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APC OS > L&T > Flashcards

L&T Flashcards

1
Q

What are the factors in a lease that impact value?

A
  • Rent
  • Term
  • Security of tenure
  • User clause
  • Break clause
  • Review (reccurence and methodology)
  • Alienation
  • Repair
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2
Q

What are the different types of rent reviews?

A
  1. Open market
  2. RPI (index)
  3. Stepped or fixed
  4. Turnover
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3
Q

(IMPORTANT)
What are the assumptions and disregards for RR calculations?

A

Assumptions:
- hypothetical term
- both parties are willing and able
- property ready for the use permitted under the lease

Disregards:
- any increase in value due to approved tenant improvements
- tenant in occupation (you should assume the property is vacant and ready to be let on the market)
- goodwill of tenant (the value attributable to the property due to the tenant trading there e.g. two restaurants, one is performing better because of celebrity chef)

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4
Q

Difference between lease and license?

A

A lease has an intention to create a legal interest in land. A lease is a contract between two parties that defines 1) rent, 2) term, 3) exclusive possession

A license is legalising what would otherwise be illegal occupation
1954 Act doesn’t apply on licenses
(e.g. hiring of a conference hall for a few days)

Street v Mountford case sets out the difference between lease and license. Landlord called it a license, but in every way it was a lease

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5
Q

When does the 1954 Act applies?

A

A business must be run within a property for the 1954 Act to apply.

A stat dec can be agreed to exclude the lease from the provisions of the 1954 Act

Or a simple declaration

(Look out for a manuscript & signature)

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6
Q

What to do if a landlord does not want to renew the lease?

A

Hostile s.25 served 6-12 months prior to lease expiry

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7
Q

What is case law on s.25 and s.26

A

Royal Mail

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8
Q

What is a s.27 notice

A

Notice from the LTA 1954 which a tenant would serve to terminate their protected lease

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9
Q

Does a tenant always have to serve a s.27 notice?

A

If a tenant vacates fully before lease expiry, the protected lease will expire (as no business will be carried out from the property)

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10
Q

Tell me about Frances Ltd v Cavendish Hotel 2017 case

(refers to Level 3 - Putney Bridge example)

A

This case from 2017 ruled that landlords should evidence a “firm and settled” intention to redevelop (when trying terminate a protected lease through LTA 1954 s.30(f) grounds)

s.30(f) states:
“LL intends to demolish or reconstruct, or to carry out substantial works of construction on the holding OR part, that they could not reasonably do so without obtaining possession of the holding”

Evidence of intention:
- planning permission obtained
- building regulation approval
- professional advisers instructed
- scheme of works prepared
- finance secured
- superior landlord consent obtained
- contracts in place

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11
Q

Tell me about the United Scientific Holdings Ltd v Burnley Borough Council 1977 case

A

This case from the 70s ruled that time is not usually of the essence for rent reviews

(Landlord can serve a RR notice even way past after the date stated on the lease)

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12
Q

What is an Authorised Guarantee Agreement?

A
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13
Q

When does liability end for assignor under AGA?

A

As per L&T Act 1927, the liability ends at the end of the lease or when

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14
Q

What is the difference between assignment and sub letting?

A

Assignment creates a new contractual relationship between the assignee and the landlord
Subletting does not

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15
Q

Difference between an expert witness and independent expert?

A

Expert Witness: Stands up in court and gives evidence to the court is respect of a LR, RR, etc

Ind Expert: Appointed by the President of RICS to settle a dispute of a RR

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16
Q

Difference between LR and RR?

A

Lease is a statutory process governed by the LTA 1954
In the event of non-agreement, decision will be taken by court or under PACT (Law Society x RICS)

RR is a contractual procedure
In event of non-agreement, the decision will follow the RR clause which usually states the rent shall be determined by EITHER an independent expert or an arbitrator

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17
Q

Give me the process for an Open Market RR

A
  1. Receive instruction, check COI and confirm fee in writing
  2. Read the lease to know RR provisions.
  3. Generally initiate by serving a notice in writing to the tenant’s registered office
    (Not a standard letter but should contain address of property, date of RR, parties involved, the proposed rent)
  4. Determine market rent using comparable method. Make note of the assumptions and disregards
  5. Agree rent with tenant and sign the RR memorandum
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18
Q

What does a RR Clause include?

A

Will state
- How the trigger notice can be served
- Will set out basis of valuation (Open market, index linked…)
- Will set out the means of settling disputes

19
Q

What is a statutory demand and when would you use it?

A

(1st step in the winding up process)

20
Q

Procedure for a OM RR?

A
  1. Inspection (Surveying Safely) and Measurement
  2. Gather comparable to get market rent
  3. Provide recommendations
  4. Negotiate
  5. In event of dispute, refer the matter to 3rd party ALTERNATIVELY a Calderbank offer is submitted which can lead to an agreement
21
Q

Is time of the essence in RR?

