Landlord & Tenant Flashcards
What does without prejudice mean?
Allows parties to engage in confidential yet candid negotiations, protecting their discussion from being used against them in court
What does ‘save as to costs’ mean?
The offer can be disclosed to the court when determining who should pay the costs
What does ‘subject to contract’ mean?
The party does not intend for the contents to be legally binding
What is a Calderbank offer?
Unconditional offer to settle a rent review (or lease renewal) on specified terms and it is marked as without prejudice save as to costs. It is based on the divorce case of Calderbank v Calderbank. The losing party will have to pay the other side recoverable costs. It must be a genuine offer to settle and not a mechanism to influence costs. An arbitrator is obliged to make an award for costs. Example = You cannot agree a rent review so present a Calderbank Offer (final offer) to the other side saying our final offer is £X. If this is not agreed and it goes to third party this can be made aware to them so costs are awarded correctly.
What is an Independent Expert?
An Independent Expert is someone who has detailed knowledge of the market as a valuer. They are appointed by the RICS but are not bound by judicial rules (i.e., not governed by law). They can make their own investigations and have their own opinion to the market rent and are bound by the terms of the lease. There is no right of appeal but they can be sued for negligence.
What is an arbitrator?
An arbitrator is appointed for 3rd party determination for rent reviews and they can be appointed by RICS president. An arbitrator is bound by the Arbitration Act 1996 and they cannot use their own knowledge/experience and the decision is based purely on the submissions by the parties. The award an arbitrator makes has to be between the two offers made. There is some right of appeal (3 grounds). Unless the arbitrator has acted in bad faith they cannot be sued for negligence.
What is the difference between an Independent Expert and an Arbitrator?
An independent expert will make their own decision based on their opinion of the rent. An arbitrator can only use the evidence submitted by the parties and from an expert witness. An arbitrator is governed by the Arbitration Act 1996 whilst an independent expert is governed by the lease. An independent expert cannot be sued for negligence but an arbitrator can be may be appealed against within 28 days on 3 grounds (tribunal jurisdiction, point of law and serious irregularity).
What is PACT?
Professional Arbitration on Court Terms. The RICS encourages it as an alternative dispute resolution (ADR) for unopposed lease renewals. It is legally binding and the arbitrator is nominated by the RICS of Law Society. It is governed by s.29 (order by court for new tenancy) and s.25-35 (terms of the new tenancy) of the 1954 act.
What are the assumptions and disregards for a rent review?
The standard assumptions are:
* The subject property is fit for immediate occupation and use
* The property is available to let on the open market by a willing Landlord to a willing Tenant at the market rent
* All covenants in the lease have been observed by the Tenant
* The property may be used for any purpose permitted under the terms of the lease
The disregards are:
* Any effect on the rent of the Tenant’s occupation
* Goodwill (i.e., you cannot argue the tenant has been there X years and therefore they should pay a higher rent as everyone knows they are there)
* Increase in value as a result of Tenants improvements
* Any licences which are personal to the Tenant i.e., alcohol licence
What is the case law for assumptions and disregards?
Ponsford v HMS Aerosols – the lease had no provision for excluding tenants improvements therefore they were taken into account and rent review.
Shows that they need to be stated.
What are the assumptions and disregards for a lease renewal?
The assumptions are:
* Regard to terms of the lease
* Willing Landlord and Tenant
* Premises are to be let with vacant possession
* Any effect on rent of the operation of L&T Act 1996 must be considered
The disregards are:
* Tenants occupation
* Goodwill
* Tenant Improvements (unless older than 21 years)
* Effect on the rent as a result of a personal licence
What is covered by s.30 of the Landlord and Tenant Act 1954?
(a) Repair obligation
(b) Persistent rent delay
(c) Other covenants Tenant has failed to observe
(d) Landlord can provide suitable alternative accommodation
(e) Uneconomic sub division
(f) Landlord wants to redevelop/demolish
(g) Landlord wants to regain occupation (must have been the Landlord for a minimum of 5 years)
What is the difference between a licence and a lease?
The difference between a lease and a licence was set out in Street v Mountford (1985). A lease must grant exclusive occupation of the property for a specified term at a rent and if it is more than 3 years it must be in writing, signed and registered as a deed. A licence is a personal right to make it lawful for them to use the land. A lease cannot be terminated until expiry whilst a licence can be revoked at any time.
What did the Landlord & Tenant (Covenants) Act 1995 do?
Introduced an AGA and privity of contract abolished (tenant liable for interest in tenancy even after assignment)
What is an AGA?
Agreement which forces outgoing Tenant to guarantee performance by the new Tenant. It falls away when a further sub letting occurs or the lease ends. If the assignee fails to perform Tenant covenants the Landlord can pursue the original Tenant.
