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APC Commercial > Landlord and Tenant > Flashcards

Landlord and Tenant Flashcards

1
Q

What is the key piece of case law relating to the difference between a lease and licence?

A

Street V Mountford (1985)

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2
Q

What is a Licence?

A

Right to enter property
Personal arrangement between licensor and licensee
Licensee has no interest in property and merely have personal right to use property which can be terminated at any time.

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3
Q

What are the 4 requirements for a lease?

A

Exclusive Possession
Payment of Rent
Duration of specified term
If more than 3 years, terms must be in writing, signed and registered as a deed.

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4
Q

What are 3 differences between a Lease and Licence?

A
  1. Lease provides occupier with estate in relevant, where licencee only as personal right to use land.
  2. Lease can be assigned.
  3. Lease cannot be terminated until it expires (unless break clause).
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5
Q

What does ‘without prejudice’ mean?

A

During negotiations, the opposing party cannot use any documents titled with this where representations made in litigation.

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6
Q

Fees for rent reviews and lease renewals, what can they be based on?

A

-% of new rent agreed
-% of the saving made from the quoting rent
-a fixed fee
-An hourly rate
-Incentive fee

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7
Q

What is a tenancy at will?

A

This is a form of licence created by written agreement for unspecified time in which LL may evict the tenant at any time. Not legal interest and no renewal right.

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8
Q

What is a wayleave?

A

Temporary right and receives an annual payment - such as it provides a right for electricity company to install and retain their apparatus.
Personal to company and cant be automatically transferred to new owner.
Not compulsorily registrable.

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8
Q

What are some typical rent review assumptions?

A

-Property available in OM by willing T and LL for term of years stated (hypothetical term).
-Property is fit and available for immediate occupation and use.
-All covenants observed by LL and T.
-Property may be used for purpose set out in lease.

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9
Q

When would a tenancy at will be used?

A

Where Tenants enter property early before contractual period of their lease.

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10
Q

What are some typical rent review disregards?

A

-Any effect on goodwill on T’s occupation.
-Ignore goodwill attached to the property.
-T improvements if LL consent has been granted for works.

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11
Q

What is the case of Basingstoke and Deane Borough Council V Host Group (1987)?

A

States that where the lease is silent on the matter of the hypothetical term, the term to be valued is the residue of the term.

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12
Q

What is the case of United Scientific Holdings Ltd V Burnley BC (1978)?

A

States that time is not of the essence regarding the service of a rent review notice unless explicitly stated within lease.

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13
Q

What is a deeming provision within a lease?

A

Normally within older leases. Clause will state that if T does not submit an appropriate counter-notice in the specified time, the tenant will have deemed to accept the new rent.

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14
Q

What is the Hierarchy of Evidence (according to the Hand book of rent review)?

A

OML
RR/LRs
Ind Exp Determinations
Arbitrator Awards
Court Determinations under LTA 54
Hearsay evidence
Sale and leasebacks
Surrender and renewals
Inter-company arrangements

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15
Q

What does a Calderbank offer do?

A

Helps achieve resolution without having to go to third party/courts.

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16
Q

What should be included in a Calderbank Offer and what are the deadlines?

A

Letter must state all the terms to settle in despite and a time limit of when other party must accept the offer.
The time limit for acceptance is usually 21 days but this may vary by case.

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17
Q

How much currently does it cost to make an application to the RICS President for Third Party determination?

A

£425 inclusive of VAT

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18
Q

Who is an Independent Expert?

A
  • Someone who has detailed knowledge of market.
    -Complies with RICS GN Ind Expert Determination 2016
    -Appointed by RICS President by DRS but not bound by judicial rules.
    -Can make own investigations and have own opinion as to Market Rent.
    -No judicial functions.
    -No appeal against decision but can be sued for negligence.
    -Orders cost set out in lease but only has power over their own costs.
    Bound by terms of lease.
    -No power to order disclosure.
    -Can involve hearing of dealt with by written representations.
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19
Q

Who is an Arbitrator?

