carried out by the past owners?

A

The authority can take enforcement action against the owner of a property (Even if that person did not undertake the work). This may require costly rectifying works. Consider time limits and whether the breach has become immune from action.

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40
Q

What are options for risk mitigation where there has been a lack of permission or consent?

A
  1. Remedying the breach (special condition to be placed in the contract) - to be obtained before completion at the seller’s own cost
  2. Retrospective planning permission or Building Regulations Regularization Certificate
  3. Insurance (ideally at the seller’s expense)
  4. Contractual indemnity, seller indemnifies the buyer against potential risks
  5. Negotiation of a reduction on the sale price.
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41
Q

What are overriding interests?

A

Overriding interests have a historical record as statutorily binding notwithstanding their absence from the register of title (Land Registration Act 1925, s.70(1)). These types of rights would not require registration to become apparent, because they ought to be apparent to any taking the registered title of land upon a physical inspection of the land (and/or inquiring with persons residing on the land) or by reference to other evidential aids, such as the registers of local land charges maintained by local authority bodies

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42
Q

What are the exceptions to a person in actual occupation’s overriding interest?

A
  1. When asked the person with the interest fails to disclose it
  2. The occupation is not obvious on a reasonably careful inspection at the time of disposition
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43
Q

What should you do when you expect a person to be in actual occupation of the property?

A
  1. Advise your client to physically inspect the property immediately before contracts are exchanged.
  2. Raise pre-contract enquiries about who is in occupation
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44
Q

What are the risks to the buyer when there is an occupier in actual occupation?

A

Buyer may be bound by the occupier’s interest if the buyer knows of the occupier or it was obvious on a reasonably careful inspection at the time of disposition.

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45
Q

What are options to consider to mitigate any risks associated with occupiers?

A
  1. Occupier to join the contract
  2. Release (separate document from the occupier to formally release any rights and confirm that he will vacate on completion).
  3. Overreaching
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46
Q

What are points to consider when there is a spouse that may have a right in the matrimonial home?

A

May have a right not to be excluded from the matrimonial home. Not an overriding interest, but constitutes a charge if registered. Consider seeking a written release by the Spouse or potentially contractually agree with the seller that it must be removed before completion.

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47
Q

What should you advise if your client is buying an old property?

A

Level 3 Survey and check if the property is listed

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48
Q

What to do if there is a known or suspected contaminant?

A

Usually identified if the property was in a location where industry is known to have existed. Identify through Environmental Searches and thorough due diligence. Consider mitigating through (1) environmental insurance; (2) covenants by the seller; (3) price; (4) indemnities.

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49
Q

What to do if there is an adverse entry on the register restricting selling?

A

Ensure that the restriction entry is removed.

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50
Q

Why is the distinction between restrictive and positive covenant important?

A

The burden of positive covenants does not generally bind future owners.

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51
Q

What is a restrictive covenant?

A

Prohibit or limit the ability to do something. It restricts the use and enjoyment of the burdened land. Likely to run with the sale of the land.

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52
Q

What is a positive covenant

A

Obligation to do something (e.g., to spend money).

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53
Q

What are the requirements for a restrictive covenant to be enforceable against future owners?

A
  1. Negative in nature
  2. Registered
  3. Touches and concerns the land
  4. Intended to run with the land
  5. No common ownership since it was imposed
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54
Q

What are points to consider when a land is burdened through a restrictive covenant?

A
  1. Check whether any covenants will prohibit the buyer from using the land for its intended purpose
  2. Consider restrictive covenant indemnity insurance
  3. Negotiate a release or variation
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55
Q

When are positive covenants enforceable?

A
  1. Compulsory renewed covenants protected by a restriction (Restriction on the burdened land title to state that no disposition should be registered without a certificate signed by a solicitor confirming that the requirement to provide a new deed of the covenant has been met).
  2. Chains of contractual indemnity: unbroken given by each buyer to the previous owner.
  3. Mutual benefit and burden principle: the person cannot continue to take the benefit of a deed without subscribing to the obligations under it.
  4. Restrictive covenant with a positive condition that couldn’t be split
  5. Use leasehold title: the burden of covenants contained in a lease will generally run before granting a lease out of the FH title.
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56
Q

What are the requirements for a valid easement?

