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Harry Penman APC > Landlord and Tenant L1 > Flashcards

Landlord and Tenant L1 Flashcards

1
Q

Tell me about your understanding of the LTA 1927?

A

Provision to ensure that tenants can be financially compensated for improvements to the property at the end of their lease term.

Improvements still need consent of LL not to be unreasonably withheld.

CANNOT be contracted out!

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2
Q

Tell me about your understanding of the 1954 LTA?

A

Introduces the concept of security of tenure, and the right to a new lease at the end of the existing one.

Can be contracted out.

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3
Q

Tell me about your understanding of the LTA 1988?

A

Introduces right to assign and right not to be unreasonably witheld.

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4
Q

Tell me about your understanding of the Landlord & Tenant (Covenants) Act 1995

A

Eliminates privity of Contract for assigned leases

Introduces Authorized Guarantee Agreement (AGA)

Ensures that any new landlord/owner is bound by the existing lease COVENANTS.

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5
Q

Tell me about a key lease clause you are aware of?

A

Rent review - provides a mechanism to adjust the rent (almost always up).

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6
Q

What is alienation?

A

Right to assign your entire legal interest to a 3rd party.

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7
Q

Tell me about your understanding of the Code for Leasing Business Premises.

A

Providing assurance and clarity to occupiers

Promoting a less adversarial relationship between occupiers, owners and their advisors

Encouraging surveyors and lawyers to work collaboratively

Encouraging occupiers to take professional advice

Updated in 2020

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8
Q

Tell me about how you would summarise a lease and what terms you would be looking out for.

A

I would use a template to ensure I capture the key elements relavent to the lease event I was working on.

Typically this would include, LL and Tenant, Term, Rent, Review, Break, Repairs, insurance, Alternations, Alienation, Incentive, LTA 1954, Anything else relevant to the break.

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9
Q

What is the Regulatory Reform (Business Tenancies) (England & Wales) Order 2003?

A

Introduces the simple and statutory declaration.
Reformed the process for renewal notices, specifically allowing LL to apply for a new lease and prevent tenants dragging their heels to enhance negotiations while paying the old rent.

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10
Q

What is the role of an expert witness?

A

An Expert Witness is the role that the landlord or tenant’s surveyor will adopt at third party. They submit their expert witness evidence to the appointed third party, who will either be acting as an Independent Expert or an Arbitrator.

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11
Q

How does the role of an expert witness change from when you are negotiating?

A

Essentially, this means that their representations must be impartial and uninfluenced by their client compared with a negotiating position.

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12
Q

How does an advocate differ from an expert witness?

A

advocate is partial and duty bound to clients best interests.

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13
Q

What is an arbitrator and Independent Expert?

A

A neutral and impartial third party appointed to resolve disputes between parties in a fair and legally binding manner.

Arbitrators are governed by the 1996 Arbitration Act and guided by lease.
Independant Expert is governed by the lease.

Arbitrator makes an award, Independent expert makes a determination.

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14
Q

How would you establish the relevant third party procedure for a rent review?

A

Refer to the lease.

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15
Q

How much does it cost to submit an RICS DRS application?

A

£425 incl of VAT

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16
Q

What is the difference between the hypothetical lease at a rent review and lease renewal

A

Hypothetical lease - the assumption of a new lease on identical terms as existing taking into account any assumptions or disregards

Lease renewal - open field to completely renegotiate and for either party to walk away.

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17
Q

What are examples of usual disregards during rent review

A

Tenants improvements.
Lease Incentive disregarded

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18
Q

What are examples of usual assumptions during rent review

A
  • Hypothetical letting
  • Open market
  • Willing parties
  • Fit for immediate occupation
  • Vacant possession
  • Assumed tenant
  • User as stated in the lease
  • Willing LL and tenant
  • Subject to all terms of the lease
  • Rent review date
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19
Q

What is PACT?

A

Professional Arbitration on Court Terms (PACT) is a joint initiative set up by RICS and the Law Society as a form of alternative dispute resolution (ADR) for lease renewal disputes.

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20
Q

What is a Calderbank offer?

A

A without prejudice offer made on behalf of landlord or tenant as a good faith attempt to resolve a dispute before it proceeds to third party dispute resolution. A Calderbank can protect your clients position on costs.

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21
Q

Tell me about your understanding of notices under the LTA 1954.

A

S25 Notice Landlords notice to grant or opose a new lease.
S26 Notice tenants notice to request a new lease , or bring the tenancy to an end.

