Leases Flashcards
what is the notice period for periodic tenancy
notice period is the length of the period unless it is 12 months and then notice is 6 months
can the terms of a lease be varied
only by agreement
can T do whatever they want to the property
yes unless a covenant in the lease stops them
what is FRI and what leases are usually FRI
full repairing and insuring (so L doesn’t have to pay these expenses) normally commercial leases are FRI
what is T usually responsible for if they only lease part of the building
the non-structural parts
T responsible for structural and common parts
can L pass cost of repairs or maintenance on to T
if there is a service charge in the lease
does rent cease to be payable if the property is unusable
no - unless there is an express term to the contrary the rent is still payable
if building is destroyed if the lease fustrated
unlikely - fustration is rare - would only apply in exceptional circumstances
what does a typical business lease contain
prescribed clauses (summary of detail and info)
commencement date
grant of lease for fixed, periodic or tenancy at will
ancillary rights (give T rights over other land to help them use their land)
annual rent
rent review
Ts covenants
Ls covenants
Ls rights to enter on breach of repair covenant
re-entry and forefiture
meaning of covenant to repair
must be disrepair before T can be in breach - physical condition must have deteriorated from past condition
standard of repair
fit for reasonable T of class likely to take it
do you have to remedy inherent defect
only if that is the only way the damage can be remedied
meaning of keep in repair
need to put in repair
meaning of keep in good condition
T needs to carry out work even if there is no disrepair
methods of rent review
fixed increase
index linked
Ts receipts
open market rent review
when does T begin paying increased rent following a rent review
T continues to pay existing rent until review is settled then back pay with interest
meaning of investigating the review
parties negotiate rent review through specialist valuers
meaning of independent determination (rent review)
if parties cannot reach an agreement it will be referred to an indepedent third party to decide
can L impose an absolute covenant against all alteration
yes but exception for T of business premises under s3 LTA to carry out improvements
what does a qualified covenant against improvements allow
there is an implied term that makes it into a fully qualified covenant so L cannot unreasonably withhold consent
how can T of business premises gain consent to improve the building even if there is an absolute covenant against alterations
serve notice on L
L has 3 months to object
if no objection T can do work
or L can offer to do work for increase in rent
or if L objects can apply to court for permission
when will the court grant permission for a business T to improve the premises when a L has objected to notice
if improvements add value, are reasonable, suitable to character or premises, don’t devalue any of Ls property
if T withdraws notice can L still do work
no
If L offers to do improvements but T refuses can T still apply to court for consent to do it themselves
no
if T obtains consent to make improvements and it increases value can T get paid
can get compensation at end of letting term
what is alienation
ways of creating a third party interest in property
can T dispose of their interest however they wish
yes unless there is a covenant against it
what is an underlease
an estate in land
how long can underlease last
must be shorter than headlease even if just by one day
can T charge sub-T more rent
yes can make profit
is T still liable to L for rent if Sub-T doesn’t pay
yes
where there is a sub-lease who exercises control over who
L exercises control over T
T can exercise L controls over sub-T
L must go though T to control sub-T
when can the sub-T become the main T
if Ts lease is forfeited and court gives sub-T protection
if Ts lease is disclaimed or surrended by administrator or liquidator
if both tenancies end by sub-T has rights under 1954 Act
S19(1)(a) LTA 1927
makes qualified covenant against sub-let and assignment into fully qualified covenant
S1 LTA 1988
L must within a reasonable time in writing give consent, set out conditions or reasons for non-consent
S19(1A) LTA 1927
allows L and T to agree in advance when it would be reasonable to withhold consent to assignment of lease
guidelines for L to consider whether it would be reasonable to withhold consent for assignment
reason by relate to relationship between L and T
can relate to use of premises even if this isn’t in the lease
if a reasonable person would refuse L doesn’t need to justify reasons
Does detriment to T of refusal outweigh benefit to L
what is a licence to let
L gives consent for sub-lease
when must a licence to let be obtained
by completion of underlease or breach of covenant
if L directly covenants with sub-T to enforce covenants directly, do this exclude anything
excludes rent but can enforce the rest of the covenants directly
can L require T to pay Ls costs when asking for a licence to let
yes
how is a lease completed
T signs counter part
L signs lease
exchange copies
send counterpart to T 5 working days before completion
by when must L send counterpart to T
L to engross lease and send to T at least 5 working days before completion. Annex lease to contract. SCPC
what is SDLT chargeable on (lease)
any premium and rent
form and time to pay SDLT for lease
14 days on form SDLT1
how is SDLT calculated for premium element of lease
same as freehold
how is SDLT calculated for rent element of lease
calculate full amount of rent for whole term reduce future years by 3.5% per year then charge each portion: 0-150K 0% 150k - 5m 1% over 5m 2%
how to register different types/lengths of leases
if over 7 years register
if 3-7 years note voluntarily on title
