Leases Flashcards
What is a lease
Street v mountford - exclusive possession for fixed period of time. Can exclude anyone including landlord, otherwise only a license
How long can a sub lease last
Must be for period shorter than main lease otherwise it is an assignment
Does T need to deduce title for L
Yes if lease is more than 7 years long the landlord must deduce the title so that the tenant can register absolute title
No need to deduce title if lease is less than 7 years long
Is an unregistered lease of less than 7 years length protected in any way
It is an overriding interest
Do you need to deduce title when granting a sublease
Sub tenant can require head lease and assignments for 15 years but not freehold title
Can a lease be granted to take effect in the future
Yes up to 21 years in the future but should created by deed if more than 3 years ahead otherwise it is an equitable lease registerable as a charge or if not registered then an overriding interest
Who drafted the lease contract
Landlords solicitor
What to include in lease contract
State it is leasehold and how long for
Any incumberances
Indemnity covenants
Annex lease to contract
When and how should landlord supply tenant with lease and contract
Lease should be annexed to contact, engrossed by landlord and supplied to tenant 5 days before completion
What happens to covenants when a lease is assigned (pre-1996)
If lease was granted before 1996 then the original tenant and new tenant are both bound by covenant and landlord can decide who to pursue so indemnity covenant is implied into assignment contract
Landlord remains liable to original tenant throughout term of contract
What happens to covenants on assignment ( post-1996)
If lease was granted 1996 onwards original tenant is released from covenants and they pass to new tenant unless they enter into a guarantee
Why would tenant give a guarantee to not be realeased from covenants when assigning a lease
if commercial contract and had a pre agreement
If L requires this as a condition to giving consent to assignment
Guarantee only applies to immediate successors and not subsequent tenants
When granting a lease what should the landlords solicitor provide the tenant with
Draft contract Draft lease Evidence of title Copies of relevant planning consent Evidence of lenders consent EPC - valid for 10 years
What searches should the tenants solicitor do
Same as for freehold
What should the tenants solicitor do after completion
Pay apportionment of rent, SDLT, registration, submit land transaction return to HMRC
Ensure landlord has sent you copy of freehold title and copy of consent of landlords lender
What are the two parts of a lease
Lease - executed by landlord
Counterpart- executed by tenant
Then swap them on completion
When does tenant receive counterpart before completion
Landlord must engross lease and send to tenant 5 working days before completion
When assigning a lease, what should the sellers solicitor provide to the buyer?
Draft contacts Copy of lease Evidence of title License permitting assignment to current and previous tenant Insurance policy for property Receipt for last premium due Receipt for last payment of rent and service charge Details of any management companies EPC
Is SDLT payable when a lease is assigned
Yes on purchase price but not on rent
Should assignment of a lease be registered
Yes if more than 7 years left
How does the buyer of an assigned lease know how much rent is due
Seller supplies buyer a completion statement showing apportionment of rent due from date of completion to next rent day
Which form is used to assign a lease
TR1
Who drafts the transfer deed for a lease assignment
The buyers solicitor
Is a guarantor of the original tenant liable for a new tenant when a lease is assigned
No
Is landlords permission necessary to assign a lease
Yes but they should provide it in writing within a reasonable time and cannot withhold it unreasonably
They can add conditions
What searches should the solicitor of a buyer of an assigned lease do
Same as freehold
Can you assign a lease which has an absolute covenant against alienation
No assignment would be a breach but can ask landlord to vary it
Can landlord refuse to give consent for assignment
Yes but not unreasonably and must give reasons
What are reasonable grounds on which the landlord can refuse to consent to assignment of a lease
Any grounds in lease
Can the landlord require the original tenant to pay their costs when assigning lease
Yes
Should the buyer of an assigned lease request deduction of superior title
Yes but they are not legally entitled to it
What is a qualified prohibition on alterations and improvements
This means T needs Ls consent for alterations and improvements but L may not withhold consent unreasonably
Does T have to accept an absolute prohibition on alterations and improvements
Yes unless
Business premises can carry out works despite prohibition. Serve notice on L who has three months to object. Could offer to do works for more rent but T can refuse
Can T claim compensation at end of lease for improvements and alterations
Where L consented and they added to the letting value
Do existing easements pass when a lease is granted
Yes they pass automatically to T but may be excluded in lease
Can the L control what use T puts the land to
Yes L can rely on Use Classes Order 1987
What is a full repairing lease
When L has responsibility for repair work of whole property and the costs
What is repair work
Would it create a wholly different property?