A

-They comply with Arbitration Act 1996.
-Can be appointed by RICS President using DRS and be a member of Chartered Institute of Arbitrators.
-Format decided by arbitrators including timetable for submission.
-Parties to submit Statement of Agreed Facts.
-Only use evidence submitted by parties.
-Will provide reasoned advice unless agreed otherwise with parties.
-Can order disclosure of documents via S34 of Arbitration Act, whereby each party allowed to see other sides rental evidence.

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20
Q

When can you appeal to the High court regarding an Arbitrator’s Award?

A

-Within 28 days of the award.
-If its a challenge to the tribunal’s jurisdiction
-It on a point of law.
-If there is a serious irregularity.

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21
Q

What details should be listed in a rent review memorandum?

A

-Name of LL and T.
-Address of property
-Date of lease and rent review.
-Confirmation of new rent agreed.
-Signed and dated by both parties.
-Can also be recorded by an Ind Exp determination or arbitrator’s award or written acceptance of Calderbank offer or an open letter.

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22
Q

What RICS document relates to Expert Witnesses?

A

RICS Practice Statement and GN ‘ Surveyors acting as Expert Witnesses, (4th Edn, amended in 2020)

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23
Q

What is the role of an Expert Witness?

A
  1. Provide impartial and objective expert evidence
  2. Duty of surveyor is to court and this overrides obligation to client.
  3. Evidence must be the independent work of surveyor.
  4. Surveyor must believe that the facts upon which they rely are complete and true and their opinions are correct.
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24
Q

What governs disclosure in court?

A

The Civil Procedure Rules

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25
Q

What is defined as a ‘business tenancy’ under S23, LTA 54?

A
  1. Its a tenancy
  2. Premises must be used for business
  3. Occupation of at lease part of premises by Tenant.
  4. Occupancy of more than 6 months.
  5. Must not be exempt or excluded tenancy.
  6. Must be competent LL (Freeholder/Superior T with more than 14 months to run)
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26
Q

What does S24 of LTA54 Act do?

A

States that business tenancy within Act is allowed to hold over after expiry of tenancy until relevant notice served and in compliance with lease provisions.

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27
Q

What is a Section 25 Notice and what are the timescales?

A

A notice to terminate the existing lease and either propose terms for new lease or states ground for opposition to new lease. Landlord serves notice and must be served 6/12 months before date of termination.

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28
Q

What should a Section 25 Notice contain?

A

Name and address of LL and T.
Address of property
Notice of date to end tenancy
Conf if new tenancy opposed or granted
Conf of date of response required
If friendly notice, terms proposed
If hostile notice, reason for opposition

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29
Q

What is a S26 Request?

A

Tenant serves this notice, 6/12 months terminating the lease and proposing a new tenancy.

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30
Q

Is the LL required to respond to a S26 request?

A

Yes, if they oppose the granting of a new tenancy, they have 2 months to serve a counter-notice.

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31
Q

What is a Section 27 Notice?

A

Effectively a notice to quit. The Tenant serves this notice 3 months before they plan to leave the property if they are holding over. Not needed if T plans to leave on contractual expiry date.

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32
Q

What does S28 of the LTA 54 do?

A

Where both parties agree to a new lease renewal, lease shall continue.

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33
Q

What is S29 of the LTA 54?

A

Order by court for grant/termination of current tenancy. Can be applied for once relevant notice served.

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34
Q

What does S29A and B relate to?

A

29A - Time limits for court application e.g. for S25 Act the statutory period ends on the date specified in the Notice.

29B - Agreement for extending court application.

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35
Q

What are the grounds for refusal set out in S30 of the LTA54?

A

a) Breach of repairing covenant
b) Persistent delay in paying rent
c) Other substantial breach
d) Provide suitable alt accomm
e) Uneconomic subdivision
f) Demolition/reconstruction
g) Owner occupation

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36
Q

How long must a Landlord own a property before they are able to use the owner occupation S30 reason for opposing a renewal?

A

5 years. Must also prove intention to occupy and run their own business.

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37
Q

What S30 grounds are discretionary and which are mandatory?

A

Grounds a-e are discretionary and courts decide whether reasonable.

Grounds f-g are mandatory.

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38
Q

What does S31/31A of the LTA 54 relate to?