if under 7 years overriding irrespective of actual occupation
if unreg land then legal lease binds purchaser of freehold irrespective of notice
who drafts the lease
Landlord
who drafts underlease
tenant
pre-contract steps and searches for lease
same as freehold
what is an agreement for lease
a contract to agree / grant lease if there will be a delay
when is T entitled to deduction of freehold title
if lease is over 7 years
if 7 years or under not entitled but if it is reg then might be able to check on open reg anyway
if underlease can have headlease and assignments for 15 years
differences between absolute leasehold title and good leasehold title
absolute only granted if freehold title deduced
what should L give to T
draft agreement for lease (if applicable)
draft lease/underlease
evidence of freehold/headlease title
copies of relevant planning consent
evidence of lenders consent to lease or underlease (if relevant)
searches for assignment of a lease
same as freehold
what deed is used to assign a lease
TR1 for registered lease no matter how long it has left
if unregistered but over 7 years will need to register so use TR1
deed of assignment used if 7 years or less
can the terms of a lease be varied on assignment
only if the L agrees but not obligated
should freehold title be deduced on assignment
not entitled to it but try to get it
would have to put it in special conditions of SC and SCPC
can ask for lease and all assignments for 15 years
what is a license to assign
consent from L to assign
who drafts the license to assign
Landlord drafts and sends to T and sub-T to amend and agree
when does a license to assign need to be made by a deed
If T and new T enter into covenants in license then the license to assign must be made by deed
which parties must join the license to assign
Landlord
guarantors of T,
guarantors of new T
T and new T if they enter into covenants
when can L insist on an authorised guarantee agreement (AGA)
if it is in the lease. If not in lease then when it is reasonable.
what if L does not give license to assign (SC)
if L doesn’t consent within 3 working days before completion or consents subject to a condition the buyer reasonably objects to either party may rescind the contract by notice. (SC)
what if L doesn’t give license to assign (SCPC)
if consent isn’t obtained by completion date then postpone completion until 5 working days after T notifies new-T that consent is given. Cannot rescind until 6 months after original completion date. then either party can rescind with notice.
pre-completion searches for lease assignment
OS1 or land charges search
company search
priority periods same as freehold
when does an AGA take effect
after assignment
how can the new T on assignment be sure that covenants aren’t breached
on production of receipt of last rent due the new T can assume rent was paid and covenants performed.
what is SDLT payable on following assignment
purchase price but not rent
how to register assignment of lease
if already registered transfer the reg to new T irrespective of how long is left
if unreg but more than 7 years then must reg within 2 months
if freehold title is reg note it against it or caution against first reg
who can L pursue for breach of leasehold covenant
depends if it is an old lease (pre1996) or new lease (after1996)
remedies for non-payment of rent
debt action
commercial rent arrears recovery
pursue guarantor
rent deposit (lease sets out when money can be taken from deposit and T will have to top it up again)
forfeiture (only if lease has forefiture clause)
how long does L have to bring a debt action
6 years
what cannot be recovered under an action for commercial rent arrears recovery
equipment to value of £1350 necessary for Ts business
lease/hire purchase items
can items taken under commercial rent arrears recovery be sold
only by public auction and T must be given 7 clear days notice of sale
when can L pursue a guarantor for Ts non-payment of rent
same old lease and new lease (1996) rules
if old lease liable till end of lease
if new lease liable until assignment (unless AGA)
whether old lease or new lease must comply with s17 (notice for fixed charge within 6 months and can get overriding lease)
what remedies are available for L when T breaches other covenants (not rent or repair)
forefiture (no need for s146 notice) specific performance injunction damages (normal contractual rules) pursue former T or guarantor deduction from rent deposit if lease allows it Surrender (need T and L to agree)
when is specific performance available for L due to Ts breach of other covenants (not rent or repair)
if positive ob is precise or no supervision required and damages not adequate
how is a lease surrendered
mutual agreement between L and T
can be informal but best to use a deed of surrender
remedies for L if T breaches covenant to repair
self help
specific performance
damages
forefiture
in which cases was self help approved for breach of Ts covenant to repair
jarvis v Harris
when is specific performance available for L due to Ts breach of repair covenant
when other remedies aren’t appropriate
how are damages for breach of Ts repair covenant limited
s18 LTA 1927 - limits damages to amount L’s reversion has decreased in value as a result of disrepairs
process for claiming damages for Ts breach of repair covenant
if lease granted for more than 7 years with more than 3 years left to run L must serve notice on T. T then has 28 days to serve counter notice. if T does then L cannot proceed without leave of court
Process for forefiture for Ts breach of repair covenant
L must serve s146 notice on T which will specify breach and require remedy in reasonable time. Can require T to pay compensation. If T doesn’t comply L can forefit. Need S146 notice incl right for T to serve counter notice within 28 days. if T does then need court permission to forefit.
