Landlord & Tenant Flashcards
What are the differences between arbitration and independent expert?
An independent expert can use their own knowledge to come to a determination and is not limited to the parties’ submIssions. An arbitrator will act in a quasi - judicial role to arbitrate between the parties and their evidence is based solely on the cases presented. An arbitrator cannot consider external evidence but only the evidence presented, whereas an IE can.IE = determinationA = awardIE = expert is guided by the lease for costsA = has discretion on costs An independent expert can be sued for professional negligence when decision making however arbitrators are effectively immune as they are arbitrating between a range out by the parties.An independent expert may not require to review written submissions, but only the lease for low value property . An arbitrator will require the two submissions to make a decision.An arbitrator is governed by the Arbitration (Scotland) act 2010 whereas the independent expert is governed by common law.
What are the usual assumptions and disregards for an OMV rent review?
Assumptions:1) there is a willing lessor and willing lessee2) premises are vacant3) no premium is payable by any party4) to the length of the term left to run on the lease 5) tenant has fulfilled obligations 6) that the hypothetical let is on the same terms Disregards:1) any effect on rent of the tenant being in occupation2) tenants goodwill3) tenant improvements 4) the effect of any licence
What are the benefits of Mediation?
This process is a voluntary and confidential way of settling a dispute.Good for preserving the relationship between the parties.Benefits: speed and cost savings (monetary and emotional)
What is the difference between a lease and a licence?
Lease = exclusive possession, fixed duration, legal interest in the land/propertyLicence = permission to occupy and does not grant exclusive possession
What are the statutory obligations under common law for:A: the TenantB: the Landlord
Tenant:1) Must take possession, occupy and use the subjects2) use for purposes for which it was let3) take reasonable care of the property4) pay rent when it becomes due5) plenish the subjectsLandlord:1) place tenant in full possession of subject property2) not to derogate from the grant3) to provide subjects that are reasonable fit for the purpose for which they are let4) to carry out repairs
Can you give me an example of case law around Lease/Licence?
Street vs Mountford 1985 Exclusive possession was effectively granted which meant that this was not a Licence but a Lease, and appropriate notice was required for termination under lease provision.
Can you give me an example of case law around landlord/tenant statutory obligations?
Graham black vs Stevenson Hotel had shut down and the Landlord claimed damages for non-occupation. Maintenance and loss of goodwill whilst it was closed.
What protection is there in Scotland for shops renewing a lease?
There is the tenancy of shops Scotland act 1949- this deals for provision for renewing a lease of a shop where LL has served NTQ under the Lease and tenant is unable to renew satisfactory terms
What is the procedure under the tenancy of shops act 1949?
Sherrif has the power to renew the lease for another year. There are circumstances where the renewal would not be granted.Case law: Superdrug vs Network RailTime frame for application. In this case the tenant was outwits the 21 day notice period
What is time is of the essence?
This is when there is a time limit on the rent review. Always read the lease! The clause must be specific. United holdings vs burugh council case where the lease set out timescales however, time is of the essence was not specifically set out in the lease.
What is the purpose of a rent review?
To adjust the rent to reflect changes in the value of money and of property.This was expressed in the Basingstoke and Dean Borough council vs Host group Ltd (1987)
How do you initiate a rent review?
Always read the lease Some leases require rent reviews to be triggered by one party giving notice to the otherSome leases simply provide for rent to be reviewed at review dateTrigger notices should not be marked ‘STC or WP’ since this might allow the tenant to argue the notice was not legally effective
Why is STC and WP used?
To reserve the legal position of the party using the phrase
What are the key contents of a rent review clause?
Basis of valuationAssumptions and disregards Time limited/Trigger notice requirement/ how this is initiated
Can you talk about the process for debt recovery in your example at 3 Osborne st?
