Leasing and Letting Lvl3 Flashcards
What are the relevant guides pertaining to Leasing and Letting?
RICS Guide to Leasing Business Premises 2020
When did the RICS Guide to Leasing Business Premises become effective?
Sept 2020
What are the main aims of RICS Guide to Leasing Business Premises 2020?
- Improve quality and fairness of negotiations
- Promote the issuing of comprehensive Heads of Terms
What are the 4 sections to RICS Guide to Leasing Business Business Premises 2020
- Introduction
- Mandatory Requirements (Negotiations and Heads of Terms)
- Lease Negotiations Best Practice
- Appendix A: Template Heads of Terms
- Appendix B: Guide to Landlord and Tenants
What does RICS Guide to Leasing Business Business Premises 2020 state about negotiating heads of terms?
- Constructive and collaborative
- Unrepresented parties must be advised of this code and should be recommended to obtain professional advice
- Agreed terms must be recorded in Heads of Terms
- Negotiations should produce a fair and balanced outcome between both parties
What items should be addressed in the Heads of Terms?
- Identity and extent of premises
- Length of term and whether there are rights to renew
- Renewal option / break option
- Guarantor / Deposit
- Rent / Frequency
- VAT
- Rent free / Inducement
- Rent review (incl. Freq and basis of review)
- Additional liability charges
- Right to assign/sublet/ change of use
- Repairing obligation
- Initial permitted use
- Right to make alterations and any particular reinstatement obligations
- Any initial alterations or fit-out
- Any conditions to the letting
What is contained in Appendix A of RICS Guide to Leasing Business Business Premises 2020
Temple Heads of Terms and checklist
What is contained in Appendix B of RICS Guide to Leasing Business Business Premises 2020
Guide to landlord and tenants
What is a lease?
A lease is a legally binding contract which outlines the terms and conditions of the tenancy between parties and their defined right and obligations
What do Rental Guarantees typically cover?
Usually makes guarantor liable for the rent and tenant’s other obligations.
What is a rent review
A mechanism within a lease that allows for the rent to be reviewed during the lease term
What laws cover rent reviews?
L&T 1984 covers rent reviews and brought in the commonly used 5 yearly reviews
Land and conveyancing reform act 2009 banned upward only reviews
Arbitration Act 2010 repealed all Arbitration acts before
What is a Memorandum of review
A document that outlines the rent review process, whether the review is settled by agreement or 3rd party.
Simply is a legal document identifying the lease, the relevant review provisions, and records the amount and effective date of any reviewed rent
What are the main factors to consider with a rent review
Mechanism for activity
Rent review procedure
Method of calculating
Dispute resolution
What are the main parts of a rent review clause
Who can initiate the RR
Time period
If Time is of the Essence
Assumptions and disregards
Procedure for rent review conflict
Talk me through rent review process
Securing instruction
Obtain lease / licences / sidenotes / previous rent review memos
Summarise and report to client
Serve rent increase notice
Inspect and measure
Collate comps and analyse
Report ERV to client
Agree strategy
Negotiate
Agree or don’t agree
Standard Assumptions
Vacant and fit for immediate occupation
Open market rent
Willing lessor lesse
Lease performance
Hypothetical term
What are some Disregards
Tenant occupation
Goodwill
Improvement
Concession on rent
Tell us about the Residential Tenancies Act
- The Residential Tenancies Act 2004 (as amended)
- Cornerstone of Irish rental legislation.
- Outlines the rights and obligations of both landlords and tenants in the private rented sector, approved housing body sector, and student-specific accommodation.
Core Principles:
- Security of Tenure: The Act promotes a degree of stability for tenants by restricting eviction grounds and providing minimum notice periods.
- Fair Rents: Rent increases are regulated in designated Rent Pressure Zones (RPZs) to ensure affordability.
*Dispute Resolution: The Residential Tenancies Board (RTB) offers a mechanism for resolving disagreements between landlords and tenants.
Key Areas of the Act:
- Registration of Tenancies: All tenancies must be registered with the RTB. Landlords are responsible for registration since April 2022.
- Types of Tenancies: The Act covers various tenancy types, including Part 4 tenancies (most common), short-term lettings, and student tenancies. Each has specific rules.
Rents and Rent Increases: Rents can only be increased within specific intervals and following proper notice in RPZs. Increases outside RPZs are unregulated but subject to good faith. - Repairs and Maintenance: Landlords are responsible for maintaining the property in a habitable condition, while tenants must take reasonable care of the dwelling.
- Termination of Tenancy: The Act outlines valid reasons for ending a tenancy and requires specific notice periods for both landlords and tenants.
- Security Deposits: Regulations govern the amount, holding, and return of security deposits.
What is the notice period for terminating tenancies
The required notice period depends on the length of your tenancy:
- Less than 6 months: Minimum notice is 90 days (increased from 28 days in July 2022). No reason required by the landlord.