if lease granted for more than 7 years with more than 3 years left to run
when does the 1954 Act apply (security of tenure)
premises occupied by T for business purposes
occupied by T or through agent or manager
must be a tenancy and not a license
when doesn’t the 1954 Act apply (security of tenure)
tenancy at will
tenancy less than 6 months (unless already been there for 12m or option to renew beyond 6m)
agriculture, mining, farms and contracted out fixed term tenancy
can L contract out of 1954 Act (security of tenure)
yes but must notify T and advise T to get advice. T must declare they received notice and agreed.
requirements for L to contract out of 1954 Act (security of tenure)
If notice less than 14 days before grant of lease Ts declaration must be in front of independent solicitor. reference to notice or declaration must be contained or endorsed on lease
what does the 1954 allow
security of tenure
tenancy continues and T can apply to court for new tenancy which can only be opposed by L on s30 grounds
7 methods of terminating a tenancy under 1954 Act
Ls notice under s25
Ts request for new tenancy under s26
forefiture
surrender
Periodic tenancy notice by T
fixed tenancy 3 months notice in writing by T but not ending before contractual end date
fixed tenancy T will not longer occupy for business purposes at end of term.
what is Ls notice to terminate tenancy under s25 1954 Act
L serves notice stating if L wants property empty or a new lease
If L wants empty property must state s30 ground
cannot end earlier than common law end date
serve s25 notice no less than 6m but no more than 12m before termination date in notice
T must apply to court for new lease if L objects to lease
or T and L negotiate new lease but T should still apply to court before expiry of s25 notice to protect rights
can the time limit under s25 notice 1954 act be extended
yes by agreement of parties
what are the s30 grounds 1954 act
Ts failure to repair (D)
Ts persistent delay of rent (D)
Ts substantial breach of other obs (D)
T is an underletting of part (D)
L offered alternative accommodation which is suitable for Ts needs and reasonable terms (M)
L intends to occupy it for own business or residence but must have owned it for 5 years before end of tenancy. (M) - need settled intention
L intends to demolish or reconstruct and couldn’t reasonably do it without possession (M) - need settled intention
do you need to show business is a success to rely on following s30 ground - L intends to occupy it for own business or residence but must have owned it for 5 years before end of tenancy
no need to show business a success but need settled intention
two types of s30 grounds
D- discretionary - not enough to establish ground, must also show why T shouldn’t be give new lease in view of fact giving rise to ground
M - Mandatory - just establish ground
Requirements to make a s26 request for a new tenancy under 1954 act
give notice stating date and terms of new tenancy. give notice 6-12m before start of new tenancy. Not earlier than contractual end date of tenancy.
If L wants to oppose new tenancy serve counter notice on T within 2m of service of s26 notice stating s30 ground
T must then apply to court for new lease
if L doesn’t object they negotiate terms but T should still apply to court before date of new tenancy to safeguard rights
what does a s26 request do under 1954 act
brings tenancy to an end and requests a new tenancy
what property does T have a right to tenancy of under 1954 act
the holding
but can’t oblige T to take whole of original part (incl sub-let parts)
what is the holding
property in current lease but not any part T isn’t occupying (eg sub-let parts)
On what terms will the court grant T a lease under 1954 Act
terms of new lease will be those reasonable in circumstances but cannot exceed 15 years
maximum length of tenancy the court can grant under 1954 act
15 years
when does the lease granted by the court commence (1954 act)
3 months and 4 days after the order
what rent will be set for a tenancy granted by the court under 1954 act
the market rent - having regard to other terms of the tenancy
what will the court disregard when setting the rent for a tenancy granted under 1954 Act
that T has been in occupation
any good will attached to holding
any improvements voluntarily carried out by T
effect of Ts license if licensed premises
can the court insert a rent review clause into a tenancy granted under 1954
yes, even if there wasn’t one in the original lease
What can T do if the court grants a tenancy under the 1954 act but T doesn’t like the terms of the tenancy
T can apply for the order to be revoked.
L cannot do this. L would have to appeal
What can L do if the court grants a tenancy under the 1954 act but L doesn’t like the terms of the tenancy
L would have to appeal
unlike T who can apply for the order to be revoked
Can T get compensation if L successfully opposes a new lease on a s30 ground
only if it is for a no-fault s30 ground
how much compensation can T get when L successfully opposes a new lease on a no-fault s30 ground
full compensation. rateable value of holding unless T and predecessors in same business were in occupation for 14 years then twice rateable value.
can T and L agree to restrict or exclude compensation for T when L successfully opposes a new lease on a no-fault s30 ground
an agreement restricting or excluding compensation is void if T or predecessor has been in occupation for 5 years or more.
