grant of a lease (week 6) Flashcards
is a commercial lease usually on a long lease or a short term lease?
normally on a short term lease
what is a private investor?
can be either an individual or a company, who makes a business out of letting premises
what is an institutional investor?
they are financial institutions, typically, pension funds and life assurance companies who invest in property just as they would in the stock market
why is commercial property attractive to institutional investors?
they are attractive because they offer income, potential for capital growth and is seen as reasonably secure.
what is an FRI lease (full repairing and insuring lease)?
they mean that the tenant picks up the costs associated with the property, and the landlord receives the clear rent
what is covenant strength?
this is an issue of concern for an institutional investor. a landlord will want to know that the tenant has the means to comply with its obligations, and also that it has assets that the landlord can recover breaches against.
what is asset management?
this involves acting for an institutional landlord, and dealing with the legal work generated by the property asset on an ongoing basis.
involves assisting a commercial landlord with the day-to-day management of the estate
what are the 3 essential ingredients for a lease?
- must have exclusive possession
- fixed term or periodic term
- formalities
if a lease is over 3 years what formalities must be adhered to? (how must it be created?)
it must be created by a deed if the term is over 3 years
if a lease is 3 years or under what formalities must be adhered to? (how must it be created?)
it can be created in writing, or even orally
what does reversion mean?
at the end of the lease term, the property reverts back to the landlord
who has the dominant negotiating position in a lease agreement?
the landlord
when can a term commencement date start for a lease?
before, on the day, after the lease?
it can be all three
what is a reversionary lease?
it is when the term commencement date starts after the lease is dated
if the term of the lease is ‘from and including’ when does the lease term actually end?
it ends the day before
eg, a lease with a term date of 10 years from and including 24th march 2019 expires on 23rd march 2029
is the term of the lease is ‘from’ a certain day - when does the lease start and when does it expire?
it starts the day after that and it expires on that day of the year
eg, lease with a term of 10 years from 24th march 2019 will start on 25th march 2019 and end on 24th march 2029
what does a break clause allow the parties to do?
it means that the lease can be brought to an end before the end of the fixed term
what are the traditional quarters for paying a lease?
25th December - 24th march
25th march - 23rd June
24th June - 28th September
29th September - 24th December
what are the modern quarters for paying a lease?
1st January
1st April
1st July
1st October
if a lease is silent on if rent is payable in advance - what does this mean?
it means that the rent is payable in arrears
what is turnover rent?
rent mat be calculated based on the tenant’s turnover at the property
what is index-linked rent?
rent is increased by reference to an agreed measure of inflation
what is open-market rent review?
(most common type of rent review adopted in FRI leases) involves ascertaining the rent based on comparable premises and certain principles
who do the code for leasing business premises apply to?
apply to members of the RICS and RICS regulated firms
what are the rules in following the code for leasing business premises?
RCIS members and regulated firms MUST follow them UNLESS there are exceptional circumstances
when is an agreement for lease needed?
where the parties want to commit to completing the lease, but either are not yet ready, or there are conditions that need to be satisfied
is a deposit payable for a lease on exchange?
no deposit needs to be paid
when is an OS1 search needed for a lease?
when there is a lease of whole
when is an OS2 search needed for a lease?
when there is a lease of part
when is an OS3 search needed for a lease?
if the lease is not registrable, it can be used. it doesnt confer priority but will check that the landlord is free (or not) to grant the lease
what are the registration requirements for a lease of less than 3 years?
doesnt need to be registered
cannot be noted agains the landlord’s title
what are the registration requirements of a lease that is between 3-7 years?
no register
can be noted against the landlord’s title
what is the registration requirement for a lease that is more than 7 years?
must be registered at the land registry
will be noted against the landlord’s title
is rent normally paid in arrears or in advance?
normally paid in arrears (default position)
who pays insurance for a lease (landlord or tenant?)
landlord pays
who pays insurance premiums for a lease (landlord or tenant?)
tenant
what is a tenancy at will?
it allows either party to end the arrangement at any time