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22
Q

Tell me about your understanding of interim rent.

A

Either the passing rent or another agreed sum that is paid from day 1 after the lease expiry and until a new rent can be agreed .

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23
Q

Tell me about your understanding of the Court procedure at lease renewal.

A

Court Proceedings:
The court proceedings involve a structured process, including the submission of evidence and arguments by both parties.
The court will consider various factors, including the terms proposed by both parties, the rental value of the property, the repairing obligations, and the interests of both the landlord and the tenant.

Court Decision:
After considering all relevant evidence and arguments, the court will make a decision on the terms of the new lease.
The court’s decision may include provisions regarding rent, lease duration, repair obligations, and other terms.

Appeals:
Either party may have the right to appeal the court’s decision if they believe there are grounds for appeal.
Implementation:

Once the court has determined the terms of the new lease, both parties are legally bound to adhere to those terms.

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24
Q

What are the Civil Procedure Rules?

A

Rules set out to: set out a procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.

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25
Q

What is a part 36 offer?

A

Similar to a Calderbank but an offer made in compliance with P36 of the CPR. Essentially the same but P36 is a formal process governed by statute rather than common law/Case law.

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26
Q

What are the Jackson Reforms?

A

Extended CPR from just personal injury litigation to commercial sector.

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27
Q

Can you serve a Calderbank offer at a lease renewal?

A

Yes if a protected tenancy.

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28
Q

What does Section 34 relate to in a lease renewal?

A

s34 of LTA 1954 Deals with how rent should be calculated in lease renewal.

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29
Q

What is compensation for disturbance?

A

Compensation paid to occupier for having to relocate either as a result of Compulsory purchase or refusal of new protected tenancy.

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30
Q

What does Section 18 mean in relation to the LTA 1927?

A

Diminution in value as a result of tenants failure to comply with lease covenants .

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31
Q

Why would you contract out a lease?

A

More advantageous to landlord normally determined by LL preference and market forces.

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32
Q

How would you contract out a lease?

A

Sign a simple declaration or statutory declaration.

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33
Q

Tell me about the LTA 1954 in relation to contracting out a lease.

A

Landlord serves a notice normally alongside the lease. This has a standard form of words determined by the act.
Tenant can sign a simple declaration provided it is 14 day after receipt.
If within 14 days they can sign a statutory declaration which means it has been witnessed by a solicitor who has read the notice to them and confirmed they have understood it .

34
Q

What are the Section 30 grounds under the LTA 1954?

A
35
Q

What time limits apply in relation to lease renewal notices?

A

Within 12 months but no later than 6 months.

36
Q

When would you recommend that a landlord/tenant serves notice in a LTA 1954 renewal?

A

It would depend on the circumstances.
Typically get your notice in first.

37
Q

What does Section 40 of the LTA 1954?

A

A Section 40 notice is a form served by either the landlord or the tenant r to gather information to decide whether to renew:

Landlord wants to know if the tenant has contracted out any sub tenancy
Tenant wishes to know if there is a superior landlord.

38
Q

What tenancies are covered by the LTA 1954?

A

Business Tenancy ( Including periodic)

Excludes licence or tenancy at will.

39
Q

What is the difference between a lease and a licence?

A

Exclusive possession, lease creates an estate in land.

40
Q

How can a tenant quit a contracted in lease?

A

Either allow it elapse with effluxation of time, or serve a 27 notice not to renew.

41
Q

What does subject to contract/without prejudice/without prejudice save as to costs mean?

A

STC - any points of agreement are not confirmed until formalised in a contract.

Without prejudice - anything said during honest negotiations is inadmissible if it goes to third party.

Without Prejudice save as to costs - as above but admissible in court when it comes to determining costs.

42
Q

What does time of the essence mean?

A

Where a rent review has to be instigated within a certain window.

43
Q

When do notices need to be served at rent review?

A

When time is of the essence and where LL would need to demonstrate he has served the appropriate notice within the time frame provided.

44
Q

What is the valuation date at lease renewal?

A

The date on which a new tenancy would start. Ie if tenant was holding over and a new rent had not been agreed.

45
Q

What are the different types of rent review?

A

Market Rent
Index Linked
Upward only
Turn over
Fixed increase

46
Q

What is a hypothetical lease?

A

A notional lease based on the same terms as the existing lease subject to assumptions and disregards.

47
Q

Can you challenge an arbitrator’s award and, if so, under what grounds?

A

within 28 days
Only on grounds of jurisdictional irregularities or points of law.
Cannot sue.

