Landlord And Tenant Flashcards
What is interim rent?
Rent payable after current lease ends and into holding over period
Landlord/tenant can apply for after section 25/26 served
Effective from earliest date a new lease would be effective
- 6 months after noticed served
Market rent from date of new lease backdated to interim rent
Types of dispute resolution?
Rent reviews - independent expert or arbitrator
Lease renewal - Professional Arbitration on Court Terms (PACT) or court
Calderbank offer = Calderbank v Calderbank
- offer to settle
- without prejudice as to costs
- resolver unaware until decision to successful party
- costs awarded to successful party
- in rent review: offer on certain basis
: parties bear own costs
: time limit to accept
What are rights to new tenancy?
Same as previous tenancy
Sae terms unless good reason
- O’May test = not impose disproportionate terms on tenant
Tenant serve section 26 between 6 - 12 months
Outline sections from Landlord and Tenant Act 1954
23 - business tenancy
24 - lease ends via provision in the act
24a - application for determination of interim rent
25 - Landlord end tenancy
26 - Tenant end and request new lease
27 - Tenant end
28 - regear (usually rent/term)
29 - order by court for new tenancy
30 - Landlord grounds to oppose
37 - compensation
28 - health warning (contracting out)
What are the notices under Landlord and Tenant Act 1954?
Section 24 - Tenancy to continue until landlord or tenant notice
Section 25 - 6-12 months landlord request to end/grant new
Section 26 - 6-12 months landlord opposes new lease, serves counter within 2 months including grounds
Section 27 - tenant three months notices of leaving after expiry
- can serve prior to expiry
How to manage a rent review?
Check conflicts of interest
Check Terms of Engagement
Object
Lease
Time limits
Notice period
Inspection and measure
Obtain comparables
Analyse
Value
Report
Negotiation
Settle/refer
Document agreement
Invoice
Diarise
Is time of the essence?
Not usual but check the lease
Basis of requirements within lease
What assumptions during rent review?
Hypothetical lease
Let on open market
Willing tenant
Fit to occupy and use
Vacant possession
Assumed term
User as per lease
Date
Basis
Other terms
What to disregard during a rent review?
Tenant occupation
Rent free
Goodwill
What is a part 36 offer?
From civil procedure rules
Offer to settle - specify period not less than 21 days
If not accepted = no higher value - cost consequence to claimant
Without prejudice as to costs
Make in writing and clear related to Part 36
- accept anytime unless withdrawn in writing
- accept then the other bears costs to point
Can be withdrawn
Why use a Part 36 offer?
Tempting if offer settle and pay costs
Why use a Calderbank offer?
Flexible
Best offer being genuine and cost at risk if wrong
Not governed by strict rules
What is arbitration and independent expert?
Arbitration = discretion over costs and account conduct
Independent expert = no authority to award costs, depends on agreement of parties
What are dilapidations?
Often made at the end of the lease
Given back as lease specified
Improvements less permission gives rise to dilapidations
Terminal - lease end or after - refer to yield up and repair
Interim - during and prior to expiry
Final - before end of
What is a breach to repair notice?
Repair obligation not complied with
Landlord serve notice under section 146 Law of Property Act 1925 to commence forfeiture proceedings
Tenant can seek relief
Jervis V Harris - allows landlord to serve a notice on a tenant to carry out repairs
Dilapidations part of Civil Procedure rules
Compensation to Landlord capped by section 18 Landlord and Tenant Act 1927
What is section 18 of Landlord and Tenant Act 1927?
Damages for a breach of a covenant or agreement to keep or put premises in repair
Compensation limited to diminution value
What act govern landlord and tenant relations?
Landlord and Tenant Act 1954 - security of tenure
Landlord and tenant act 1927 - landlord not unreasonably withhold consent
Landlord and tenant act 1995 - privity of contract
What is the Code of Leasing Business Premises 2020?
Improve quality and fairness of negotiation
Outlines:
Demise
Term, lease renewal and breaks
Rent deposit and guarantees
Rent and reviews
Service charge and insurance
Assignment, subletting and sharing
Repairs
Change of use, alienation and fit out
Insurance and damage
Management and operational performance
EPC
Landlord title
Outline example case law
Frances V Cavendish
- section 30 grounds
- Landlord genuine intention to redevelop
Canary Wharf V European Medicines Agency
- Brexit frustrate lease
- HQ move
- Pay rent and stick to lease covenant
What is a break clause?
