Landlord & Tenant 3.0 Flashcards
Tell me about your understanding of the Landlord and Tenant Act 1927
Gives a tenant who has made improvements the right to compensation at the end of Tenancy if given notice prior to works
Section 18 also limits Landlords claim on repair breaches / damages claim to the loss in value suffered only
Tell me about your understanding of the Landlord and Tenant (Covenants) Act 1954
An act that provides business tenancies with security of tenure
Tell me about your understanding of the Landlord and Tenants (Covenants) Act 1995
Lease made after this Act are considered modern leases
Act abolishes privity of contract for new leases -> addressing the continuing liability of former tenants for the performance of tenants agreements following assignment
- Introduces AGA
Tell me about your understanding of the Landlord and Tenant Act 1988
Statutory duty imposed on Landlords whereby if assignment, underletting, charging or parting with the premises requires Landlord consent, it is implied that consent is not to be unreasonably withheld
Tell me about a key lease clause you are aware of?
- Break clause
- Service charge / rent
- Covenants to repair and maintain
- Rent Review
- Assignment / Alienation
What is Alienation?
Alienation is the right granted in a lease to assign, sub-let, or share occupation / interest of the property
Tell me about your understanding of the Code for Leasing Business Premises
Code for leasing business premises 2020 - professional statement
- Objective is to improve the quality and fairness in negotiating lease terms
- Promote the issue of comprehensive HOTs making legal drafting process more efficient
Tell me how you would summarise a lease and what terms you would be looking out for
A lease gives a Tenant exclusive right of possession in return for rent or periodic payments
-> legally binding contract
What is the Regulatory Reform (Business Tenancies) (England & Wales) order 2003?
Amends part 2 of the Landlord and Tenant Act 1954 and alters the procedures for renewal and termination of business tenancies
- also introduced new procedures for contracting out of sections 24-28
What is the role of an expert witness?
A person who is a specialist in a subject and provides impartial profesional opinon where a dispute has arisen
How does the role of an expert witness change from when you are negotiating?
Overriding duty of expert witness is to provide independent impartial and unbiased evidence to the tribunal
- Overrides any contractual duty to your Client
How does an advocate differ from an expert witness?
Sometimes referred to as a party representative
- Advocate must do for the Client all that the Client might properly do for themselves -> spokesperson for the Client
- Presents to the tribunal a Clients properly arguable case as best as possible
What is an Arbitrator?
An Arbitrator fulfills a role similar to a judge -> involved in Arbitration process whereby parties in a dispute agree to be bound by the decision of an Arbitrator
What is an expert?
A surveyor appointed either by President of RICS or by the agreement of parties to determine a dispute
How does an Arbitrator and experts roles differ?
Arbitrators cannot rely on own expertise and must rely on parties evidence
Arbitrator is govered by the Arbitration Act 1996
Arbitrator cannot delegate duties
How would you establish the relevant third party procedure for a rent review?
Either agreed to by both parties or appointed by President of RICS if no agreement can be made
How much does it cost to submit an RICS DRS application?
£425
What is the difference between a hypothetical lease at a rent review and a lease renewal?
The assumptions and disregards may differ, such as the hypothetical term
What is PACT?
Professional Arbitration on Court Terms -> alternative to going to court
- Arbitrator handles instead of Court
How does PACT differ from court?
- Expert decision - judges in court not always experts
- Quicker, more cost effective solution to court
- PACT is flexible and adaptable
What is a Calderbank offer?
An unconditional offer to settle ‘without prejudice save as to costs’
Must be a genuine offer
What is a break clause?
Clause in a contract / lease that allows early termination prior to the default date
Tell me about you understanding of notices under the Landlord and Tenant act 1954
Section 25 notice (friendly & hostile) -> must be served 6-12months prior to the specificed termination date or expiry date
Section 26 notice -> served by tenant requesting new tenancy (6-12 months prior to suggested new tenancy date. Should include proposed rent)
Section 27 notice -> notice to vacate (3 month notice)
What are the contents of a section 25 notice?