A
  1. There must be a dominant and servient land
  2. Owners must be different persons
  3. Must accommodate the dominant land (not a personal right)
  4. Capable of forming the subject matter of a grant (not to wide or vague)
  5. Must not amount to exclusive possession
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57
Q

What is the rule in Wheeldon v Burrows?

A

In the context of a protracted and unnecessary neighbour dispute, the High Court has usefully analysed the impact of section 62 of the Law of Property Act 1925 and the rule in Wheeldon v Burrows.
Continuous and apparent easements exercised prior to the sale of a property in parts can give rise to legal easements unless care is taken expressly to avoid their occurrence.

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58
Q

What makes an easement a legal easement?

A
  1. Express legal easements made by deed (must be registered)
  2. Prescription over 20 years of continuous use
  3. Implied on a sale (section 62 of the LPA or Wheeldon v Burrows)
  4. Implied by true necessity (land is landlocked)
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59
Q

What is section 62 of the LPA?

A

When an owner disposes of a part of their land that is benefitted by an easement (that benefit will travel automatically)

60
Q

How do you register an easement?

A

Over a registered servient land, as a notice. As a land charge for unregistered land.

61
Q

What easements are overriding?

A
  1. Implied or presumed if (1) they know about it ; (2) its existence was obvious; (3) it has been exercised within the last year
  2. Express legal easements over unregistered land
62
Q

What are the risks associated with easements to the buyer of servient land? How do you mitigate?

A

Buyer may be obliged to comply. Solutions (1) express release (or variation); Indemnity insurance; Implied release (consider whether the easement may be extinguished by abandonment.

63
Q

What are the risks associated with easements to the buyer of dominant land? How do you mitigate?

A

Failure to register certain easements can render these unenforceable against the servient land. Solutions (1) Enforceability; (2) Contractual Condition; (3) Injunction.

64
Q

When you buy a FH subject to lease, is the lease binding on future owners?

A
  1. Lease term up to 7 years = yes
  2. More than 7 years must be registered
  3. Lease term not more than 21 years granted before LRA 2002 (Overriding)
65
Q

What does an absolute title mean?

A

Takes the land free of interests which are not registered.

66
Q

What is a good leasehold title?

A

The class of title will be granted if the applicant is able to prove the leasehold title but cannot do the same for the superior title/ freeholder.

67
Q

What does the possessory title mean?

A

Class is granted by reason of long possession without documentary right. For registered land anyone with adverse possession for 10 years can apply. For unregistered land over 12 years.

68
Q

Can you apply to upgrade a title to absolute freehold or good leasehold ?

A

You can apply to upgrade the title to absolute freehold or a good leasehold once it has been registered for 12 years or by producing new documentary evidence of title.

69
Q

Can you apply to upgrade a title to absolute freehold or good leasehold ?

A

You can apply to upgrade the title to absolute freehold or a good leasehold once it has been registered for 12 years or by producing new documentary evidence of title.

70
Q

What is a qualified title?

A

Granted where there is some defect that has been identified which cannot be disregarded. You can apply to upgrade the title to absolute by producing the missing documents.

71
Q

What do different title guarantees mean?

A

Full title Guarantee: free from any encumbrances
Limited Title Guarantee: Not free from known encumbrances

72
Q

What are the requirements for a contract for sale of land?

A

(1) Made in writing
(2) Contains or incorporates all of the terms
(3) Signed by or on behalf of the parties

73
Q

How are contracts exchanged?

A

Telephone Exchange (most common) (The contract becomes binding on the phone) / Personal exchange is an option, but very rare / Postal exchange: Buyer Solicitor sends the buyer’s copy to the seller’s solicitor, who then posts the seller’s signed copy back to the buyer’s solicitor.

74
Q

What is Formula A for Exchange?

