Grant of a lease procedure Flashcards
What are the usual stages for the grant of a lease?
Normally pre-completion and post-completion.
Grant of lease transactions commonly do not need an exchange. Often pre-exchange and pre-completion steps are merged.
What are the steps a landlord’s solicitor must take pre-exchange?
- Take instructions
- Prepare draft lease and, if necessary, agreement for lease.
- Deduce title (and check that lender will consent to letting) and respond to any queries on title.
- Answer pre-contract enquiries
- Once agreed, engross the agreement for lease, obtain landlord’s signature, and send counterpart to tenant’s solicitor.
What are the steps a tenant’s solicitor must take pre-exchange?
- Take instructions
- Review draft lease and agreement for lease and amend as required.
- Investigate title and raise any queries on title
- Raise pre-contract enquiries and searches
- Arrange for tenant to sign counterpart lease.
What does engross mean?
Print a copy for signature (e.g. on good quality paper and bound).
How will the landlord’s solicitor draft the lease?
They will draft the lease based on the heads of terms.
The solicitor may use a generic precedent lease. Alternatively, if there have been past lettings on the landlord’s estate, the solicitor may have a part-completed lease which just needs to be tailored to the individual letting.
The tenant’s solicitor will go through and amend anything that is onerous or unfair to the tenant.
When would an agreement for lease be needed?
An agreement for lease is needed where the parties want to commit to completing the lease, but either are not ready yet, or there are conditions that need to be satisfied.
What enquiries and searches will the tenant’s solicitor raise?
CPSE1 enquiries and CPSE3 enquiries.
The tenant’s solicitor should raise the same searches as they would if they were buying the freehold.
What happens on exchange?
*Solicitors exchange in similar manner to freehold contract (usually adopting Law Society B)
*no deposit is usually payable
*the agreement for lease may set a fixed completion date, but more likely will set out what conditions need to be satisfied and by when for completion to take place.
*the agreement for lease will usually have a draft of the agreed form of lease annexed to it, so it can only be exchanged once the terms of the lease have been agreed.
What are the steps the landlord’s solicitor must complete pre-completion?
*Prepare original and counterpart lease, obtain landlords signature to original and send counterpart to tenant’s solicitor
What are the steps the tenant’s solicitor must complete pre-completion?
*Arrange for tenant to sign counterpart lease.
*Obtain funds from client needed to complete as per completion statement.
What is apportionment?
Apportionment involves counting the number of days for which the tenant is going to occupy in the current quarter, and calculating an appropriate proportion of the yearly rent. One method is to multiply the number of days by the daily rate, which is found by dividing the yearly rent by 365 (366 in a leap year).
What pre-completion searches will be tenant’s solicitor conduct?
*OS1 is appropriate search with a lease of whole
*OS2 is appropriate search with a lease of part
*If the lease is not registrable, then an OS3 search could be used. This does not confer priority, but will check that the landlord is free (or not) to grant the lease.
What is the completion process?
*the tenant’s solicitor sends the landlord’s solicitor the completion monies.
*the landlord’s solicitor and tenant’s solicitor agree over the phone to complete and date the executed leases that they are holding.
*the solicitors send the completed original and counterpart to each other.
What is the landlord’s solicitor responsibilities post-completion?
Send summary of main provisions of lease to client.
What is the tenant’s solicitor responsibilities post-completion?
*Arrange to submit SDLT or LTT return and pay appropriate SDLT or LTT if necessary.
*Register lease if necessary.
