Landlord and Tenant Flashcards
What is Privity of Contract?
In the context of a business tenancy, the “privity of contract” doctrine means the first (original) tenant can assign his interest in the tenancy (presupposing the lease permits assignment), but not his relationship with the landlord.
What was the procedure before the Landlord and Tenant (Covenants) Act 1995?
Before the Landlord and Tenant (Covenants) Act 1995, the first tenant remained liable for the rent, etc throughout the term of the tenancy, regardless of assignment. An assignee default at any time meant the original tenant could suddenly be presented with a demand for rent at any time.
What was the effect of the Landlord and Teanant (Covenants) Act 1995?
After 1 January 1996 when the 1995 Act came into operation, the change in the law introduced what is known as an Authorised Guarantee Agreement, or “AGA” for short. Now, and assuming completion of an AGA, the first tenant on assignment only remains liable for the duration of the first assignee’s interest in the tenancy. When that first assignee assigns, the first tenant bows out and the first assignee becomes liable for performance of the second assignee’s interest, and so on.
What is the general approach to a lease renewal?
Am I competent? Conflict of Interest? Signed Terms of Engagement? Obtain all information from the client. Read the lease + any licences/deeds of variation. Is it inside the Act. Undertake market research + Inspection. Produce rent valuation report. Serve notices. Negotiate. Conclude.
Use Ryton Road as an example
What is the general approach to a rent review?
Am I competent? Conflict of Interest? Signed Terms of Engagement? Obtain all information from the client. Read the lease + any licences/deeds of variation. Is time of the essence? Undertake market research + Inspection. Produce a rent valuation report. Serve rent notice. Negotiate. Conclude.
Use Unit 1 SCTP as an example
What are the effects of the 1954 Act on Lease Renewals?
If its is contracted w/in the 1954 Act, a notice must be served on the Landlord or Tenant to end or renew the tenancy. S.25 from the LL (Friendly or Hostile). S26 to renew from the Tenant. S.27 to bring the lease to an end from the tenant.
The 1954 Act provides security of tenure for the tenant. If it is inside the Act, the LL can only refuse a new lease on 7 grounds, as set out within S.30.
What is the effect of the 1954 Act on Break Clauses?
If a lease is contracted inside the Act, a LL must serve a S.25 notice when they want to exercise the break clause. They must state their reasoning under S.30 of the Act.
What dispute resolution is there for rent reviews?
Depends on the lease. The RICS has an ADR section. Cost is £425 inc of VAT. Read the lease to establish the method of determination. Options typically include Arbitration or Independant Experts.
Would you rather an Arbitrator or Independent expert if you were acting for a tenant/landlord in an upward/downwards market?
In a falling market when activng for a LL, an arbitrator would be preferred (as they have to rely on evidence submitted).
In a rising market when acting for a LL, an independant expert would be preferable.
Vice versa for a tenant.
What is an Arbitratior?
An Arbitrator is appointed for 3rd party determination of rent reviews. They can be appointed by the RICS president using DRS service. They are governed by the Arbitration Act 1996. A format is decided by the arbitrator which will include agreed statement of facts and timetable for submission. They can decide to hear the case and order costs. They will provide reasoned advice unless agreed otherwise. They can only use the evidence submitted by the parties - facts, hearsay and from an expert witness. They have immunity from negligence and can order disclosure by S34 of the Arbitration Act 1996. You may only appeal to the high court wihtin 28 days on 3 grounds - challenge a tribunal jurisdiction, point of law and serious irregularity.
What is an Independent Expert?
Someone who has detailed knowledge of market as a valuer. They are appointed by the RICS DRS but are not bound by judicial rules. They can make their own investiagations and have their own opinion to the makret rent. They are bound to the terms of the lease. No judicial function. You cannot appeal against their decision but can be sued for negligence. Can involve a hearing or dealt with by written representations. Good for when their is a lack of market comparables. No power to order disclosure. Only has power over their own costs, but can order as set out within the lease. Level Properties Ltd vs Balls Brothers (2007) - a rare example of determination of a rent review not being held to be binding, as based on incorrect interpretation of a rent review clause.