A

Formulae A (Rarely used): One solicitor holds both duplicates / both agree over the phone that the contracts are exchanged and become binding. The solicitor holding both documents dates them and sends a copy signed by its own client to the other Solicitor.

75
Q

What is Formula B for Exchange?

A

Formula B (Most Common): Each solicitor holds his own client’s copy of the contract. the solicitors go through the contracts over the phone to check they are identical. Solicitors will then agree that contracts are exchanged and become binding at this point. Each solicitor dates and sends to the other its respective client’s signed copy.

76
Q

What is Formula C for Exchange?

A

Similar to Formula B, but the solicitors agree to release the contracts for exchange for a specific period. It allows a chain of buyers and sellers to be ready to exchange so that as soon as the party at the end of the chain is ready, all contracts in the chain can be exchanged almost simultaneously.

77
Q

What happens to the deposit when contracts are exchanged?

A

The buyer’s solicitor will usually send the deposit to the seller’s solicitors when the contracts are exchanged.

78
Q

What does deposit paid to the seller’s solicitor “as stakeholder” mean?

A

This means that the deposit may only be released to the seller on completion or on the buyer’s failure to complete. Better for the buyer as the deposit could be recovered if something goes wrong.

79
Q

What does deposit paid to the seller’s solicitor as an agent?

A

This means that the seller’s solicitors can pay the deposit to the seller immediately. Better for sellers. Important to advise the buyer of the risks involved with paying the deposit as an agent. If completion does not occur, through no fault of the buyer, then the buyer may not be able to recover the deposit from the seller.

80
Q

What happens to the buyer’s deposit if the seller becomes insolvent between exchange and completion and the Seller’s solicitor holds it as agent?

A

The buyer will rank as an unsecured creditor in relation to the deposit.

81
Q

What is the advantage for the buyer if the deposit is held as agent?

A

The buyer may have the bargaining power to negotiate better terms.

82
Q

What risks should be taken into account when your client is replacing a residence? How do you mitigate the risks?

A

If the transaction are not synchronized the client could either end up with no property or two properties at the same time. You mitigate the risk by synchronizing the transactions.

83
Q

When should you check whether the client has enough money for the deposit?

A

Before exchange

84
Q

When does legal estate pass for unregistered property?

A

When the transfer deed is executed and completion monies have been paid, registration needs to happen within 2 months or the transaction becomes void and the estate reverts to the seller.

85
Q

When does the legal estate pass for registered property?

A

When the transfer is registered

86
Q

What are the key pre-completion inquiries that confer a priority period?

A

For Registered Land Form OS1 / OS2 “Land Registry Official Search” against the title confers a 30 working days priority period
For unregistered land Land Charges Search on Form K15 against the seller and each of the previous owners. The priority period is 15 working days.

87
Q

What is the outcome of a priority period?

A

Will limit any applications for adverse entries during the priority period.

88
Q

What happens if the priority period expires before completion?

A

It is possible to repeat the search. This will confer a new priority period.

89
Q

Besides the priority period searches what pre-completion searches should be conducted?

A

Company search
Bankruptcy Search
Repeat pre-exchange searches (if you suspect that circumstances have changed)
Check the POA
Other searches as needed

90
Q

What are pre-completion requisitions?

A

Set of questions raised by the buyer’s solicitors usually using the Completion Information and Requisitions on Title Form TA 13, which is designed so certain key information is obtained prior to completion.

91
Q

What do pre-completion requisitions usually include?

A
  1. Any changes to info
  2. Whether anything changed to the title
  3. Time and place of completion
  4. Arrangements for handing the keys
  5. Letter authorizing tenant to pay rent to the buyer (if applicable)
  6. What deeds and documents should be handed over on completion
  7. Exact amount
  8. Mode of payment
  9. Information regarding discharge of seller’s mortgage
92
Q

Who is responsible for ensuring that all answers to queries raised in the pre-completion requistions are satisfactory?

A

The buyer’s solicitor.

93
Q

What time limit does the SCS places on the ability to raise requisitions on the title?