Landlord or tenant right to terminate lease
- vacant possession
- issue in prescribed format
- compliant with lease obligations
What is pre action protocol?
Conduct court expect from both before escalation
Process and time for information exchange
- standards for consent
- quality of schedule
- quantified demands
What is a Calderbank offer?
More flexible than Part 36 offers
No strict rules and not binding
Advantages - offeror be creative = time, costs, payment
- settle where Part336 not apply = arbitration
What is the Landlord and Tenant Act 1985?
Rights and responsibilities on landlord and tenant where lease is less than 7 years
Landlord = repair structure, extension (drains), repair installations (water, gas), repair space heating and heating water
Tenant = clean, not damage, general maintenance (bulbs)
What is the main objective of the Law of Property Act 1925?
Facilitate and cheapen land transfer
Section 52 and section 53 relate to conveyance of land in writing through a deed
What is the Party Wall Act 1996?
Enables protection for specific work on adjacent/adjoining land
Provides dispute resolution by appointed surveyor
What is a party wall?
Wall on land of two or more ownership
Part of wall on land of one that separates building of two
When is notice not required under Party Wall?
Minor works
Non disputive work = plaster, screws, chasing wires
What to include in a Party Wall notice?
Name of owner
Name of adjoining owner
Indication of works
Start date
Correspondence
Description of works
Drawings
Structural information
What is the procedure fr serving notice under Party Wall?
Adjoining owner can
- consent within 14 days
- consent with conditions
- refuse = dispute resolution
- not reply = dispute
- counter requesting extra works
Refuse/no reply = appointing a surveyor
Dispute = surveyor route
Both must agree
What is the Rent Act 1977?
Applies to tenancies created before January 1989
Provides tenant security and right to fair rent
What is the Rent Act 1977?
Applies to tenancies created before January 1989
Provides tenant security and right to fair rent
What is a Tenancy at Will?
Gives no legal interest in property
Both have right to terminate
Temporary short term use
If the tenant stays after termination it can result in trespass
Cricket V Shaftesbury = no security under Tenancy at Will
= even if occupation over 12 months
What are the components of a Tenancy?
Parties listed in agreement
Physical property and fixed to land (not a boat = licence)
Terms specified
Value of rent specified
Exclusive occupation
Street v Mountford
Features:
- payment of rent
- fixed term
- exclusive possession
What a Bare Licensee?
Use/occupy land with permission
No legal interest
Not transferable
Not enforced against third party who acquires property
Revocable at will by owner
Define trespasser
Enter land/property without permission
No consent
Intent to trespass
What is a contractual licensee?
Licence grants by a contract
Right to occupy
Revocable/irrevocable in accordance with terms
Grants for purpose but not exclusive possession
- cinema ticket = contractual licensee
What is a periodic tenancy?
Rolling tenancy with no fixed end date
AST becomes at end of the fixed term
No end till notice served
Period depends on intervals of rent payment
What is a Tenancy at Sufferance?
Tenancy created when tenancy holds over past end of the period of tenancy
Remain past lease expiry
Original conditions apply including rent payment
Temporary and transitional
Opposite to Tenancy at Will whereby tenant occupies with consent but without written contract or lease
How can a Tenant apply for a new lease?
Serve section 26 notice asking from a new lease
Serve before/after lease end but not 12 months before end date
Tenant can apply to court under section 29 once noticed served and landlord has resisted
Both desire a new lease but terms not agreed so court determine
What are the grounds for landlord to object to a new lease?
Under section 30:
A - Tenant failure to repair
B - Tenant late paying
C - Other breach at courts discretion
D - Landlord offer alternate accommodation and cover costs
E - Uneconomic subdivision
F - Landlord intends to demolish/reconstruct
G - Landlord wants to occupy - must own 5 years +
Steps for the landlord whereby the tenant does not pay
Formal demand notice = contact the tenant
Reach middle grounds = part payment
Obtain rent from deposit, guarantor, guarantee
Take legal action under common law
Take to County Court if 50k+ = then High Court of distress
Landlord take tenants possession = limited by statue if tenant is bankrupt.