48
Q

Can you challenge an expert’s determination?

A

No, they can actually make perverse or irregular decision. They can be sued though for negligence.

49
Q

What is the presumption of reality?

A

That contract language should be interpreted to infer the meaning that makes most sense and reflect the intention of the contract. As opposed to extracting precise definitions to suit one party OR to create absurd outcomes.

50
Q

Tell me about one example of rent review/break option/lease renewal case law you are aware of.

A

Marks and Spencer v BNP Paribas [2015]: Marks & Spencer leased ‘The Point’ in Paddington Basin and terminated the lease early. They sought reimbursement for rent paid beyond their occupancy period, rent was paid to comply with conditions for serving the break.

51
Q

What is a turnover rent?

A

A rent based on the turnover of the tenant, normally with a fixed sum topped up with turnover % and monitored by the ERP system.

52
Q

Tell me about your understanding of fitted assumptions?

A

Deprives the tenant of the right to argue in a rent review that the hypothetical lease would require a ftting out period and therefore a discount to the headline. Typically 3 months is provided to allow tenant to fit out.

53
Q

What does the RICS say about conditional fee agreements when proceeding to third party as an expert witness?

A

Not permitted by RICS because of the clear conflict between fee and impartiality.
Under restricted circumstances they can be allowed for access to justice where professional services would otherwise be affordable for the client.

54
Q

What does disclosure mean in relation to a lease renewal?

A

A notice provided by landlord to tenant providing high level information on the nature of the lease. Designed to ensure the tenant is not misled by omission when negotiating a new lease.

55
Q

How would you deal with post-dated rent review evidence?

A

Weight the importance evidence according to how close it is to the review date. Apply the reasonableness test to ensure it accurately reflects the market at the time of the review.

56
Q

How would this differ at lease renewal?

A
57
Q

Talk me through your understanding of the RICS guidance on dilapidation.

A

RICS Professional Standard Dilapidation’s 2024
Sets out the standards expected of members:
Understanding your role
Agreeing terms
Inspections
Schedules
Claims and Quantified demands
How to format submissions.

58
Q

What is the dilapidation’s protocol?

A

The process a landlord would be expected to follow before making a claim for dilapidation’s.From Civil proceedures rules.

59
Q

What timings apply to a dilapidations claim?

A

Quantified demand within 56 days of the end of the lease.

60
Q

What is PDPAC?

A

Practice Direction - Pre-Action Conduct and Protocols- The aim of the PDPAC is to enable the parties to explore potential settlement of a claim before proceedings are issued, and if proceedings are issued to assist the courts in the efficient management of the claim.

61
Q

What is quantified demand?

A

A costed schedule of damages as a result of covenant breaches.

62
Q

What is a Scott Schedule?

A

A Scott Schedule is an extended version of the Schedule of Dilapidations which enables the tenant (or their surveyor) to respond to the content of the Quantified Demand and/ or the Schedule of Dilapidations.

63
Q

What is a diminution valuation?

A

The difference between market value and market value subject to the remedial cost of the dilapidation’s.

64
Q

What legislation relates to diminution valuations?

A

If pushed S18 LTA 1927

65
Q

What would you find in a schedule of dilapidations?

A

A detailed breakdown of the breaches and the cost (damages) associated with remedy, sub total and then other project costs associated with organizing/facilitating the work and finally an endorsement from other professionals to verify their input but CRITICALLY what the landlords intentions are at the end of the lease.

66
Q

What type of landlord’s schedules exist?

A

Interim
Final
Terminal

67
Q

What documentation do you need to consider in relation to a dilapidations claim?

A

Schedule of dilpidations
Quantified demand
Scott Schedule
Response
Format of words to send to landlord to request confirmation of intentions

68
Q

What remedies exist for dilapidations during the lease term?

A

forfeiture
claim damages
entry and repair under a ‘Jervis v Harris’ clause - charge back the costs
specific performance

69
Q

Why and when would you recommend one/each of these?

A

Forfeiture - where there has been a substantial loss in value of property
Claim damages
Entry and repair under a ‘Jervis v Harris’ clause. Where there is insolvency risk if left to the end of lease.
Specific performance - where other options are inappropriate ie last
resort.

70
Q

What is supersession?

A

Where the claim has been superseded by the landlords intentions, ie to redevelop or knock down.

71
Q

How should you respond to a dilapidations claim?

A

Instruct a chartered building surveyor to complete their own schedule and prepare a robust response.

72
Q

How can you settle a dilapidations dispute?

