L+T Flashcards
When must Terms of Engagement be agreed?
At the start of the instruction.
What must you check before agreeing Terms of Engagement?
- You are competent
- No personal interest or conflict of interest
- Refer to the standard Terms of Business that will apply alongside the Terms of Engagement.
What can fees be based on for rent reviews or lease renewals?
- A fixed fee
- Incentivised fee – Percentage of the uplift achieved or saving made (cannot be applied for expert witness work)
- An hourly rate (commonly applied for expert witness work)
What are general actions that could be required by the surveyor?
- Undertake a CoI check and competency check
- Agree ToE with client
- Obtain an understanding of your client’s objectives
- Obtain all the information from the client
- Read the lease packet and any licences
- Check whether time is of the essence for a rent review
- Undertake a site inspection and measurement of the property
- Undertake a market rent valuation
- Prepare a report to your client
- Agree your strategy with your client
- Open negotiations upon receipt of instructions
- Check that any notice received is valid
- Conclude negotiations and document the rent review in a RR memo.
*Lease renewals - instruct solicitors to prepare the new lease in accordance with the heads of terms prepared for the new lease.
What does ‘without prejudice and subject to contract’ mean?
‘Without Prejudice’ means that during negotiations, the opposing party cannot rely on any document or discussions labelled ‘without prejudice’. ‘Subject to contract’ means subject to contract.
What is a protected tenancy?
A protected tenancy is where the commercial tenant has security within their tenancy and the right to renew their lease, qualified by the lease being inside the L&T Act 1954.
What is the difference between a lease and a licence?
- A lease provides an estate in the land
- A licence is a personal arrangement without property interest
- A lease can be assigned; a licence usually cannot
- A lease cannot be terminated until it expires; a licence can be revoked at any time
What is a tenancy at will?
A tenancy at will is a temporary arrangement allowing a tenant to use a commercial unit, with no legal interest and can be terminated by either party.
What is a periodic tenancy?
A short-term rolling tenancy with no fixed end date until one party gives notice.
What is a Wayleave?
A temporary right allowing an electricity company to install and retain apparatus, receiving an annual payment.
What is an Easement?
A permanent right allowing one party to enjoy rights over another’s land, capable of being registered at the land registry.
What is Adverse Possession?
The process by which a person can become the legal owner of land through possession for a specified period without the owner’s permission.
What is the Basis of Valuation for a Rent review?
Normally upwards only to the market rent using standard assumptions.
What are the standard assumptions and disregards usually found for a rent review?
- Assumptions:
- Property available to let on the open market
- Property is fit and available for immediate occupation
- All covenants observed
- Property may be used for the purpose set out in lease
- Disregards:
- Any effect on goodwill
- Ignore goodwill attached to the property
- Tenant’s improvements if landlord consent has been granted
What is a headline rent review clause?
A clause that ignores all incentives or concessions granted on a letting, making it difficult for landlords to achieve a headline rent at rent review.
What is time of the essence?
The presumption that time is not of the essence unless there are sufficient contra-indications.
What is Deeming Provisions?
Clauses requiring the landlord to specify the rent in the trigger notice, leading to deemed acceptance by the tenant if no counter-notice is served.
Can evidence post-rent review be used as evidence?
Yes, prior transactions on comparable properties may be admissible, but post-rent review events like covid-19 cannot be taken into account if not in the mind of the parties at the review date.
What is a trespasser?
Someone who has entered land without permission and has specific legal rights if injured due to property owner negligence.
What is a Calderbank Offer?
An offer marked ‘without prejudice save as to costs’ for a disputed rent review, requiring clear terms and careful drafting.
What are the dispute resolution offers for rent reviews?
- Typically identified in the lease
- Options usually include arbitrator or independent expert
- Appointment via application to the RICS Dispute Resolution Service
What are the key features of arbitration?
- Governed by the Arbitration Act 1996
- Decision must be based on submitted evidence
- Limited rights to appeal under specific grounds
What are the key features of an independent expert?