A

6 working days of becoming aware of the title issue

94
Q

Besides searches and queries, what practical steps should the buyer’s solicitor take during pre-completion?

A
  1. Pre-completion inspection
  2. Request an undertaking from the seller’s solicitor that the mortgage will be redeemed on completion.
  3. Prepare the transfer deed.
  4. Will arrange to execute the mortgage deed but will leave it undated.
  5. Send a certificate of title to the lender (if acting for the lender) (includes (1) no legal problems with the property; (2) good and marketable title; (3) who will own the property when sale is completed; (4) the completion date and when funds are needed.
95
Q

what practical steps should the seller’s solicitor take during pre-completion?

A
  1. Get the redemption figure of any existing mortgage, prepare the mortgage discharge form
  2. Prepare financial statement to show net proceeds
  3. Prepare a completion statement for the buyer to show how much has to be paid on completion
96
Q

How do you ensure that the obligation to provide the property in a vacant condition is complied with and what remedies do you have for breach?

A

Through an express provision in the contract, remedies include applying for an order for specific performance and damage, or rescinding the contract, or completing and claiming damages.

97
Q

What are the consequences of death of any party after exchange but before completion?

A

Contract remains binding on buyer and the deceased’s estate. PR is bound to complete.

98
Q

What are the risks associated with a seller dying between exchange and completion?

A

Delay in completion
Breach
Existing mortgage (if not insured may exercise enforcement right on security)

99
Q

What are points a PR can consider to mitigate risks?

A

Can request an express or limited grant
Postpone completion date
Grant a licence to occupy

100
Q

What are points to consider to mitigate risks on buyer if the seller died between E&C?

A

Unilateral notice protecting the contract for registered landor land charge (estate contract) for unregistered
Compel PR to Complete (Notice to complete). The buyer will then be able to rescind and claim damages.
Claim compensation.

101
Q

Possible remedies for buyer in relation to damage between E&C ?

A

Claim insurance coverage
Consider whether the damage was due to the seller’s or third party’s fault and claim damages

102
Q

What happens if the buyer does not have the completion monies on completion?

A

Seller is entitled to charge interest on the balance of the purchase price.
The seller may serve a notice to complete requiring completion within 10 working days, if the buyer fails to do so, the seller can withdraw and keep deposit / claim damages

103
Q

What are possible solutions if the Buyer does not have the money on completion?

A
  1. Postpone the completion date
  2. Bridging finance
  3. Use money from related sale
104
Q

What is the completion timeline provided for in the SCS?

A

20 working days from the contract date.

105
Q

What are the methods of completion?

A

In person / by agent or by post

106
Q

What are the steps linked to completion by post?

A
  1. appoint the seller’s solicitor as agent
  2. Payment of completion monies
  3. Seller Solicitor Complete and date transfer deed
  4. If buyer’s solicitor acting for the lender date the mortgage deed
  5. SS will dispatch completion documents to BS
107
Q

What are the protections against failure to complete?

A

Protection by notice: registering a unilateral notice for registered land or a C(4) Land charge (estate contract) for unregistered land.

The buyer who has paid some or all of the purchase price is entitled to apply for a lien over the property for amount paid. Seller can do so over buyer’s property or money for the purchase price, where the contract remains unperformed through no fault of the seller.

108
Q

Is a notice to complete necessary?

A

SCS provides that time is not of the essence unless a notice to complete has been served If time is already of the essence, a notice to complete is not necessary.

If time is not of the essence, a failure to complete on the completion date gives the innocent party a claim for damages but cannot unilaterally terminate the contract.

Serving a notice to complete means that time is of the essence, parties must complete within 10 working days. If completion is not completed, the contract can be rescinded.

Party serving the notice must be ready, able and willing to complete.

109
Q

What happens if a party fails to comply with a notice?

A

Seller may rescind and keep the deposit
Buyer may rescind and refund the deposit with accrued interest.

110
Q

What remedy does section 49(2) of the LPA provide?

A

Where the seller fails to complete, the court may order repayment of any deposit to the buyer.

