Instructions Flashcards
What needs to be agreed at the start of the instruction?
Terms of Engagement
What is the process for confirming the terms of engagement with a potential new client for a LR/RR?
- Act within the limit of your competency
- Check for a conflict of interest (declare any conflict in writing)
- Confirm the identity of your client i.e. RICS Money Laundering Guidance 2011
- Discuss client requirements, strategy and objectives
- Agree how to present information i.e. level of feedback & reporting
- Set out details of fees, business terms and duration of the instruction
- Scope of the work. e.g. RR/LR’s
- Written in plain language i.e. no discrimination against vulnerable customers
- Give clients the opportunity to negotiate terms
- Your CHP should be available upon request
- Sign and date before asking your client to do so
When undertaking a RR or LR what information do you need from the client at the commencement of the instruction?
- Signed terms of engagement (both parties) (C.I.T)
- Understand client requirements, strategy and objectives
- Contact details to arrange an inspection
- Copy of the existing lease and any deeds of variation to the lease
- Copy of licences e.g. for alterations, improvements, sub-letting, or assignment
- Copy of any rent review memorandum
- Confirm which party will be responsible for serving notices
- Details of any comparable evidence held by your client
- Copies of rent review memorandums
What actions are required by the surveyor when undertaking a rent review?
- Firstly I undertake a conflict of interest check.
- I then agree Terms of Engagement with the client.
- I obtain my clients strategy and objectives.
- I check the lease pack for any licenses / understand the rent review clause / check the lease is not contracted out of the security of tenure provisions of the L&T Act 1954 (sections 24-28) in the case of a lease renewal. If it is silent, the lease is inside the Act.
- I must check whether time is of the essence for a rent review.
- I can then organise and undertake a site inspection and measurement in accordance with RICS Surveying Safely, 2018 & RICS Property Measurement, 2018.
- I then undertake a market rent valuation, having regard to the terms of the lease.
- Prepare a report to my client setting out your recommendations.
- I agree on a strategy with my client and confirm who is serving the relevant notices (It is important to always instruct a lawyer to serve 1954 Act lease renewal notices).
- Upon receipt of instruction I open negotiations, once the correct notices have been served.
- I conclude negotiations and document the rent review in rent review memorandum.
- For a lease renewal, I instruct solicitors to prepare the new lease in accordance with the HOT’s.
What is included in the terms of engagement for a lease renewal/rent review?
- Scope of work
- Client
- Property
- Confirmation of competence
- Confirmation of no conflicts of interest
- Copy of complaints handling procedure
What are fees for rent reviews or lease renewals based on?
- A percentage of the new rent agreed
- A percentage of the saving made from the quoting rent
- A fixed fee
- An hourly rate (more common for third party determinations)
- Incentive fee
After terms of engagement what should you understand?
I should understand the clients strategy and objectives.
What documents should be obtained from the client?
Copy the existing lease.
Plans attached to lease or Deeds of Variation.
Copies of any licences e.g. for alterations, improvements, sub-letting, or assignment and any deeds of variation to the lease.
Copies of rent review memorandums.
What can the client offer in relation to evidence?
Details of any comparable rental evidence relating to similar property held by the client.
How do you ensure due diligence when instructed on a RR or LR negotiation?
- Signed terms of engagement (C.I.T), CHP
- Understanding the clients requirements
- Obtain all necessary info from the client
- Read the lease and other documents
- Check whether inside or outside act
- Check if time is of the essence for a rent review
- Undertake inspection and measurement
- Undertake a market rent valuation
What is a deed of variation of lease?
A standard deed for use where a landlord and a tenant agree to vary the terms of their lease. It provides a framework for the parties to formally document the agreed variations to the lease.
How do you arrange an inspection?
Obtain contact details for the tenant to arrange an inspection or details of the landlord/agent.
What should you check before issuing Terms of Engagement?
- You are competent.
- There is no personal interest or conflict of interest.
- Confirmation of your complaints handling procedure details.
Initially, what important aspects of the lease do you need to understand?
- The rent review clause.
- Check not contracted out of 1954 Act (security of tenure provisions) in case of a lease renewal. IF SILENT - lease is inside Act.
What is important to check for during a rent review?
Whether time is of the essence.
United Scientific Holdings v Burnley Borough Council 1978