What is an improvement
Remedy disrepair but also created something recognisably different
Does T has to remedy an inherent defect
Only if it creates damage
Can insured risks be excluded from repairing covenant
Yes unless money cannot be recovered from insurance company
What if repair obligations fall on other tenants
Ensure there is a covenant from L that L will enforce repair obligations against other Ts
When is a repairing covenant breached
Only once L has notice of disrepair so include term for T to notify L of need to repair then failure to notify would be a breach
Should a self help clause be included in a lease
Yes so L can enter to repair and then charge T
How will T know which parts of the building are part of their repairing covenant
This should be included in the contract
What does the Landlord and Tenant Act 1954 part 2 do?
It gives security of tenure to Ts who occupy premises for business purposes
Means tenancy doesn’t end and expiry and needs more than notice to quit. T can apply to court for new lease and L can only object to renewal on grounds in act.
What is security of tenure
Statutory rights to protect Ts interests under their lease
Requirements for Landlord and Tenant Act 1954 part 2 to apply
Must be lease not license ( exclusive possession, rent and fixed period of time)
Business purposes main reason not sole reason
T must be in occupations personally or through agent, manager or company owned by T
Can a lease for less than 6 months gain protection under Landlord and Tenant Act 1954 part 2
Yes if T was already in occupation for more than 12 months or it included provision for renewal or extension beyond 6 months
What type of tenancies are excluded from the Landlord and Tenant act 1954 part 2
Tenancy at will
Tenancy not exceeding 6 months
Can contract out if T has notice before granted / before T is bound, is told to get legal advice and they make declaration or statutory declaration if less than 14 days notice
Statutory notice must be before independent solicitory
Reference to notice and declaration in lease
What is a tenancy at will
Can be terminated by either T or L at any time
Can you contact out of L and T act 1954 if it is a period tenancy and a fixed term tenancy
Not only for fixed term tenancy not periodic tenancy
What type of leases cannot contact out of L and T act 1954
Railway, mining, dockyard, agriculture, service or farm
Do you need a court order to contract out of L and T act 1954
Only if lease was granted before 1 June 2004
7 methods of terminating tenancy under L and T act 1954
S25 notice by L S26 request by T for new tenancy Forfeiture Surrender Notice to quit periodic tenancy by T S27 notice by T to end FTT S27(IA) notice by T ceasing to occupy for business purposes at end of lease
What is s25 notice by L under L and T act 1954
Two forms: one if L won’t object to new lease and one if L will object on grounds in s30
Must want vacant possession of whole building to object
Notice must be served 6-12 months before end of lease date in termination notice which cannot be sooner than the lease would otherwise come to an end
How much notice must L give under S25 L and T Act 1954 if terminating tenancy
Notice must be served 6-12 months before end of lease date in termination notice which cannot be sooner than the lease would otherwise come to an end
what is an agreement for lease
where one or both parties cannot enter into lease immediately but need to bind the other party.
requirements for an agreement for lease
agreement and any variations must be in writing, incorporate all terms and be signed. Agree terms in advance and annex to agreement
when is an agreement for lease triggered
practical completion triggers commencement of lease and liability for rent
types of rent review clauses
open market rent review
turnover rent
fixed increase
index linked clauses
How to record a rent review once new rent is agreed
Once L and T agree on the rent record it in a memorandum, signed and keep it with lease
What is an index linked clause - rent review
increase or decrease in line with index. Generally multiply old rent by retail price index increase since date of last review
what is a fixed increase - rent review
rent increases a fixed amount at the review date
what is a turnover rent - rent review
T might pay base rent and top-up rent based on turnover of business.
what is an open market rent review
rent is revised in accordance with changes in the property market. Working out the open market value - advice of a rent review surveyor should be sought as to the impact of a particular set of assumptions and disregards before the lease is agreed.