- Name and address of Landlord and Tenant
- Address of property
- Notice of date to end tenancy
- Confirmation on whether new lease is offered or opposed
- Confirmation on time scale for response
- Landlords proposal for new tenancy, including proposed rent (if freindly)
- Landlords grounds for opposition (if hostile)
- Strong recommendation to seek professional advice
What is section 24 of the Landlord and Tenant Act 1954?
Continuation tenancy -> states a tenancy does not expire by effluxion of time, but only when a party serves notice
Tell me about your understanding of interim rent
Section 24a of the Act -> application to determine interim rent (to court)
Interim rent is teh rent payable by a business under the Act for the period of occupation between the termination of the former tenancy and commencement of the new lease
- assumes annual rent and at market rent (new rent)
- earliest application date is on S.25 or S.26 date
- only one party can apply
- Can be decided by pact
- no notice, no interim rent
Tell me about your understanding of the court procedure at lease renewal
Application to court to direct terms of new tenancy or decide whether opposition grounds are reasonable
Can also apply to extend time frames for negotiations
What is the difference between In-court PACT and out-of-court PACT?
In-court PACT used for an unopposed new tenancy whereby an application to court to fix new terms has already been made
Out-of-court PACT used when no application has been made and agree to postpone application until the out-of-court PACT resolution is determined
What is the difference between In-court PACT and out-of-court PACT?
In-court PACT used for an unopposed new tenancy whereby an application to court to fix new terms has already been made
Out-of-court PACT used when no application has been made and agree to postpone application until the out-of-court PACT resolution is determined
What are the Civil Procedure Rules?
Civil Procedure Rules 1998
Ensures cases are dealt with fairly and parties are on equal footing
What are the Jackson Reforms?
Reforms that impact areas of Civil Litigation, including:
- costs
- funding
- case management
- disclosure
- Part 36
What is a Part 36 offer?
Similar procedure as a Calderbank offer to induce a party to settle -> if offer is genuine
Offer is open for 21 days, after which it can still be accepted, but also possible to be withdrawn
Can you serve a Calderbank offer at lease renewal?
No you would serve a Part 36 offer under the Civil Procedure Rules, 1998
What does Section 34 relate to in a lease renewal?
Section 34 (L&T Act 1954) gives the court power to determine the level of rent when the parties have not been able to reach an agreement on that aspect of lease renewal
What is compensation for disturbance?
If Landlord opposes new tenancy under grounds e, f, g (no fault grounds), section 37 of the L&T Act 1954 provides the Tenant with compensation
1x Rateable Value
2x Rateable value (if in occupation for 14+ years)
What does section 18 mean in relation to the Landlord and tenant Act 1927?
Statutory cap on the amount of damages a Landlord can recover from a tenant for breaches in repairing covenants
-> Capped at the value of the property dimished due to the breach
Why would you contract out a lease?
- requirement in the head lease to grant any subletting outside the act
- The landlord wants to re-occupy in due course
- the landlord wishes to redevelop at lease end
- The rent may be lower
- Landlord wants future flexibility
How would you contract out a lease?
Landlord must serve notice on prospective tenant, warning that the proposed lease will not be protected (health warning)
Tenant must make a declaration in response, confirming receipt and acceptance
Simple declration - 14 days or more to new lease
Statutory declaration - less than 14 days to new lease (must be made before an independent solicitor)
Tell me about the l&T Act 1954 in relation to contracting out of the lease?
Section 38A of the Act sets out the procedure which must be followed for the Landlord to contract outside the Act
What time limits apply in relation to lease renewal notices?
Section 25 and section 26 served 6-12 months prior to expiry date or suggested expiry/new tenancy date
-> counter notice served within 2 months (S.26)
Section 27 - 3months notice to vacate after expiry date
What are the section 30 grounds under the Landlord and Tenant Act 1954?