1) Read lease and Identify non-payment of rent quickly and try to resolve with tenant (could be that they missed an invoice?)2) try to arrange a meeting to discuss, if there were cash flow issues perhaps advise of an informal payment plan3) no contact - send formal demand requiring rent to be paid by (14 days) or seek termination of lease/legal recovery4) if no payment, serve another 7 day demand and the consider legal proceedings 5) in this case, pre irritably was served, which also allowed remedy for the tenant. There was continued non payment of rent therefor irritably was served with immediate effect. In this case vacant possession was given as the tenant vacated the property. Statutory demand was attempted to be served by sheriff officers which required 21 day payment in full. In this case the company was in liquidation and guaruntor was being pursued for payment, sheriff officers could not confirm that the notice was being served to correct address and neighbours weren’t particularly forthcoming. Continued expense would have brought the claim down to about 5,200. My clients policy is to write this off as the cost of further legal action makes this not economical.In this case we would have had to obtain a decree because the lease wasn’t registered, and I would have sought legal advice for financially effective option.
What is included in the pre-irritancy notice?
Must comply with provisions under Law Reform (Miscellaneous Provisions) (Scotland) Act 1985Clear and concise.Must accurately specify the rental arrears and interest clearly.Must specify time period for payment (minimum of 14 days however RTL)
Why register a lease?
Confers a real right in the premises Makes debt recovery proceedings easier - registered under books of council of sessions effectively gives the lease the status of a court decree with respect of rent
Why would you go to mediation rather than arbitration?
Gives my client more control over the processReputational benefit should it not go in my clients favourPreserving relationship with a long standing tenantCost and time saving Mediation not legally binding *
What would an alienation clause look like in a lease?
The clause could be absolute or qualified.Absolute precludes the tenant from landlords consent.Qualified puts certain restrictions in place and is usually held ‘subject to landlord consent and not to be unreasonably withheld or delayed’.
What are the grounds for refusal under the tenancy of shops act?
• Breach of lease• landlord has offered to sell the premises• alternative premises have been offered that are reasonable• tenant notice to quit - landlord has then leased or offered to sell premises and would cause hardship or be seriously prejudiced•hardship•reasonableness
What is a keep open clause
A keep open clause effectively obliges a tenant to keep their premises open for trading. They are most commonly found in the retail sector.Safeway case - Scottish position is that keep open clauses are enforceable
What are the different types of rent reviews?
Turnover and base rentRPI linkedOpen market and upwards onlyCPI linkedFixed uplifts / stepped
Section 23
The criteria to be eligible for security of tenure:- must be used for business purposes- must be a tenancy- must not be a serviced tenancy or TAW- T must occupy at lease part of the property- tenancy must be at least 6 months- must be a competent LL with at least 14 months interest
Section 24
Tenant has right to stay in occupation under same terms when contract ends (holding over) until one party serves notice
Section 25
CHECK VALIDITYLL serving notice on T- must be in prescribed form and inform tenant of rights (strongly suggest legal advice)- 6-12 months notice- date of notice termination and required response date- ll and tenant address and property address- parties can extend time limit by agreement (if you are undertaking agreements and pass date for new lease as per s.25/26, tenant loses security of tenure unless new lease in place, one party has applied to court or parties have agreed in writing an extension of statutory period (stay)- maximum term of 15 years can be granted by the CourtFriendly - proposed terms and rentHostile - grounds under section 30 for opposition
Section 26
CHECK VALIDITYT notice to renew- prescribed form- proposed terms- 6-12 months notice (LL has 2 months to serve counter notice)
Section 27
CHECK VALIDITYT notice of termination- prescribed form- 3 months notice at anytime- if tenant vacates before contracted end, no notice needed (PEARL ASSURANCE VS ESSELTE 1997)
Section 30