A

No, as per United Scientific Holdings v Burnley Borough Council

HOWEVER if there is a break clause, time will be of the essence

22
Q

What is a hypothetical term? (assumption for Rent Reviews)

A

If I was to let the property for a term today, would it be the same as the hypothetical term?

Hypothetical term = 25 years
Would I let a retail unit in London now for 25 years? no, closer to 5 years

SO you have to reduce the value substantially

23
Q

What is a Calderbank offer?

A

Calderbank letter is a BINDING unconditonal offer to settle without prejudice, save as to costs (= the evidence you give cannot be relied upon in court, except for the costs)

A Calderbank offer is generally only applicable with an arbitrator.

Generally valid for 21 days

24
Q

What’s the difference between an arbitrator and an independent expert?

A

Arbitrator: “award”
- Appointed by the President of RICS
- Bound by Arbitration Act 1996
- Award has to be between the two offers made
- Can be appealed but cant be sued

Ind Expert: “determination”
- Appointed by both parties or by the President of RICS to settle a dispute of a RR
- Not regulated by law
- No right of appeal BUT can be sued for negligence
- No required explanation of their decision

24
Q

What’s the difference between an arbitrator and an independent expert?

A

  • Bound by Arbitration Act 1996
  • Award has to be between the two offers made
  • Can be appealed but cant be sued

Ind Expert: “determination”
- Appointed by the President of RICS to settle a dispute of a RR
- Not regulated by law
- No right of appeal BUT can be sued for negligence
- No required explanation of their decision

25
Q

When can a tenant serve a s27 notice?

A

Within the last 3 months of the tenancy, but not after expiry

26
Q

What should a landlord do after receipt of a s26 notice?

A

Landlord should respond within 2 months with a counter notice

(Time is of the essence: If they do not respond in time, they lose their right to oppose the new tenancy)

27
Q

What is a s40?

A

Relevant to serve if the landlord is not sure of who is in occupants (any sub tenants)
if you have any doubts that the tenant is in occupation, you serve a s40 to ensure they are still in. If they are not, then LTA 1954 doesn’t apply (only applies if tenant is the occupier)

28
Q

Why would a tenant serve a s40 notice?

A

Relevant for s30(1)f or g??

The superior landlord has to have been the owner of the property for at least 5 years

29
Q

What is a s.29?

A

Courts grant a new tenancy

Courts will look at the old terms. They will also establish the Open Market rent the property under the SAME assumptions and disregards as rent reviews

Disregards:
- tenant occupation
- tenant goodwill
- any licenses
- any improvements carried out by tenants (other than in lease obligations or in last 21 years)

30
Q

Can a party change the terms of the lease in a protected lease renewal?

A

As per O’May and City of London 1982, either party who wants to change the terms of the lease need to satisfy 4 tests:
1) does the party demanding the change show good reason?
2) will the other party be adequately compensated?
3) will the change materially impair the conduct of the tenants’ business?
4) is the variation fair and reasonable?

31
Q

What is a section 24 notice?

A
32
Q

What is a part 36 offer?

A

(Equivalent to a Caldervank offer for lease renewals)

33
Q

What is a s146 notice?

A

Of LPA 1925
Tenant can serve a counter notice within 28 days. Landlord must establish the grounds under s15 to carry out repairs
Tenant has 6 months to remedy the breaches

34
Q

Under which act does dilapidations fall under?

A

L&T act 1927 limits the dilapidations claim to the diminution in value to the landlord’s reversion caused by the breach

Eg if AC is broken, this falls under the lease SO the cost is limited to repairing the AC

35
Q

What clause needs to be in the lease to permit the landlord to enter the premises to carry out repairs?

A

Jervis v Harris clause

36
Q

Schedules of condition

A

Generally prepared by the tenant’s surveyor and agreed by the landlord surveyor

If not done, the tenant’s surveyor or solicitor could be sued for negligence

37
Q

Can a landlord object to repairs?

A

Depends on what the lease states, generally “no alterations without LL consent, not to be unreasonably withheld”
Landlord could object (can to to court)
Or LL could carry out the works themselves and charge a premium on the rent
Or LL could let the tenant carry out

38
Q

What is the minimum term for a lease?

A

6 months

39
Q

What case law refers to the difference between a lease and license?

A

Street v Mountford
Tenant signed a designated license but it was deemed to be a lease in all but the name

40
Q

What does a s25 do?

A

It terminates the lease

41
Q

How does PACT differ from court hearings?

A

Cheaper
Less time consuming
Run by a property professional

42
Q

What is the law of property act 1925?

A

Introduces Section 146 forfeiture (breaches of lease)

43
Q

How long is a calderbank offer valid for?

A

21 days BUT could be more or less as defined in the doc

APC OS (13 decks)

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