A

S31 - Dismissal of application where LL successfully opposes.
S31A - Grant of new tenancy where S30 (f) applies.

39
Q

What do S32-35 of the LTA 54 relate to?

A

Terms of new lease:

S32 - Property within new tenancy
S33 - Duration of new tenancy
S34 - Rent under new tenancy
S35 - Other terms of new tenancy

40
Q

What does the Regulatory Reform (Business Tenancy) (England and Wales) Order 2003 state?

A

As from March 2004, Courts are only allowed to grant a new lease term of 15 years.

41
Q

In order to provide a rental value as per S34, what areas are to be disregarded?

A

Tenant goodwill and occupation and any LL approved improvements carried out by Tenant within the last 21 years.

42
Q

What does O’May V City of London (1983) reference?

A

A tenant’s old lease had no service charge provision, the Landlord proposed a new lease with onerous service charge provisions. The Courts refused this change on the grounds that it was not fair and reasonable.

43
Q

What are the 4 principles test regarding the variation of lease terms to reflect ‘modern’ lease terms?

A
  1. The LL must have valid reason on estate management grounds.
  2. Change proposed must be capable of being compensated by a change in rent.
  3. Change must not materially adversely affect the tenants security of tenure.
  4. Must be reasonable.
44
Q

When should compensation be payable for new leases opposed on S30 grounds.

A

For grounds a-d, no compensation is payable.

45
Q

How much compensation is payable?

A

1x RV = Tenant with less than 14 years occupation.

2x RV = Tenant with more than 14 years occupation.

46
Q

What is Interim Rent?

A

Rent payable by tenant under this act for period of occupation between termination of former tenancy and the commencement of a new lease.

47
Q

What are the deadlines for an application for interim rent?

A

Earliest interim rent can be served is date of S25/26 Notice. Latest date is 6 months after lease expiry date.

48
Q

What is a S40 Notice?

A

A request for information from either the LL or T. Can be used to check who is the competent Landlord or Tenant with statutory protection.

49
Q

When can a S40 Notice be served?

A

Last 2 years of tenancy.

50
Q

Who is a competent Landlord?

A

Defined under S44 of LTA 54, as someone who should be served or should serve notice.

Must be freeholder/superior tenant with unexpired term of over 14 months.

51
Q

What is a Part 36 Offer?

A

Similar to Calderbank but served for lease renewal. Offer is a genuine attempt to settle dispute and is only open for 21 days, after this time offer can still be accepted but possible for offer to be withdrawn by party who made it.

52
Q

What 2 choices are there for lease renewal 3rd party determination?

A
  1. County Court - following Civil Procedure Rules 1998
  2. PACT
53
Q

What does PACT mean?

A

Professional Arbitration on Court Terms

54
Q

What are some advantages of PACT?

A

Faster than courts
Greater flexibility/control
Less expensive
Decision by Arbitrator rather than judge (Surveyor with market knowledge)

55
Q

What is a lease contracted outside the Act?

A

Tenancy does not fall within the renewal provisions within S24-28 of LTA54.

Tenant not allowed to hold over on expiry until notice served and must leave on expiry unless Landlord permits a new lease.

56
Q

Why might a lease be contracted outside the Act?

A

-Requirement of head lease
-LL wishes to redevelop property in due course
-LL wishes to occupy property in due course
-Rent may be lower
-LL wants future flexibility

57
Q

Strict procedure undertaken when contracting out a lease, what are the 2 types of declarations for this?

A
  1. Simple Declaration - When parties have at least 14 days prior to committing new lease.
  2. Statutory Declaration - When parties have less than 14 days prior to new lease, must be made before an independent solicitor.
58
Q

What is a ‘health warning’ notice?

A

Notice that must be provided to Tenant who is potentially going to agree to a lease outside the act. Advises them of the risk attached to doing so.

59
Q

What are some various ways a lease can be terminated?

A

Forfeiture
Surrender and negotiation
Merger
Disclaimer (insolvency)
Break Clauses
Lease expiry/service of notice

60
Q

What does the Code of Leasing Business Premises (1st Edn, effective Sept 2020) state?