Grounds for opposition:a. Repair breachb. Rent breachc. Other substantial breachd. Alternate accommodatione. Uneconomicf. Developmentg. Owner occupya-e up to court, f & g mandatoryFor development must prove intention, funnding, planning, substantial work & necessity for vacant possession Re-occupation LL must have owned property for 5 years and prove intention to occupyCASE LAWS:FRANCES V CAVENDISH 2018 - Supreme court, acid testBETTYS CAFES V PHILLIPS 1958 / VIVIENNE WESTWOOD V CONDUIT STREET DEVELOPMENTS 2017- a,b,c count on day of court hearingKELES V PATEL 2009- must actually owner occupy (newsagents, retirement)HUMBER OIL V BAP 2012- change to license due to expensiveness to moveFROZEN VALUE V HERON FOODS 2012- competant LL of 5 continuous years
Section 31
Courts right to dismiss renewal
Section 32
The property
Section 33
Duration Post 1st June 2004 Regulatory Reform for Business Tenancies Order 2003 states maximum 15 year term
Section 34
RentAssumptions- Terms - willing LL and T- VP- L&T Covenants 1995Disregards- current occupation- goodwill- improvements unless LL obligation or over 21 years ago- any licenses
Section 37
CompensationIf after 1st April 1990 and LL opposes, compensation if no lease breach, and under s.30 e/f/g1 x RV if 14 years or under2 x RV over 14 yearsRV is the RV in force at the date of hostile 25 or counter s26Compensation may be liable for improvements under LTA 1927
Section 35
Other termsO’May V City of London 1982- intro of s/c for external/structural would have massive burden, more than reduction in rent4 principles for varying terms:1. LL must have valid reason from estate mgmt grounds2. changes must be capable of being compensated by rent change3. change must not adversely affect T’s security of tenure4. must be reasonableConcept of modernisation accepted to reflect current market practice, e.g. AGAs, VAT etcEdwards & Walkden V City of London 2012- Smithfields tenants originally paid S/C and rent but became inclusive rent temporarily during building works- T’s wanted inclusive again, court said they should pay s/c
Section 24a
Interim rent - LL or T can apply to court to determine rent from end of old tenancy until start of newPost 1st June 2004 LTA 1954 reforms- Once one party has applied, the other cannot (important in failing market)- Earliest date to serve is date of S25/S26- Latest date is 6m after termination of tenancy - Rent assumes annual tenancy and market rent- rent to be paid from end of fixed term until new rent starts- interim rent can be subject to adjustment if market conditions change significantly over interim period- can be decided using PACT proceedings- if no notice served, there is no interim rent
Third Party Determinations for Lease Renewals
COUNTY COURT - Following Civil Procedures 1998- Pre-action protocols- Laws for anticipated / on-going court proceedings- Part 36 offer is similar to procedure as a Calderbank offer to induce the other party to settle- Offer only open for 21 days, after this it can be still accepted but it is possible for offer to be withdrawn by party who made itPROFESSIONAL ARBITRATION ON COURT TERMS- Launched by RICS and Law Society 1997- RICS encourages as an alternative dispute resolution service to court- In-court PACT is designed to be used for an unopposed new tenancy where one party has already made an application to the court to fix terms of new tenancy- Out-of-court PACT to be used when no court application has been made by either party, and parties agree to a postponement of such application pending an out-of-court PACT resolution- Normal services of notices must take place and necessary applications to Court made- Court needs to give consent order binding on both parties- Arbitrator nominated by President of RICS or Law SocietyAdvantages: faster, full court hearing avoided, greater flexibility and control, less expensive, decision by surveyor acting as arbitrator rather than judge
Section 40
Notice requesting information from either landlord and tenant, so LL/T can check exactly who the competent LL/T is with statutory protection- either party can serve S.40 notice during the last 2 years of tenancy requesting details as to the name and registered address of the other party who has to provide the information within one month (failure to do so can be taken as a breach of statutory duty- not limited to one request, LL could serve another notice just prior to serving S25 notice to check the tenant is still the same occupier
Section 44
Competent LL / the person or body who a notice should be served or should serve the noticeMust be a freeholder or superior tenant with unexpired term of over 14 months
Section 38A
