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Property Practice > Granting a lease > Flashcards

Granting a lease Flashcards

1
Q

What are the essential ingredients of a lease?

A
  • exclusive possession
  • fixed term/periodic tenancy
  • created by deed if over 3 years (otherwise can be writing or orally)
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2
Q

Who is in the dominant negotiating position?

A

Landlord

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3
Q

What will institutional Landlords insist on?

A

FRI lease

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4
Q

What are the landlord’s objectives?

A
  • keep premises insured
  • keep premises in repair
  • ensure only used for permitted purpose
  • control of occupiers
  • say in how tenant alters premises
  • rent review
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5
Q

What are the tenant’s objectives?

A
  • allows intended purpose
  • satisfactory term
  • flexibility
  • not onerous restrictions
  • no steep rent rise
  • no unfair provisions
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6
Q

Can a lease commence before the lease is dated?

A

Yes

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7
Q

What is a reversionary lease?

A

commences after dated

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8
Q

When does a term expire when it says ‘from and including’

A

Day before ‘including’

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9
Q

When is the start and expiry of a term that says ‘from’?

A

Starts - day after ‘from’
Expires - ‘from’ date in relevant year

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10
Q

Who can a break clause be in favour of?

A

Landlord
Tenant
Mutual

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11
Q

What are the two types of break clause?

A

specifies date
rolling break

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12
Q

What type of rent and premium is paid on commercial leases?

A

rack rent (market rent)
no premium

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13
Q

What type of rent and premium is paid on residential leases?

A

ground rent
pays premium

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14
Q

What happens to the rent if the lease completes part way through?

A

Apportioned

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15
Q

What are the different types of rent review?

A
  • stepped rent
  • turnover rent
  • index linked rent
  • open market rent review
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16
Q

What is the usual first step for determining new rent on open market rent review?

A

L and T agree between themselves

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17
Q

What happens for open market rent review where landlord and tenant cannot agree a new rent?

A

A specialist valuer determines

18
Q

What does a specialist valuer consider when determining new rent on open market rent review?

A
  • rent payable for comparable premises
  • terms of the hypothetical lease
19
Q

What are the basic assumptions for a hypothetical lease?

A
  • Premises are vacant and available
  • There is a willing landlord and tenant
20
Q

What is the common disregard for a hypothetical lease?

A

Ignore what tenant has done voluntarily

21
Q

Rent review made at what point will mean the tenant may pay further SDLT?

A

before 5th annviersary of commencement

22
Q

When are the code for leasing business premises mandatory requirements followed?

A

Must be followed by RICS members

23
Q

When are the code for leasing business premises good practice provisions followed?

A

must be followed by RICS members unless exceptional circumstances

24
Q

What are the CLBP mandatory requirements?

A
  • Negotiations approached in constructive and collaborative manner
  • Unrepresented party must be advised on existence of code/recommend to seek professional advice
  • L responsible for enduring HOTs compliant with code and agreed before draft lease circulated
  • Prepare written HOTs stating subject to contract
25
Q

What must be covered in the heads of terms according to the CLBP?

A
  • Extent of premises
  • Length of term and break rights
  • Rent and rent review
  • Repairing obligation
  • Right to assign/underlet
  • Permitted use
  • Right to alter and obligations to return to original state
26
Q

What are the good practice points under CLBP for the premises?

A

o Define demise
o Lease plan
o All rights T will need

27
Q

What are the good practice points under CLBP for the break rights?

A

basic conditions to exercise break

28
Q

What are the good practice points under CLBP for the rent and rent review?

A

o Initial rent
o Frequency of payment
o VAT charged
o Rent free period
o How rent reviewed
o How often rent reviewed

29
Q

What are the good practice points under CLBP for the landlord’s title?

A

Responsible for obtaining any consent needed to grant

30
Q

What are the good practice points under CLBP for repairs?

A

o T’s repairing obligation appropriate length of term and condition
o Schedule of condition required for qualified repairing obligation
o New builds – T given appropriate protection against inherent construction defects

31
Q

What are the good practice points under CLBP for insurance and damage?

A

Suspend rent if premises damaged by insured risk or uninsured risk

32
Q

Who drafts the lease?

A

Landlord’s solicitor

33
Q

What is the original and counterpart lease?

A

Original - signed by L
Coutnerpart - signed by T

34
Q

When is an agreement for lease needed?

A

Parties want to commit to completing but not ready/conditions to be satisfied

35
Q

What will the landlord’s solicitor do pre-exchange?

A
  • Take instructions
  • Prepare draft lease (+ agreement for lease)
  • Deduce title
  • Respond to enquiries
  • Engross agreement for lease, L sign and send to T solicitor
36
Q

What will the tenant’s solicitor do pre-exchange?

A
  • Take instructions
  • Review draft lease and agreement and amend
  • Investigate title
  • Raise enquiries
  • Raise searches
  • Arrange for T to sign
37
Q

What method of exchange is usually adopted for leasehold?

A

formula B

38
Q

What enquiries are raised for leases?

A

CPSE1 and CPSE3

39
Q

What are the appropriate searches for leases?

A

OS1 search with lease of whole, OS2 search with lease of part
OS3 if not registrable

40
Q

When will a lease need to be registered?

A

Term more than 7 years

Property Practice (11 decks)

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