111
Q

What are the key main post completion steps?

A

BS to pay SDLT
SS to pay CGT if applicable
BS should register
Completion of mortgage formalities and perfection

112
Q

When is SDLT payable?

A

Within 14 days of the completion date. Once paid HMRC will issue a return that should be submitted with the application for registration.

113
Q

When is CGT made on a sale payable?

A

Within 60 days of completion.

114
Q

What is the registration process after completion?

A

BS will apply to the Land Registry to register the title in the Buyer’s name, as well as register the lender’s charge (if any). BS will submit the required documents and pay the registration fee.

115
Q

What are the formality requirements of a mortgage?

A

Incorporate all terms
In writing
Signed by both
Deed

116
Q

How do you perfect a mortgage?

A

First, the lender should conduct a priority search to effectively freeze the register in favour of the lender.

The mortgage is then perfected through registration at the land registry. Generally registration is not obligatory, but failure to register could prejudice that security’s priority position.

117
Q

What is the time limt for registration of a mortgage for companies at CH?

A

Companies must register mortgages at companies house within 21 days of completion.

118
Q

What are the consequences of failing to register a mortgage on time at companies house?

A
  1. Security becomes void against liquidators
  2. Debt payable as an unsecured debt
  3. Money secured become immediately payable
119
Q

s not What are the three types of mortgages?

A

Repayment / Interest only / Endowment linked to life insurance policy

120
Q

What happens if the seller dies before registration?

A

Does not affect validity of transfer deed. Can be registered in normal way.

121
Q

What are remedies for breaches discovered after completion?

A

Breach of contract claim
Claim for misrepresentation
Claim for misdescription (if substnatial can lead to rescission)

122
Q

How is a leasehold created?

A

Granted by the freeholder in exchange for a sum of money (premium) and ground rent (nominal amount) = you own the building not the land for a set number of years.

123
Q

What is the difference between a lease and a license to occupy?

A

Lease is an interest in land, license is personal
Lease is exclusive
Lease likely to bind owner, license not
SDLT payable on lease not on license

124
Q

What are typical lease covenants?

A

Lessee to pay rent, to repair where reasonable, to insure, to permit landlord entry to inspect or repair, to use premises for a specific purpose, not to assign or sublet, not to alter the structure

Lessor not to derogate from the grant, to repair, to allow quiet enjoyment

125
Q

What is security of tenure?

A

A tenant occupying a space for business generally has a statutory right to renew its tenancy at the end of the term. Landlord can oppose renewal on limited grounds set out in section 30 of the LTA 1954.

126
Q

What are exceptions to the security of tenure?

A

Contracted out leases
leases that are granted as part of the tenants employment.
Home business tenancies
Tenancies for 6 months or less
Licenses and tenancies at will

127
Q

What are the limited grounds for opposing renewal under section 30 of the LTA?

A
  1. Premises in disrepair (Court has discretion / No compensation for tenant)
  2. Arrears in rent (Court has discretion / No compensation for tenant)
  3. Substantial breaches or other reason related to the use of the premises (Court has discretion / No compensation for tenant)
  4. Landlord willing to provide a suitable alternative accomodation (Court has no discretion / No compensation for tenant)
  5. Ending a sub-lease to let the property as a whole (Court has discretion / compensation for tenant)
  6. To demolish, reconstruct or carry out substantial construction (Court has no discretion / compensation for tenant)
  7. Landlord intends to occupy the premises (Court has no discretion / compensation for tenant)
128
Q

What is the procedure to contract out from the security of tenure ?

A
  1. Health warning: must serve a warning notice on the tenant, which advises the tenant that they are giving up their statutory right to secure tenancy and compensation and recommends professional advice.
  2. Tenant must reply confirming they have received notice and accept consequences. If 14 days before lease simple declaration is sufficient if less than 14 days a statutory declaration signed before an independent solicitor is required.
  3. Endorsement
129
Q

What is a section 25 notice?