Contracting outside the ActReasons: LL wants to re-occupy in due course, LL wants to develop at lease end, rent lower, flexibility, requirement of headlease to grant subletting outside of Act- T has no statutory right to stay at end of lease or compensation right- TAW required if new lease is being renegotiated at lease end to ensure tenant cant claim statutory protection- no rent should be collected until new lease completed as this could lead to new protected tenancy- ‘health warning’ LL serve notice on prospective tenant to warn new tenancy will not be protected, proposed tenant must then make delcaration in response confirming he recieved notice and accepts (simple dec given when parties have over 14 prior to committing to lease, stat dec when parties have less than 14 days and must be made before an independant solicitor)- procedure must be completed before lease can be signed
Various ways of lease termination
- forfeiture- surrender- merger- disclaimer (due to insolvency)- break clause- lease expiry- service of notice under LTA 1954- negotation
Key Case Law
CHILTERN RAILWAYS V PATEL 2008- Tenant said declaration should have been simple not stat, court said bordering on absurd as stat dec more officialINCLUSIVE TECHNOLOGY V WILLIAMSON 2009- this case is a warning to all LLs that silent when intentions change can amount to misrepresentation - LL served S25 hostile notice under development grounds- LL didnt intend to carry out redevelopment but as a result of changing market conditions, decided not to- LL didnt tell T of change and marketed property to be let- before marketing property the tenant found alternative accommodation at higher rent not knowing existing property was being marketed- the tenant sued the LL for misrepresentation claiming damages amounting to the difference between rent he would pay for new premises and rent he would have had to pay for his existing premises- the court held that the LL should have informed the tenant when he decided not to redevelopSOMERFIELD STORES V SPRING SUTTON COLDFIELD 2009- T could process with application for new tenancy even though LL went into administration- 2010 T attempted to overcome the LL opposition to a new tenancy, Court held that the LL may not be able to prove intention until the date of the full trail, tenant cannot reduce the time available by seeking summary judgement- a tenants right to continue lease renewal proceedings against a LL in administration outweighs the benefit to the LLs bank of delaying proceedings to work up a redevelopment schemeBARCLAYS WEALTH TRUSTEE V ERIMUS HOUSING 2013- t staying in occupation at end of contracted outside the At tenancy - the t wished to vacate but was laible for 13 months rent as it was held that a new periodic tenancy had been created
Section 28
Renewal of tenancy by agreement
Section 29
Order by Court for a new tenancy
Information required from client at commencement of instruction
agreed terms of engagement- understanding of clients strategy and objectives- a copy and existing lease and any plans attached to the lease of deeds of variation- copies of any licences eg alterations improvements, subletting, assignments, deed or variation- copy of any rent review memorandums- contact details for tenant to arrange property inspection/ LL details- confirmation which party is responsible for service of notices- copy of property mgmt file to see if any historic rental evidence on file or relevant background info for negotiations- details of comparable rental evidence held by client
Terms of Engagement Protocol
check you are competent, no conflict of interest, include complaints handling procedure detailsFees for RRs/leases renewals can be based on:% of new rent, % of saving made from quoting rent, fixed fee, hourly rate (usually for 3rd party determinations, incentive feeActions- undertake conflict of interest/competency check- agree terms of engagement with client- understand clients objective- check if inside of coutside act- read lease clauses- check if time is of essence for RRs- undertake site inspection and measure property in accordance with RICS Surveying Safely 2018 and RICS Property Measurement 2018- undertake market rent valuation, having regard to lease terms- prepare client report with recommendations- agree strategy with client and who is serving relevant notices (always instruct lawyer for 1954 act renewal notices)- upon receipt of instruction open negoations, once correct notices served (check all notices are valid)- conclude negotiations and document the rent review in rent review memorandum- for lease renewal instruct solicitors to prepare new lease in accordance with heads of terms prepared for new lease
Without Prejudice / Subject to Contract
without prejudice means during period of negotiations the opposing party can’t rely on these documents/discussions, it is priveledge and cannot be used as evidence against the party sending it- in RRs, corresponsdence cant be shown to arbitrator / independant export to show how negotiations have been conducted- subject to contract means subject to contract lol