- Breach of repairing covenant
- Persistent delay in paying rent
- Other substatial breach
- Provide suitable alternative accomodation
- Uneconomic subdivision (higher rent achieved if let as a whole)
- Demolition or reconstruction
- Owner-occupation
When would you recommend that landlord / tenant serves notice in a Landlord and Tenant act 1954 renewal?
Landlord -> if under-rented, serve friendly notice section 25
-> serve hostile if possession of unit is wanted back
Tenant -> if over-rented, serve section 26
What does section 40 of the Landlord and Tenant Act 1954 say?
Requests information from either the Landlord or Tenant
-> Landlord or Tenant can check who the competant Landlord or Tenant is with statutory protection
Served during the last 2 years of tenancy requesting details as to the name and registered address of the other party
What tenancies are covered by the L&T Act 1954
business tenancy
Occupy for more than 6 months
Must be competant landlord
What is a competant Landlord ?
Defined in Section 44 of the L&T Act 1954 as the person upon whom notice should be served upon or serve the notice
Must be a freeholder or superior tenant with unexpired term of over 14 months
What is the difference between a lease and a licence?
A licence passes no interest in land, but only makes lawful what would otherwise be unlawful
A lease can usually be assigned -> licence cannot, it is a personal right
Licence can be revoked at any time
Tell me about the terms of a new lease in relation to a contracted in lease renewal (e.g. lease length)
Sections 32-25 of the L&T Act 1954
- maximum 15 year term
- market rent
- ignore previous occupation, goodwill & any landlords approved improvements carried out within last 21 years
How can a tenant quit a contracted in lease?
- Vacate prior to expiry date
- Serve Section 27 providing 3 months notice of vacating
What does subject to contract mean?
Agreement is not binding and is subject to contract
What does without prejudice mean?
Offers / words cannot be used against them in court if negotiations fail
What does without prejudice save as to costs mean?
The standard without prejudice applies until court delivers judgement
-> court will then turn to the question of awarding costs
What does time of the essene mean?
Time is material to the performance of a contract or provision
-> provision must be completed in the stated time
When do notice need to be served at rent review?
The rent review clause in the lease will state who can initiate the review process
-> notice must be served if stated in the lease
-> usually just requires Landlord trigger notice in writing to tenant to begin discussions
What is the valuation date at lease renewal?
The date at which the rent is to be assessed in accordance with the statutory provisions contained in Section 34 of teh L&T Act 1954
What are the different types of Rent Review?
Usually upwards only:
- Market rent (open market)
- RPI
- CPI
- Stepped / fixed increase
- Turnover rent
What is a hypothetical lease?
Imaginary lease used to value rent -> hypothetical lease will be on the same terms as existing lease, but with pre-agreed assumptions and disregards
What is a Rent Review assumption ?
Assumption made to make a level playing field beyween parties and find the real open market value (not Red Book)
- Willing landlord and willing tenant
- Property available for immediate occupation
- Property is vacant
- Hypothetical term
- Covenants complied with
- Premises used for purpose set out in the lease
What is a rent review disregard?
Disregards made to make a level playing field between parties and find the real open market value (not Red Book)
- occupation
- tenants improvements (lawful)
- Goodwill
- Incentives / rent free periods
Can you challenge n Arbitrators award and if so, under what grounds?
Limited right of appeal -> cannot appeal if you simply disagree
Under the Arbitration Act 1996
Can you challenge an experts determination?
No right of appeal
-> rarely court will set aside decision based on a misinterpretation
What is the presumption of reailty?
