Grant of lease procedure Flashcards
What should the LL’s solicitor do pre-exchange?
- Take instructions
- Prepare draft lease and agreement for lease (if relevant)
- Deduce title
- Engross agreement for lease, obtain LL’s signature and send counterpart to T’s sol
What should the Tenant’s solicitor do 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 tenant to sign counterpart lease
What will be the basis for the draft lease?
Based on heads of terms - usually prepared by LL’s solicitor
What may a solicitor use to draft the lease?
Generic precedent lease or past-completed leases
What happens if the parties are not using an agreement for lease?
When the parties’ solicitors complete once the tenant’s solicitor is happy with title investigations and the form of lease is agreed
When is an agreement for lease needed?
When parties want to commit to completing lease but are not yet ready or there are conditions to satisfy
What will the landlord’s solicitor deduce during the investigation of title?
Their freehold title
What must the tenant’s solicitor ensure regarding the landlord?
That the landlord has title to grant the lease
Having established title, what else will the T’s solicitor investigate at the pre-exchange stage?
- any freehold covenants as these will also bind tenant
- CPSE1 Enquiries (as in freehold transaction) and CPSE3 Enquiries (which are specific to the grant of a lease)
- same searches as if they would if buying freehold
What do CPSE3 Enquiries pertain to?
Specific to the grant of a lease
When might a tenant agree that the cost of searches is not justified?
For short leases with limited repair and other obligations
What is the manner of exchange in a lease?
Similar to a freehold contract (using Law Society Formula B)
Is a deposit usually payable in a lease exchange?
No deposit usually payable
What does an agreement for lease usually set?
It may set a fixed completion date but usually outlines conditions that need to be satisfied for completion.
What is typically included in an agreement for lease?
A draft of the agreed form of lease.
What does the landlord’s solicitor do at the pre-completion stage?
- Prepare the original and counterpart leases.
- Prepare and send completion statement detailing money due on completion
What might be included in a completion statement?
- Apportion yearly rent, insurance rent and service charge on daily basis
- Need to count number of days for which the tenant is going to occupy in the current quarter and calculating an appropriate proportion of the yearly rent – find daily rate by dividing yearly rent by 365
What are the pre-completion steps for the T’s solicitor?
- arrange for tenant to sign counterpart lease
- obtain funds from client needed to complete as per completion statement
- raise pre-completion searches
What is an OS1 search?
Search for lease of a whole.
What is an OS2 search?
Search for lease of a part.
What is an OS3 search?
Search if lease is not registrable and does not confer priority.
What does the Tenant’s Solicitor do during completion?
The Tenant’s Solicitor sends completion monies to the Landlord’s Solicitor.
What agreement is made between the Landlord’s Solicitor and Tenant’s Solicitor during completion?
They agree over the telephone to complete and date the executed leases they are holding.
What do the Landlord’s Solicitor and Tenant’s Solicitor do after agreeing to complete?
They send the completed original and counterpart to each other.