- Procedure governed by contract
- Duty to investigate and make enquiries
- No grounds for appeal; potentially liable for negligence
What are the two roles a surveyor can adopt in dispute resolution proceedings?
- Expert witness
- Advocate
What is the contents of a RR Memorandum?
- Name of landlord and tenant
- Address of the property
- Date of the lease and rent review
- Confirmation of new rent agreed
- Signed and dated by both parties
What is Section 24?
At the end of a fixed term of a lease, the tenancy continues automatically on the same terms if the tenant remains in occupation.
What is holding over?
The tenant remains in the unit under the same terms as the current lease until notice is served to end the tenancy.
What is Section 25?
Landlord’s notice must be served with a date not more than 12 months and not less than 6 months.
What is a continuation tenancy?
Known as ‘holding over’
It refers to the automatic continuation of a tenancy under the same terms until terminated according to the act.
What does Section 24 of the LTA 1954 allow?
It allows the tenant to remain in the unit under the same terms as the current lease after the end of their tenancy.
What is the notice requirement under Section 25?
Landlord’s notice must specify a termination date, be given by a competent landlord, and inform the tenant of their rights.
What are the time limits for a landlord’s notice under Section 25?
Not more than 12 months and not less than 6 months before the termination date.
What must a Section 25 Notice include?
- Name and address of the landlord and tenant
- Address of the property
- Date to end the tenancy
- Confirmation of new lease opposition or grant
- Deadline for tenant to ask for a new tenancy
What does Section 26 allow a tenant to do?
It allows a tenant to serve a notice requesting a new tenancy starting not more than 12 months and not less than 6 months after the request.
What is the purpose of a Section 27 notice?
To inform the landlord of the tenant’s intention to vacate the premises.
What are the two options for a tenant under Section 27?
- Vacate by the contractual expiry date
- Serve a S27 (1) notice giving at least 3 months’ notice
What are the 7 grounds of Section 30 for a landlord to object to a new lease?
- Breach of Repairing Covenant
- Persistent delay in paying rent
- Other Substantial Breach
- Provide suitable alternative accommodation
- Uneconomic Subdivision
- Demolition or Reconstruction
- Owner Occupation
Which grounds of Section 30 are mandatory?
- F - Redevelopment intention
- G - Owner occupation intention
What is the compensation owed to a tenant under Grounds E-G?
RV if under 14 years and 2x RV if above 14 years as at the date of the hostile S25 or S26 counter notice.
What sections of the LTA 1954 assist courts in determining a new lease?
- Section 32
- Section 33
- Section 34
- Section 35
What does Section 34 of the LTA 1954 address?
It pertains to the rent under a new tenancy and how it is determined.
What are interim rents?
Rents payable after the expiry of the contractual term before a formal lease renewal is completed.
What is a Section 40 request?
A request for information from either the landlord or tenant regarding who is a competent landlord or tenant.
What defines a competent landlord under Section 44?
A freeholder or superior tenant with an unexpired term of over 14 months.
What are the dispute resolution options for a lease renewal?
- Referral to county court
- Alternative dispute resolution (PACT)
What is PACT?
Professional Arbitration on Court Terms, an alternative dispute resolution mechanism for unopposed business tenancy renewals.
What are the proposed changes to the LTA 1954 announced in March 2023?
A review of Part II of the LTA 1954 to ensure it works for today’s commercial leasehold market.
What are the key features of Lease Renewals contracted out of the LTA 1954?
- No right to remain in occupation
- No compensation payable
- Strict procedures must be followed to contract outside the Act
What are the two types of declarations when a tenant contracts out of the LTA 1954?
- Simple declaration
- Statutory declaration
What are the various ways to terminate a lease?
- Forfeiture
- Surrender and negotiation
- Merger
- Disclaimer (due to insolvency)
- Break Clauses
- Lease expiry and service of notices
What is the first step in approaching lease renewals for a client?
Carry out a CoI check, agree ToE, and receive the lease information.