A

Informal negotiations
Independent Expert
Courts

73
Q

When would you consider ADR or litigation?

A

Depending on the conduct of the tenant extent of damages and the relationship between landlord and tenant.

74
Q

What is an offer to settle?

A

Typically a part 36 offer similar to Calderbank without prejudice.

75
Q

Can you make a part 36 offer in dilapidation

A

Yes. The protocol is governed by civil procedures rule as is part 36 offer.

76
Q

What is included on a settlement agreement?

A

The parties
the background
The value of the settlement
Breakdown of works and costs
Releases the tenant from their lease obligations to repair.
Governing law
Signatures

77
Q

Why are turnover rents becoming increasingly popular? How might this affect future rent reviews and lease renewals?

A

Because they put some of the risk of adverse market on the landlord.
They provide mutual gain.
They encourage the landlord to play an active role in enhancing trade.
They are becoming more popular with estates or centers where institutional landlords are responsible for the shopping area and the performance of the center generally.

Tenants might seek turnover rents to share the pain of any future economic shocks like covid.

78
Q

What was the outcome of the W (No. 3) GP (Nominee A) Ltd & W (No. 3) GP (Nominee B) Ltd v JD Sports Fashion Plc case in relation to turnover rents at a contracted in lease renewal?

A

Shopping centre.
JD on Turnover rent contracted in tenancy.
LL wanted new TO rent, JD wanted fix.
S34 determines hypothetical lease must adhere to an open market rent.
Comps suggested many tenants opted out of this and went for fixed in a declining rental market.
Judge held that turnover rent was not in the spirit of the law.

79
Q

What recent county court cases have there been on Covid lease renewals?

A

Poundland Limited v Toplain limited

Poundland wanted a 50% covid clause in a protected tenancy.

The Judge held that the purpose of renewing the lease under the 1954 Act, is to enable the tenant to continue operating the business from the premises when the lease has come to an end, not to “redesign previously negotiated risks”.

80
Q

What is the ‘Chartbrook’ principle on index linked rent reviews?

A

The Principle: The Chartbrook principle, established in the case Chartbrook Ltd v Persimmon Homes Ltd 2009 allows courts to correct clear mistakes in the drafting of a lease agreement related to rent review formulas.

Focus on Mistakes: The key concept is that the court can intervene only if there’s a demonstrably unintended outcome caused by a mistake in how the formula is written.

81
Q

Following the Chartbrook case, what was the outcome of the Monsolar IQ Ltd v Woden Park Ltd case?

A

Deemed that a mistake had clearly been made and corrected the error, effectively double counting the RPI every time the biannual increase was implemented. because it multiplied the passing rent rather than the rent a commencement of the lease.

82
Q

What are the key sections in LTA 1954. (Promt each section)

A

Section 23:

Relates to application of the Act

Remember, to gain protection you need a tenancy of premises occupied by a tenant for business purposes (BOT)

Also relates to service of notice

Section 24: relates to continuation of a tenancy, which will not expire by the effluxion of time. A tenant will, therefore, continue to hold over until the relevant notice is served under the Act.

Section 24a: interim rent procedure.

Section 25: hostile or non-hostile landlord’s notice.

Section 26: tenant’s notice to renew.

Section 27: tenant’s notice to quit.

Section 28: relates to renewal by agreement.

Section 29: relates to the Court Order for a new tenancy.

Section 30: landlord’s grounds of opposition:

Section 31: dismissal of application for a new tenancy where a landlord successfully opposes.

Section 31A: relates to the grant of a new tenancy where S30 f applies and access is given to the landlord or an economically separate part is let to the tenant.

Sections 32-35: relate to the terms of the new lease, e.g. premises, term, rent and other clauses.

Section 36: relates to the procedure for a Court Order for a new tenancy.

Section 37: relates to compensation for disturbance, i.e. lease under 14 years attracts 1x Rateable Value and lease over 14 years attracts 2x Rateable Value.

Section 38: contracting out either by standard (>14 days before lease commencement) or accelerated procedure (<14 days, requiring a statutory declaration). This means that the tenant does not have security of tenure.

Section 40: request for information by either the landlord or the tenant, served within 2 years of contractual expiry. Information must be provided within 1 month.

Section 43: relates to excluded tenancies under the Act.

Section 44: relating to the competent landlord, who is generally either the freeholder or an intermediate landlord (with over 14 months unexpired term remaining) if a sub-tenant has security of tenure.

Harry Penman APC (34 decks)

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