Landlord preferred creditor at liquidation
What is forfeiture?
Landlord end lease following tenant breach
Landlord take peaceable re-entry/commence proceeding to possess
Landlord has right to terminate
Tenant allowed to get possessions
Must not accept rent during period
Law of Property Act 10925 = tenant right to rectify breach
What is a section 146 Notice?
Law of Property Act 1925
Landlord intends to forfeit following breach
Notice to re-enter or court order in place
Failure means landlord open to damages claim
Tenant must be informed by:
- covenants/conditions
- breach
- time to rectify
What is a section 17 notice?
Former tenant has assigned the tenancy and has an Authorised Guarantee Agreement for benefit of the new tenant
Former tenant bound to pay fixed charges = rent, service charges
Serviced on tenant/guarantor within 6 months of failing
Upon receipt the tenant/guarantor is bound to pay
If not served within 6 months, landlord loses their right to pursue
What is the compensation to a Tenant for improvements?
Landlord and Tenant Act 1927
Tenant to receive compensation for improvements
Tenant must serve notice of intent
Provide spec and plan before starting improvements
Compensation payable lesser of:
- net addition to value of whole as direct result of improvement
- reasonable cost for improvement at end of tenancy
Define a competent landlord
Landlord and Tenant Act 1954
- 14 months unexpired interest
- Freehold or tenant whose lease is not due to expire in 14 months
- tenant looking to extend lease
- example: sub tenant wants a new 25 year lease but head tenant only has 5 years left - can’t grant as not competent landlord
What is an AGA?
Authorised Guarantee Agreement
Tenant wants to assign = guarantor to new tenant regarding lease covenants
Assignee breach means tenant is responsible for payments
What is the difference between guarantor and surety?
Guarantor:
- primary liability
- independent of obligations by principle debtor to creditor
- pay/fulfil obligations to creditor whether principle agreement or not
Surety:
- contract between creditor, principle debtor and third party = binds on behalf of principle debtor
- steps into shoes of principle debtor and pay creditor
- none if no principle obligations between creditor and principle debtor
- assessor to principle agreement
Outline Access to Neighbouring Land Act 1922
Grants access from purpose including
- maintenance
- clean/repair sewer/drain
- fell/remove tree/plant
Grant by court if
= no unreasonably inconvenient
= not suffer interference/disturbance
Describe landlord and tenant implied covenants?
Landlord = to allow quiet enjoyment and not to derogate
Tenant = pay rent, keep in good repair
How does a tenancy request improvement works?
Check lease for provisions
Landlord provide consent
Tenant provide supporting documents
Ok = improve value
Reject = appeal
Landlord and Tenant Act
- consent to alter not withheld
- Section 19 of the 1927 Act = tenant alterations
- landlord must demonstrate detrimental
What are the requirements of Law of Property Act 1989?
Regarding new leases
- in writing
- terms in one document
- signed by both parties
- oral agreement if less than 3 years
What are the rights to Pre-Emption?
Chance to buy before others
Estate to sell, family receive right to purchase
Document and register on land registry
Assignment v sublet
Assignment = all covenants and obligations to new party
Sublet = contract out and control overarching tenancy
Language explained…
Fixed term = usual lease
Periodic = one period to the next until terminated
Statutory = protect by statue (Landlord & Tenant Act 1954 PII)
Contracted out = excludes security of tenure
Reversionary = rent to lease end or rent review
Licence = short term
Tenancy at Will = occupied at will of landlord. If 6 months + = lease
Tenancy at Sufferance = holding over without consent
How to end a protected tenancy?
Landlord under section 25 with section 30 grounds
Tenant under section 26 = end current and request new. Tenant leaves vacant possession
Tenant under section 27 = tenant not want to continue
What is a break clause?
Right to terminate by notice
Penalties = conditions
= time of essence
Investment valuation method
- term and revision
- increase yield
- deter for void period
- values may allow for costs
How many grounds for the landlord to oppose new tenancy?