A

Notice to terminate and oppose the grant of a new lease
By competent landlord
To a commercial tenant (must be served on all tenants)
The prescribed form that specifies the grounds of opposition under section 30 must be used
Must be done at least 6 months but not more than 12 months before the termination date in the notice

130
Q

What is a section 26 notice?

A

A notice requesting a new lease by the commercial tenant

131
Q

Can a landlord serve a section 25 notice after receiving a section 26 request?

A

No. In the event the landlord wants to oppose the renewal they must respond to the section 26 notice within 2 months and must specify the applciable section 30 ground. If not served within the time limit, must renew.

132
Q

What can a tenant do if he receives a counternotice or section 25 notice?

A

Application to court and grounds for opposition.

133
Q

What is a section 27 notice?

A

Notice by a tenant to end a lease must be made 3 months before the expiry.

134
Q

Waht are the remedies for breach of lease?

A

Forfeiture where there is a breach of condition or a covnenant if that right is expressly reserved.

135
Q

What is a section 146 notice?

A

It is required if the landlord is seeking to forfeit for a tenant’s breach other than a breach of a covenant to pay rent. It must specify the breach and give a reasonable period to remedy the breach. If the tenant fails to remedy, the landlord will be entitled to remedy.

136
Q

What remedies beside forfeiture are available for a breach of lease?

A

Calling on additional securiy
Rent arreasrs recovery through agent

137
Q

What remedies beside forfeiture are available for a breach of lease?

A

Calling on additional security
Rent arrears recovery through an enforcement agent
Court proceedings to recover debt
Action for damages and/or injuction

138
Q

Can a tenant assign a lease?

A

Yes unless specified otherwise.

139
Q

What is an Authorized Guarantee Agreement?

A

It was introduced after the abolition of the tenant’s liability for the whole term of the lease after assignment. Under an AGA the outgoing tenant guarantees the performance of the lease covenants and obligations of the incoming tenant. Limited to the immediate assignee for the period of the original lease.

140
Q

Where the landlord’s consent is required for assignment? What is the process to apply for consent?

A

The landlord must within a reasonable time give consent except if it is reasonable to refuse, pursuant to the tenant’s request for consent in writing. Landlord can give conditional consent and for example require an AGA, the decision must be in writign.

141
Q

If consent for assignment is unreasonably withheld, what are the tenant’s possible remedies?

A

Act without consent / If it was deemed that the landlord rejection was reasonable, the tenant would be in breach.

Court declaration (may be time consuming)

Court claim for damages/ injunction

142
Q

If consent for assignment is unreasonably withheld, what are the tenant’s possible remedies?

A

Act without consent / If it was deemed that the landlord rejection was reasonable, the tenant would be in breach.

Court declaration (may be time consuming)

Court claim for damages/ injunction

143
Q

What are the effects of contracting out from security of tenure?

A
  1. The tenant has no right to remain in the property at the end of the lease
  2. The tenant must leave unless landlord chooses to offer a new lease
  3. Tenant has no right to compensation from the landlord on leaving the property at the end of the lease
  4. The tenant has no right to ask the court to fix the rent or the terms of the lease if the Landlord chooses to offer another lease
144
Q

What is the procedure to contract out of security of tenure?

A
  1. Landlord warning notice
  2. Tenant’s declaration
  3. Endorsement
145
Q

What are the 7 grounds a landlord can rely on to end a lease with security of tenure?

A

a. Premises in disrepair
b. Arrears of rent
c. Substantial breaches or other reason related to the use of the premises
d. Landlord willing to provide suitable alternative accommodation
e. Ending a sublease to let the property as a whole
f. To demolish reconstruct or carry out substantial construction work
g. Landlord intends to occupy

146
Q

What are the mandatory grounds under which a landlord can end a secured lease?

A

(d) willing to provide suitable alternative accomodation
(f) demolish, reconstruct or carry out substantial construction work
(g) landlord intends to occupy the premises

147
Q

What are the grounds that may entitle a tenant for compensation when subjected to a section 25 notice?

A

Property Conveyancing (2 decks)

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