Assumption in a Rent Review that the rental value is to be the whole of the demised premises as they exist at the review date
Tell me about a Rent Review case law you are aware of
Norwich Union Life Insurance Society v British Railway Board (1987)
Wider than usual repairing liability resulted in Arbitrator discounting market rent by 27.5% on the basis it was more onerous than usual for the tenant
Tell me about a break option case law you are aware of
Osborn Assets Ltd v Britinnia Life Ltd (1997)
Tenant was covented to paint internally usuing 3 coats, but invoices proved only 2 coats were used
-> Break was ineffective
Tell me about one example of lease renewal case law you are aware of
S.Franses Ltd v The Cavendish Hotel (London) Ltd (2017)
Court initially held Landlord can oppose tenancy on redevelopment grounds, even though the redevelopment is devised soley to evict the tenant and has no benefit to Landlord
-> Supreme court overruled -> Landlords must prove a fim and settled intention to carry out works
What is a turnover rent?
Tenants rent is determined in part, or entirely, by the actual turnover generated by the tenants business operating out of the premises
What is geared rent?
Rent that is linked to the rent obtained or obtainable by the tenant from its under-tenants
What does disclosure mean in a lease renewal?
Statement providing confirmation to the tenant less than 14 days before the lease is entered into
How would you deal with post-dated rent review evidence?
No set way
-> If an event was wholly unforseeable at the review date, then it should not have been taken into account
-> The longer the period between the valuation date and transaction date, the ;ess weight the evidence should carry
-> If an event had its roots in the market at the review date, it should be relevant
How do you treat tenants improvements at rent review?
Most rent review clauses will state that improvements are to be disregarded at Rent Review
May be included if made without Landlord consent or were not made during the lease term
How do you treat tenants improvements at lease renewal?
Imrpovements made pursuant to an obligation of the Landlord, will be taken into account
Talk me through your understanding of the RICS guidance on dilapiations
RICS Dilapidations in England and Wales, 7th Edition, 2016 -> Guidance note
Provides practical guidance to RICS members when instructed in connection with dilapidation matters
What is the dilapidations protocol?
Pre-action protocol for claims for damages in reltion to the physical state of commercial property at the termination of a tenancy (applicable to terminal dilapidation disputes)
What timings apply to a dilapidations claim?
Schedule of Dilapidations served any time -> response expected within reasonable time or 56 days
12 year limit on bringing a dilapidations claim
What is PDPAC?
Practice Direction Pre-Action Conduct and Protocols
(applicable to dilapidation disputes unless the Protocol applies)
What is quantified demand?
A document prepared for the purpose of and complying with part 4 of the protocol, typically incorporating a Terminal Schedule of Dilapidations
-> usually prepared by a building surveyor
What is a Scott Schedule?
A Schedule of Dilapidations with additional columns to enable the parties to set out their respective views
-> usually prepared by a building surveyor
What is diminution valuations?
A valuation prepared in order to calculate the diminution in value of a Landlords property incurred as a result of alleged breaches
-> document is usually prepared by a specialist valuation surveyor
What would you find in a Schedule of Dilapidations?
- relevant lease / tenancy obligations
- Alleged breach of those obligations
- Remedial works that have been completed or are proposed to rectify breach
- The estimated or actual cost incurred in rectifying those breaches
What type of Landlords schedules exist?
Interim schedule
Terminal schedule
What documents do you need to consider in relation to a dilapidations?
Leases
Licences (licence to alter)
Deed of variation
Side letter
What remedies exist for dilapidations during the lease term?
- Damages
- Forfeiture
- Specific performance
- Entry to carry out works
What is supersession?
Undefined legal concept -> Landlord should not claim for remedy of a tenants breach if they are proposing to do something else to the building which would supersede the need for the tenant to remedy the breach
How should you respond to a dilapidations claim?
Provide a formal response within a reasonable time or 56 days from receipt
Cover every point set out in the claim
Dispute costs or state that you will carry out yourself
How can you settle a dilapidations dispute?
Ideal: negotiation (settled privately)
Through ADR:
- Independent expert determination
- Mediation
- Arbitration
- Early neutral evaluation
When would you consider ADR or litigation?
ADR strongly advised if dispute cannot be resolved through negotiation
-> Potential for reference to and determination by court
-> be mindful of possible future litigation / acting as expert witness
What is an offer to settle?
