Lease Structure And Content Flashcards

1
Q

What are the main stages in a grant of lease transaction?

A

The main stages are: Pre-exchange, Pre-completion, and Post-completion.

If there is no exchange, the stages are Pre-completion and Post-completion.

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2
Q

What tasks does the landlord’s solicitor perform during the pre-exchange stage?

A

The landlord’s solicitor takes instructions, prepares draft lease and agreement for lease, deduces title, answers pre-contract enquiries, and engrosses the agreement for lease.

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3
Q

What tasks does the tenant’s solicitor perform during the pre-exchange stage?

A

The tenant’s solicitor takes instructions, reviews and amends the draft lease, investigates title, raises pre-contract enquiries, and arranges for the tenant to sign the counterpart lease.

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4
Q

What does ‘engross’ mean in the context of lease agreements?

A

‘Engross’ means to print a copy for signature, typically on good quality paper and bound.

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5
Q

How does the landlord’s solicitor draft the lease?

A

The landlord’s solicitor drafts the lease based on the heads of terms, using a generic precedent lease or tailoring a part-completed lease from past lettings.

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6
Q

What is an agreement for lease?

A

An agreement for lease is a commitment to complete the lease when conditions are satisfied, often used when parties are not yet ready to complete.

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7
Q

What investigations does the tenant’s solicitor conduct during the pre-exchange?

A

The tenant’s solicitor investigates the landlord’s title, raises CPSE1 and CPSE3 enquiries, and conducts searches similar to those in a freehold purchase.

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8
Q

What happens during the exchange of an agreement for lease?

A

The solicitors exchange agreements without a deposit, setting conditions for completion and attaching a draft of the agreed lease.

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9
Q

What tasks does the landlord’s solicitor perform during the pre-completion stage?

A

The landlord’s solicitor prepares the original and counterpart lease, obtains the landlord’s signature, and sends the counterpart to the tenant.

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10
Q

What is included in the completion statement prepared by the landlord’s solicitor?

A

The completion statement details the money due on completion, including apportioned annual rent, service charge, and insurance rent.

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11
Q

What occurs during the completion of the lease?

A

The tenant’s solicitor sends completion monies, and both solicitors agree to complete and date the executed leases.

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12
Q

What tasks does the landlord’s solicitor perform post-completion?

A

The landlord’s solicitor sends a summary of the main provisions of the lease to the client.

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13
Q

What are the SDLT and LTT considerations for a grant of lease?

A

Calculating SDLT and LTT on a long residential lease is similar to a freehold, while for a commercial lease, it is more complex.

Leases of 3 years and under are not registrable.

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14
Q

What are alterations in the context of a lease?

A

Alterations are changes to the premises, such as reconfiguring internal walls or adding new features.

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15
Q

What is the doctrine of waste in relation to alterations?

A

The doctrine of waste prohibits tenants from making alterations that reduce the value of the premises.

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16
Q

What is an absolute covenant regarding alterations?

A

An absolute covenant means alterations are not permitted without exception.

17
Q

What is a qualified covenant regarding alterations?

A

A qualified covenant allows alterations only with the landlord’s consent, which may not be unreasonably withheld.

18
Q

What is the significance of s19(2) LTA1927 in relation to improvements?

A

s19(2) LTA1927 converts a qualified covenant against alterations to a fully qualified covenant for tenant’s proposed improvements.

19
Q

What is a licence for alterations?

A

A licence for alterations documents the landlord’s consent for alterations and includes tenant’s covenants regarding the works.

20
Q

What is the tenant’s statutory right to carry out improvements?

A

Under s3, LTA1927, a tenant can serve notice for improvements, and if the landlord objects, the tenant can seek court permission.

21
Q

What does ‘user’ refer to in a lease?

A

User refers to what the lease allows the tenant to use the premises for, which can be specific or general.

22
Q

What are the implications of a change of use in a lease?

A

A lease may prohibit changes of user, allow them with consent, or allow them with consent not to be unreasonably withheld.

23
Q

What are the types of covenants regarding changes of user in a lease?

A

The lease may prohibit changes of user (absolute covenant), allow changes with consent (qualified covenant), or allow changes with consent not to be unreasonably withheld (fully qualified covenant).

24
Q

How does statute affect qualified user clauses?

A

Unlike a qualified alterations covenant, statute does not convert a qualified user clause to a fully qualified user clause.

25
Q

What does section 19(3) of the Landlord and Tenant Act 1927 state about landlord consent?

A

If the landlord gives consent to a change of use, they may not charge a lump sum or increase rent unless the change requires structural alterations.

26
Q

What should tenants ensure regarding planning law for alterations and changes of use?

A

Tenants must ensure they have the relevant consents to comply with the lease and avoid enforcement action.

27
Q

What is an example of a change of use that requires planning permission?

A

A landlord gives consent for a clothes shop (use class E(a)) to be converted to a betting shop (sui generis use), which requires planning permission and a betting premises licence.

Understand the principle of requiring planning permission for changes of use.

28
Q

What does the Code for Leasing Business Premises state about alterations and change of use?

A

The lease should restrict alterations and change of use only as necessary to protect the value of the premises and adjoining properties.

29
Q

What does the Code require regarding internal non-structural alterations?

A

The Code requires landlords to give tenants a fully qualified covenant for internal non-structural alterations in a lease of part, and allows tenants to carry out such alterations without consent in a lease of whole.

30
Q

What should be clarified in the heads of terms regarding alterations?

A

If the landlord requires any alterations to be reinstated at the end of the lease, this should be made clear in the heads of terms.

31
Q

What types of covenants exist regarding alterations in FRI leases?

A

Covenants may be absolute (not allowed), qualified (allowed with landlord’s consent), or fully qualified (allowed with landlord’s consent not to be unreasonably withheld).

32
Q

What happens to a qualified covenant regarding tenant’s improvements?

A

A qualified covenant will be converted to a fully qualified covenant regarding tenant’s improvements, with a statutory procedure for allowing improvements even under an absolute covenant.

33
Q

What do FRI leases control regarding the use of premises?

A

FRI leases control the use of the premises, with changes subject to absolute, qualified, or fully qualified covenants.

34
Q

What does the lease usually require from tenants regarding laws?

A

The lease will usually require tenants to comply with relevant laws, such as planning.

35
Q

Is a qualified covenant converted to a fully qualified covenant for use changes

A

No - section 19(3) of the Landlord and Tenant Act 1927 does mean that if the landlord decides to give consent to a change of use, the landlord may not charge a lump sum or increase the rent for giving consent unless the change of use also requires structural alterations (in which case the landlord may charge a lump sum or increase the rent for giving consent).