Leasing and letting Flashcards
What additional forms of security might a landlord request when leasing a property?
Deposit
Guarantee
These are both dependant on market conditions and the strength of a tenant’s covenant
If a deposit is held, what are the rules?
It must be personal to the tenant
Must be legally documented in a rent deposit deed and held in a separate bank account
The interest goes to the tenant
Agreed terms for when the money is released
What might you request from a prospective tenant as a minimum to interpret their covenant strength?
3 years of audited accounts
A credit rating (such as a Dunn & Bradstreet report)
Previous landlord’s reference
What is the profits test?
This is whether the Tenant shows three years net profit at 3 times the annual rent
What is an assignment
An assignment involves a Tenant transferring their lease liabilities to another tenant, subject to Landlord’s approval
What is a sublease?
The re-renting of property by an existing tenant to a new third party for a portion of the tenant’s existing lease contract, but the Head leaseholder remains contractually liable for the property under their existing lease.
What is an alienation clause?
Alienation is the legal term for the ability to assign, sub-let, share or otherwise deal with a tenant’s interest in a lease of property
What is the difference between vacant possession and free of occupation?
Vacant possession is when a property is left free of people, chattels and legal interests, free of occupation may just mean the tenant no longer occupies the premises
What is the structure of the Code for Leasing Business Premises 2020?
- Introduction
- Mandatory Requirements
- Lease negotiations must be approached in a constructive + collaborative manner
- Unrepresented parties must be made aware of the code and recommended to seek professional advice
- Agreed terms must be recorded in written heads of terms stating that they are subject to contract - Lease negotiation best practice
- Advice on lease terms including rent deposits, rent reviews, service charges, repairs and alienation clauses - Appendices
- Model heads of terms template
- A guide for Landlords and Tenants on matters such as HOT’s negotiation, the premises, service charges, rent deposits and insurance, including a checklist for the payment of occupancy costs.
What is included in the misrepresentation Act 1967?
Ensure a disclaimer is included on marketing particulars, stating the particulars have been produced in good faith and believed to be correct.
What do sections 18 & 21 of the Estate Agents Act 1979 set out?
Section 18: Requires clear terms of agency to be agreed with itemised costs or fees agreed in advance, in writing
Section 21: requires declaration of any personal interest in the marketing particulars and terms of engagement, or otherwise to decline to act if it is not possible to do so ethically.
What is included in the Consumer Protection from Unfair Trading Regulations 2008?
This is a document one can refer to in Agency work.
What does the Code for Leasing Business premises 2020 include?
Introduction
Mandatory Requirements
Lease Negotiation best practice
Appendix
What is the case law on serving a break notice?
Riverside Park Vs NHS:
Tenant left some of their fit out and the court regarded that the fit out included removable chattels and therefore deemed in free from occupation as opposed to vacant possession
What were the repairing obligations in the Lease?
FRI. The tenant is required to yield up in line with their repairing obligations. My client had a dilaps liability. Could agree a financial settlement with the Landlord as opposed to refurbishing the space themselves.