Part 36 offer Civil Procedure Rules (CPR)
Unconditional, genuine offer to settle
Can you use a Part 36 offer in a dilapidations claim?
Yes - > Part 36 of Civil Procedure Rules offer
What is included on a dilapidations settlement agreement?
In writing and identifying:
- The parties involved
- The relevant lease
- The Schedule of Dilapidations and quantified demand to when the sttlement applies
- Be open (not marked ‘without prejudice’)
- Stated to be in full and final settlement of the dilapidation claim
- Deal with every part of the dilapidations claim
- State payment date / or date works are to be completed
- Signature of both parties
- Current date
Tell me about an instance when you have reflected market conditions on renatl value?
Acting in a rent review for Compas House
-> Open market review and therefore my Market Rent ascertained reflected market conditions through comparable evidence analysed
How do you collate, analyse and adjust comparable evidence?
COllate recent transactions from published databased, such as CoStar, and also private databases at work such as TRAMPS and Horizon.
Collate evidence into a table, ranking each transaction based on similarity and the hierarchy of evidence
How do you collate, analyse and adjust comparable evidence?
COllate recent transactions from published databased, such as CoStar, and also private databases at work such as TRAMPS and Horizon.
Collate evidence into a table, ranking each transaction based on similarity and the hierarchy of evidence
What is the hierarchy of evidence?
The relative weight attached to comparable evidence
The common weighting is:
- open market lettings
- Rent reviews / lease renewals
- Independent experts determinations
- Arbitrators determination
- Court deterinations under L&T Act 1954
Tell me about a Landlord and Tenant negotiation you have been involved with
Buckingway business Park -> Tenant had substatial arrears, exceeding £50,000 built up through COVID-19
Landlord instructed me to agree payment plan and lease extension in return for writing off 2 quarters rent
Undertook a financial review which confirmed their covenant strength and ability to adhere to an additional 5 year extension
Tenant wanted 3 years -> agreed 4 year lease extension and additional 3month rent deposit.
Tell me about a contracted out lease renewal you have dealt with
Coldhams lane Industrial Estate -> Tenant had 1 year remaining on lease. SPoke to Tenant during site visit and they expressed inrerest in remaining in the unit
Advised the Landlord and discussed their objectives for site -> following instruction to agree HOTs, i measured the unit and collated/ analysed comparable evidence which suggested the unit was under-rented
I agreed terms with the tenant, and once approval was given from the Landlord, instructed solicitors to draft
How would you advise a tenant differently between a contracted in renewal and a contracted out renewal
Depends on market conditions/rent of the unit and whether they wish to vacate or remain.
If contracted out, i would advise that theyhave no security of tenure and therefore cannot rely on PACT or court to assist in directing new lease terms
How do you check security of tenure?
review the lease
What strategy did you recommend to your Client around notices during the lease renewal at 29 Bourne Industrial
After ascertaining Market Rent and receiving Clients aims of retaining the tenant -> i advised that Section 25 friendly should be served as the unit was under-rented
Should the unit have been over-rented, i would have advised that no notice be served as the tenancy would continue under section 24 if the tenant remains in the unit and serves no notice
What happened after service of notice?
Notice was served for purpose of negotiation, as stated in the notice itself -> it triggered negotiation
-> Tenant responded and new terms were agreed within the specified limit (i.e by lease expiry date, which was 6 months from S.25 notice being served)
What happened after service of notice?
Notice was served for purpose of negotiation, as stated in the notice itself -> it triggered negotiation
-> Tenant responded and new terms were agreed within the specified limit (i.e by lease expiry date, which was 6 months from S.25 notice being served)
How did you ensure the break notice was valid at Glasshouse Yard?
I reviewed the lease, checking the conditions required for validity.
-> this stated payment of all charges and vacant possession
-> i attended on the break date and confirmed conditions satisfied
Explain your advice on dilapidations
Upon receipt of break notice, i advised my Client that building surveyors should be instructed to prepare a schedule of Dilapidations