- More than 6 months: Landlords must provide a valid reason for termination and the following notice periods apply:
- 90 days (increased from 42 days)
- 120 days (increased from 70 days) for tenancies between 4 and 7 years
- 180 days (no change) for tenancies over 7 years
Valid Reasons for Termination (Landlord):
- Breach of tenancy agreement by the tenant (e.g., rent arrears, anti-social behavior)
- Sale of the property with vacant possession
*Requirement of the property for the landlord or their immediate family
How do you resolve anti-social behavior
- Gather Information:
- Document the behavior: Keep a record of the dates, times, and details of the anti-social behaviour. This could include noise complaints, threats, property damage, etc.
Identify the source: Is it your neighbour, a housemate, or someone else entirely?
- Try to resolve it directly (if safe):
- Calm communication: If you feel comfortable and safe, you can try talking to the person directly about the issue. Explain how their behaviour is affecting you and suggest solutions.
- Involve relevant authorities (if needed):
- Landlord: If the culprit is a tenant in your building, your landlord is the first point of contact. Report the behaviour and provide your documentation.
- Residential Tenancies Board (RTB): If your landlord isn’t responsive or the issue persists, you can consider filing a complaint with the RTB. https://www.rtb.ie/
- Gardai (Police): For serious threats, violence, or criminal activity, contact the Gardai immediately.
How can a landlord terminate a tenancy
- Determine the Grounds for Termination:
- Less than 6 months: No reason required. You can simply serve a notice of termination with the minimum 90 days’ notice period.
- More than 6 months: You must have a valid reason and provide the corresponding notice period:
- Breach of tenancy agreement: This includes issues like rent arrears, anti-social behaviour, or unauthorized occupants.
- Sale of the property: You require vacant possession to complete the sale within 9 months (restrictions apply for selling 10+ units).
- Own use of the property: You or an immediate family member needs the property for their own use. (Only applies to private landlords, not approved housing bodies)
- Issue a Notice of Termination:
- Use the prescribed Notice of Termination form provided by the Residential Tenancies Board (RTB). The notice must be in writing, signed by you (or your authorized agent), and dated.
- Clearly state the grounds for termination and the required notice period based on the tenancy length.
- New Requirement (Since July 2022): You must also send a copy of the Notice of Termination to the RTB on the same day it’s served to the tenant. The notice is invalid if this isn’t done.
- Notice Period:
- Less than 6 months: Minimum notice period is 90 days.
- More than 6 months: The notice period depends on the reason and tenancy length:
90 days (increased from 42 days) for most cases. - 120 days (increased from 70 days) for tenancies between 4 and 7 years.
- 180 days (no change) for tenancies over 7 years.
- Tenant’s Response:
The tenant has 28 days to dispute the validity of the notice with the RTB (except for breaches or rent arrears).
- Next Steps:
If the tenant doesn’t vacate by the termination date:
- You can apply to the RTB for an “Order for Possession.” This can take time, so be prepared for potential delays.
- In some cases (e.g., serious rent arrears), you may be able to seek legal possession through the courts.
Circumstances of termination on commercial lease
- Effluxion of time
- Periodic tenancy can be terminated at any time
- Non payment / breach of obligation
Termination of Periodic Tenancies (commercial)
- No Lease
- Commonly occurs when lease expires and L/L and tenant relationship continues through mutual consent
- Can be terminated at any time, no reason given
- Serve notice to quit
- Notice requirement usually matches gale date except for annual tenancies where its 6 months.
Termination of a Fixed Term Lease
- Notice to quit not required for effluxion of time and no right to renew
- Vacant possession should be given
- If tenant has rights to renew, they should issue a notice of intention to claim a new lease
- If no notice is received, landlord can either serve a Notice to Quit or establish a expressed tenancy or implied tenancy.
Termination of Breach
- Forfeiture is the process of termination of the lease and resumption of possession by the landlord
- Generally lease will state that it will terminate in the event of non- payment of rent. Ensure if it states a warning should be issued first
- For other breaches, Section 14 notice needs to be served outlining breach, remedy, compensation, timing
- Court order required if L/L cannot peacefully re-enter property
Relief against forfeiture
- If landlord is obtaining a unfair windfall from forfeiting (Goodwill, Improvement), tenant may be able to claim relief
- Where L/L is seeking a court order by reason of forfeiture, the courts may refuse
- Court may grant relief to tenant on grounds that breaches are rectified
- For breaches of non payment of rent the courts can grant Equable Relief
- Relief can be sought both before and after peaceful re-entry
What happens if a head lease is forfeited with a sub tenant
- Sub-lease may make an application for a court order that the subleases are not forfeited
- They will assume the role of the head tenants
- May be an increase in rent however they can seek relief
What about forfeiture of long (ground rent) leases
- Tenants are close to being absolute owners and the courts would not uphold the forfeiture