What are the key differences between an Arbitration and an Independent Expert?
“Evidence - Arbitrator can only act on evidence provided and arguments submitted. Independent Expert has a duty of investigation to discover facts and does not just have to consider the evidence provided + can use their own knowledge.
Appeal - Arbitration can only be to the high court on 3 grounds. Independant Expert there is no appeal.
Disclosure - Arbitrator has powers, Independant Expert does not.
Law - Arbitrator governed by Arbitration Act 1996. Indpendant Expert governed by what is says in the lease.
Outcome - Arbitrators Award vs Expert Determination.
Costs - Arbitrator has power over all costs. Independant Expert only has power over his own costs.”
What is PACT?
Professional Arbitration on Court Terms.
RICS encourages it as an ADR, offers alternative form of determination for unopposed LR. Used in-court where one party as served unopposed new tenancy to fix terms of the new lease. Out-of-court PACT should be used when no application has been made by either party and postpone court pending an out of court PACT resolution. Parties agree which points are agreed and which is to be decided by the 3rd party. Court need consent order binding on both parties. Arbitrator is notminated by RICS or Law Society. Legally binding. Seen as faster, avoid full court hearing, less expensive, decision by surveyor acting in the role of an arbitrator rather than made by a judge.
What parts of the 1954 Act govern PACT?
Section 29 - Order by Court for new tenancy, S32-35 Terms of the new tenancy.
Can you detail the key section of the 1954 Act?
“S23 - Application of the Act.
S24 - Holding over.
S24a - Interim rent.
S25 - LL notice to end (friendly or hostile).
S26 - Tenants notice to seek new lease.
S27 - Tenants notice to end the lease.
S28 - Renewal of tenancy by agreement.
S29 - Order by Court for a new tenancy.
S30 - LL grounds for opposition.
S32-35 - Terms of the new lease.
S34 - Basis of valuation for the new rent.
S37 - Compensation provisions.
S38a - Contracting outside the Act.
S40 - Notice requestion info about either party.
S44 - Definition of competent landlord”
What are goes into a rent review memorandum?
Name of landlord and tenant, address of property, date of the lease and rent review, confirmation of the new rent agreed, signed and dated by both parties. Can also be recorded as expert determination or arbitrtors award OR Written acceptance of Calderbank offer Or an open letter (not subject to contract).
Explain what a Calderbank offer is?
“Used to achieve early resolution of a dispute and prevent costs escalating. Letter must be served and headed ““without prejudice & subject to costs”” and not marked ““subject to contract””. A tool for influencing costs and negotiatiations in RR and the losing party will have to pay the other side recoverable costs, can avoid equal awarding of costs. The letter must detail a time limit whihc the other part must accept the offer. Usually 21 days - can be less if suffiecient time to consider and respond. Must be a genuine offer to settle and not a mechanism to influence costs. Arbitrator is obliged to make an award for costs. Part 36 offer under Civil Procedure Rules, 1998 offer similar mechanism for lease renewals.
Calderbank vs Calderbank (1975) - relates to a divorce proceeding. House worth £12k had been offred by Mrs, MR was given £10k in trial, she claimed she should not have to pay legal costs.”
What Key woridng would you put in a Claderbank offer?
Without Prejudice/Save as to costs.
3 week notice - 21 days.
Can be less if there is a reasonable time to consider the offer.
Can be accepted after 21 days if the opposing party picks up all costs associated with the Arbitrators fee, charges and LL/T costs beyond date of acceptance OR All experts fees and LL/T costs beyond date of acceptance.
Why did allow for a 10% deduction to rent for the onerous terms at Edenbridge?
I refered to the evidence schedule. I also compared this to how simililar rent reviews.
What is included within the Agreed Facts for a 3rd Party
It is a statement of agreed facts whihc is a summary of the points agreed between both parties, such as relating to the lease terms, floor areas and comparable evidence.
Can you appeal an expert determination?
No, but you can sue them for negligence.
Can you appeal an Arbitrators Award?
Yes but only on 3 ground to the High Court within 28 days of the award.
Tribunal Jurisdiction
Point of Law
Serious Irregularity