A

Includes mandatory requirements for negotiations and heads of terms e.g. what items are required to be listed in HOTS and that parties not professionally represented should be advised to read this code and obtain representation.

Also discusses best practice guidance.

61
Q

How can the LL and T contract a lease outside S24-28?

A
  • LL must serve notice on T under Regulatory Reform Business Tenancies Order 2003.

-T must either sign a simple or statutory declaration.

62
Q

What is the 21 year rule?

A

Found in S34 of the LTA54. For Tenant improvements older than 21 years they are able to be rentalised.

63
Q

For London Rd, EG, why did you advise the client to serve a S25 Notice when the property was overvalued?

A

The Landlord stated that there objective was for their parade of shops to be fully occupied due to the current retail market. They wanted to secure a new lease, this would help with their investment value should they ever want to sell the property.

64
Q

In London Road, EG - why did you provide the tenants with 3 months rent-free?

A

Although I believed the property to be overvalued. My advice was to offer a rent slightly above the passing rent. Once the Tenant got back in contact, with my clients permission I was able to offer them 3 months rent-free as an incentive to agree and we negotiated a new lease at the passing rent.

65
Q

In Hanover House, why did you devalue your comparables taking into account the rent-free?

A

The rent review assumptions was to assume the property was vacant. If a comparable had rent-free I deducted 3 months for standard fitting out and then calculated the net effective rent.

66
Q

For Arun BP, what would you do if the T offered a 3 year term instead of the 5 year term proposed?

A

I would quote the 4 principles test from Omay V City of London. Citing that changes to the term should be reasonable and compensated via a change to the rent.

I would also argue that the market indicated term certain of 5 years was currently being agreed.

67
Q

What would a court say in regards to a tenant offering a reduced repairing covenant compared with the existing lease?

A

They would also use the O’may principles and come to the conclusion that the offer was unreasonable.

68
Q

For Arun BP, if you weren’t able to agree terms with the Tenant before expiry of the notice what would the next steps be?

A

The Tenant would loose their right to security of tenure unless you had applied to court under S29B for an extension to the deadline.

69
Q

What happens if a new lease is not agreed at the expiry of the S25/26 Notice?

A

The existing tenancy will end
The Tenant will lose security of tenure

70
Q

For Arun BP, how would your advice differ if you represented the tenant?

A

Depending on my clients long-term objective I would try to reduce the rent by agreeing a long lease.

I may try to negotiate a stepped rent.

71
Q

On Landguard Rd, what rent did your evidence support?

A

Our advice was to serve a S26 at a nil uplift but we believed there may be a minor uplift having looked at the evidence nearby but certainly not enough to justify the increase the LL had argued for in their informal proposal.

72
Q

Why did you serve a S26 instead of continuing to hold over?

A

The LL has offered an informal proposal and we thought it was a matter of time before they served a formal notice. We advised our client to protect their position by serving one before the market changed and evidence started to be agreed at higher rents.

73
Q

What is Ponsford V HMS Aerosols Ltd?

A

Relates to case where lease was silent on whether LL could charge rent on Tenant improvements.

74
Q

How to determine what a tenant’s fixture or fitting is?

A

Fixtures and fittings are the items that would fall out of a building if it was to be flipped over i.e. all items not structural

75
Q

Is a mezzanine classed as an improvement or tenant fixture?

A

Depends on type of mezzanine but generally treated as tenant fixture as not part of structure. Therefore, in RR assuming VP you would not rentalise mezzanine anyway.

76
Q

Can courts grant rent-free?

A

No

77
Q

What mandatory items are included in the Code of Leasing Business Premises?

A
  1. Negotiations must be approached in constructive and collabroative manner.
  2. Advise unrepresented party about code and rec prof advice.
  3. record heads of term that is ‘subject to contract’ and include key headline details.
  4. Follow existing lease at lease renewal except for reasonable modernisation
  5. negotiations aim to produce letting terms to achieve fair balance between parties.
78
Q

What mandatory terms listed in HOT as per code of leasing business premises?

