Landlord & Tenant - Level 2 Flashcards
What is a lease?
A lease is a contract between two or more parties that creates a legal interest (a leasehold) in land and buildings.
For a document to be a lease it must?
Be for a certain term i.e, a fixed period of time
Grant exclusive occupation of the property
Be at a rent
What are the key features of a lease?
Demise
Parties
Lease term
Rent
Rent review clause
Repairing liability
User clause
Alienation
What does demise mean?
This is the agreed ‘property’ that is to be let.
What does parties mean?
Precise details of who the landlord, the tenant, and any guarantor/surety is etc.
What does the lease term mean?
How long the lease is to be ranted for and from when.
What does the rent mean?
What the commencing rent is and when it will start.
What does the rent review clause mean?
A complex area that sets out the nature, basis and frequency of any review of the rent during the lease term.
What does the repairing liability mean?
This sets out who is responsible for the repair of the property during the lease term. This can range from all of the responsibility being upon the tenant (full repairing) to only being responsible for the interior (internal repairing).
What does the user clause mean?
This sets out the uses that the parties agree the tenant can use the property for the lease term. This is not to be confused with what planning permission may or could exist.
What does alienation mean?
This governs the ability of the tenant is grant a sub-lease of all or part of their leasehold interest (subletting) or sell it in its entirety (assignment).
What is the difference between a lease and a licence?
Lease gives exclusive possession for a term, at a rent with longer leases creating an estate in land.
Licence gives permission to do something otherwise illegal. Personal arrangements not capable of being assigned.
Street V Mountford 1985
What are the S.30 grounds for possession?
a) Breach of repair
b) Persistent delay in paying rent
c) Substantial breach
d) Suitable alternative accommodation
e) uneconomic subdivision
f) the landlord intends to demolish or reconstruct the property
g) owner intends to occupy
What is the compensation to tenants if possession is obtained?
Under 14 years occupation = 1 x RV
Over 14 years occupation = 2 x RV
What are the usual assumptions and disregards in a lease?
Assumptions
Disregards
- Tenants actual occupation
- Goodwill
- Improvements
What lease clauses affect value?
How can tactics affect service of notices in a lease renewal?
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 L&T?
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 for L&T?
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 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.
What does holding over mean?
What is the rental hierarchy of evidence?
What does the L&T 54 Act apply to?
What does security of tenure mean?