Section 25 - landlord: initiate renewal and states terms or serves stating grounds to oppose renewal
Section 26 - tenant request new lease
7 grounds:
A - breach of repair
B - persistent rent delay
C - breach of covenant
D - landlord offer alternate accommodation
E - uneconomic subdivision
F - landlord wish to demolish/develop
G - landlord wish to occupy
When is holding over actioned?
No notice served under 1954 Act by expiry date in the lease. Protected lease continues to run and th tenant holds over
What is interim rent?
Rent paid between old lease expiring and new one commencing
Application served by either after section 25 or 26 notice and within six months of termination of old tenancy
Not serving section 26 prudent tenant not trigger liability
Not applicable to contracted out leases
What is the role of litigation in Landlord and Tenant relations?
Both parties can apply to county court if the lease renewal cannot be settled by negotiations.
Latest to apply is the termination date in the section 25 or 26 notice
Claim issued within four months although each can request acceleration
Section 64 states new lease commence three months after court order
Outline the relevance of the Code for Leasing Business Premises?
Confirms negotiation and terms should seek to achieve fair balance between parties having regard to their respective interests
Name two types of offer to settle lease renewals?
Calderbank - without prejudice save as to costs, more flexible than Part 36 as not governed by court rules but costs are at discretion of the court
Part 36 - offer under Civil Procedure Rules 1999. If settlement no achieved, it protects offeror’s position on costs. Settlement offer exclusive of costs.
What is PACT
Professional Arbitration on Court Terms
- type of alternate dispute resolution
- ahead of legal proceedings
What is section 23 of Landlord and Tenant Act 1954?
Qualification of tenancy protected by the act.
B - business purposes
O - occupation
T - tenancy
Tenancy must not be a licence, tenancy at will or an excluded tenancy
What is section 28 Landlord and Tenant Act 1954?
Parties can contract out security of tenure
14 day cooling period
Or
Sworn in front of solicitor within 14days of commencing
What is section 40 of Landlord & Tenant Act 1954?
Formal request for information served by either party
Gather details about the lease and property
What is compensation required after section 30 grounds E, F, G served?
Landlord required to pay disturbance to the tenant
Rateable value if occupied for less than 14 years
Twice the rateable value if occupied 14 years+
What is section 32 Landlord & Tenant Act 1954?
Tenant only entitled to new lease of their holding
Part of building occupied for business purpose
What are index link rent reviews?
Generally not as popular as open market rent reviews
RPI - includes housing costs
CPI - removes housing costs
Cap and collar - limiter of increases
What is litigation?
Process of taking legal action through courts
Civil Procedure Rules
Public process
How to appointment an Arbitrator or Independent Expert?
DRS1 form to RICS
Expert witness v independent expert?
Expert witness - third party evidence who will either be acting as Independent Expert or Arbitrator. Award
Independent Expert - third party represent both sides and determine new rent. Determination
What is a protected tenancy? What qualifies as such?
Protected tenancy under Rent Act 1977
Gives security of tenure and right to fair rent
Protects tenants occupation
Applies to most tenancies before 15 Jan 1989
Stamp duty in commercial property?
LH = Lease premium and NPV of the total rent over the lease term where NPV less than £150k = add together
FH = 2% 150k-250k
5% 250,001 +
What professional statement governs dilapidations?
Dilapidations 7th edition effective 1 December 2016
Contents:
Role of the surveyor
Taking instructions
Documentation
Inspection
Schedule of Dilapidations and Scott Schedules (columns to set out views)
Dilapidations during the lease term
Dilapidations at the end of the lease term
Dilapidations claims against landlords
Diminution valuations - quantifying landlords damages claim
Break clauses
Settlement of disputes - negotiations, ADR, litigation
Appendix A - Format of a costed Schedule of Dilapidations
Appendix B - Format of a Quantified Demand
Appendix C - Format of a Response
Appendix D - Format of a Scott Schedule
Appendix E - Suggested text to send to Landlords to request confirmation of intentions
Appendix F - VAT
Propose for licence for alterations
Application by tenant
Technical review
Assessing information supplied
Reviewing the licence
Monitoring works
Review complete documentation