A

Identify of premises
special rights granted
length of term
LTA 54 included/excluded
Renewal or break rights,
Req for guarantor/deposit
amount of rent
LL intends to charge VAT?
rent free
rent reviews frequency
service charge liability
repairing obligations
initial permitted use
any initial fit out
alterations
conditions on boards

79
Q

What is Iceland Foods Limited V Castlebrook Holdings Ltd?

A

Relates to decision for length of new lease at lease renewal.

Tenant wanted 5 year lease and LL wanted 15 years. LL aduced that short term letting woud damage value of reversion. Court sought to balance interests of both parties and ordered new term of 10 years.

Case shows that sometimes courts can order longer leases than what the tenant seeks.

80
Q

In Landguard Road, Southampton what would happen if you were 1 month away from expiry of the notice and the LL refused to order and extension of time?

A

If the Landlord refuses to offer a time extension, I would advise my clients that their solicitors should serve an application to court to protect their position before expiry of our Section 26 notice.

81
Q

What is the earliest time an application can be made to courts for a lease renewal?

A

The earliest time is the date of the notice. However, if T serves S26 they will have to wait 2 months for a LL counternotice unless LL already opposing renewal in which case they can apply.

82
Q

What is Sainsburys Supermarkets Ltd V Medley Assets Ltd (2024) relate to?

A

Where LL had opposed renewal on redevelopment grounds. LL wanted to redevelop first, basement and small part of ground floor of building. However, Sainsbury’s had vacated all these parts even the small part of the ground floor.

Landlord’s opposition failed and courts claimed LL’s works could carry out with Sainsbury’s in situ.

83
Q

What does Mcdonald’s Restaurants Ltd V Shirayama Shokusan Company Ltd (2024) relate to?

A

LL gave undertaken to court and successfully opposed new renewal for Mcdonalds due to them wanting to occupy themselves via a Japanese Restaurant.

However, after opposition it was found that only part of the building would be a japanese restaurant and the LL decided to let the remainder of the building to a bakery/cafe.

Mcdonald’s not happy with this and the courts agreed and found LL liable to pay compensation for misrepresentation as per S37A.

84
Q

Summarise Plinth Property Investments Ltd V Mott, Hay and Anderson?

A

Rent review clause stated hypothetical letting of premises on same terms but lease restricted use and made no provision for change of use. However, LL argued that rent review should be fixed on assumption that LL would be reasonable in permitting changes of use as the ailenation clause permitted this.

Courts favoured tenant and it was assumed that LL would enforce all rights under lease and therefore discount due to restricted use should apply.

85
Q

Why would you use a Part 36 Offer?

A

If genuine offer they are more tempting for other side to settle and pay their own costs.

86
Q

Can you talk me through your involvement with Arun BP?

A

I was instructed to advise my LL client about a potential lease renewal with 11 months remaining on the current lease at the time.

I advised them to serve a S25 notice at my opinion of MR for a new 5 year lease.

Once the notice was served I was contacted by the tenants surveyor to negotiate. After acceptance from my client I drafted HOTs and finalised the deal at an uplift for my client.

87
Q

What is adverse possession?

A

This is the process by which a person who is not the legal owner of the land can become the legal owner through possession of the land for a specified period of time without the owner’s permission.

88
Q

What governs adverse possession and what are the timescales?

A

Land Registration Act 2003. After 2003 the rules are 10 years of occupation is required.

89
Q

What is the difference between rent review disregards and lease renewal disregards?

A

Rent review disregards are strictly in accordance with individual lease. Lease renewals are in accordance with S34 and are fixed.

90
Q

What can a LL’s dilaps claim include?

A

Cost of works
contractors preliminaries
VAT
Prof fees
Loss of rent
Loss of insurance premiums and service charge

91
Q

What is the valuation date at a lease renewal?

A

The start date of the new tenancy.

92
Q

What is an offer to settle?

A

Part 36 offer from Civil Procedure Rules 1998

93
Q

What are the Jackson Reforms?

A

A review into the potential removal of various costs associated with litigation.

94
Q

What is the different between pre and post-issue PACT?

A

pre = Before court proceedings issued.
post = After court proceedings issued.

95
Q

Does PACT require consent from both parties?

A

Yes

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