Leasing/Letting L3

Question 1

What is the Bribery Act 2010?

Answer 1

Makes criminal offence Offering a bribe, receiving a bribe, bribery of a foreign public official, failure of a commercial organisation to prevent bribery on its behalf.

Question 2

What are Sole letting rights?

Answer 2

Fee due if unconditional contracts exchanged during period of sole selling rights, even if purchaser found by another agent or client. After expiry of sole selling rights, fee due if contracts exchanged with purchaser introduced during period or with whom agent had negotiations.

Question 3

What are Sole agency rights?

Answer 3

Fee due if unconditional contracts exchanged with purchaser introduced by agent or another agent or with whom agent had negotiations during period of sole agency. No fee due if purchaser found by client.

Question 4

What was the main change brought in by the Consumer Protection from Unfair Trading Regulations (CPRs) & Business Protection from Misleading Marketing Regulations 2008 (BPRs)?

Answer 4

Wider scope so cannot rely on caveat emptor principle.

Question 5

What is a misrepresentation?

Answer 5

Misrepresentation of fact during negotiations which is relied upon and induces other party to enter contract.

Question 6

What is the current RICS leasing and letting Guidance called?

Answer 6

RICS Real Estate Agency & Brokerage Professional Statement (3rd Edition, 2016).

Question 7

Can a tenant assign to a guarantor?

Answer 7

No - this would be void under the recent EMI ruling.

Question 8

What are the planning regulations in relation to marketing boards?

Answer 8

Flat boards can be no larger than 2 sq m, V boards can be no larger than 2.3 sq m, must not project more than 1m from the wall, must not project >4.6m above the ground, need planning consent for illuminated, remote or boards erected on listed buildings or in conservation areas.

Question 9

What does the phrase ‘Without Prejudice and Subject to Contract’ mean?

Answer 9

Neither party intends to be bound either in law or in equity unless and until a formal contract is made; and that each party reserves the right to withdraw until such time as a binding contract is made.

Question 10

Where could you find a sample Heads of Terms for a letting?

Answer 10

Code for leasing business premises 2020.

Question 11

What are the four forms of agency?

Answer 11

Sole selling/letting rights, sole agency, joint Agency, multiple agency.

Question 12

What are the six principles of the Estates Agents Act 1979?

Answer 12

Honesty and accuracy, clarity on TOE, open and transparent, no discrimination, pass on all offers in writing, Keep clients’ money separate.

Question 13

What is section 18 of the EA Act 1979?

Answer 13

Clarity on terms, requires agents to give clients information before entering a contract for estate agency work, including fees, conflicts etc.

Question 14

What is section 21 of the Estate Agents Act 1979?

Answer 14

Disclose any personal conflicts.

Question 15

What are the requirements surrounding letting a property and EPCs?

Answer 15

All commercial buildings over 50 sqm, must be instructed prior to marketing, must show rating, valid for 10 years, MEES - no less than E (new lets) April 2023 for existing.

Question 16

What factors may impact the letting value of a property?

Answer 16

Location, quality of building, condition, rent review clause, alienation, break clause, repair obligations, security of tenure (contracted out?).

Question 17

Give some of the key pieces of legislations surrounding leasing and letting?

Answer 17

Estate Agents Act 1979, Consumer Protection from Unfair Trading Regulations, 2008, Consumer Rights Act 2015, Misrepresentation Act 1967, Bribery Act 2010, Money Laundering, Terrorist Financing and Transfer of Funds 2017.

Question 18

What are the penalties for not adhering to the Estate Agents Act 1979?

Answer 18

Negative licensing, Act policed by the National trading standards, prohibition stops an agent practicing, costs can also be awarded.

Question 19

What is Caveat Emptor?

Answer 19

‘Let the buyer beware’ The overriding common law principle means that the buyer should satisfy itself on all matters relating to the property.

Question 20

Provide some items you would be required to include in Heads of Terms?

Answer 20

Heads of terms ‘subject to contract’, identity of premises, any special rights, length of term and whether LTA applies, Options for renewal or break, guarantor/rent deposit, amount of rent, whether LL wants to charge VAT, RF period, RR, repairing obligations, permitted use, initial alterations, or fit out.

Question 21

What is a pre-let?

Answer 21

A pre-let is a contract between a potential tenant and a commercial property developer which allows the tenant to agree to lease a building before the construction has started.

Question 22

What are the advantages of a pre-let?

Answer 22

If tenant needs specific facilities. The main advantage to the tenant is the delivery of a bespoke building designed to suit their needs.

Question 23

What are the disadvantages of a pre-let?

Answer 23

Lengthy and complex process and a level of risk in the event of developer/contractor not performing.

Question 24

What is the key RICS Professional Statement on leasing/letting practices?

Answer 24

RICS Code for leasing business premises, 2020.

Question 25

What is the aim of RICS Code for leasing business premises, 2020?

Answer 25

Improve the quality and fairness of negotiations on lease terms. Promote the issue of comprehensive heads of terms to make the legal drafting process more efficient.

Question 26

What does the RICS Code for leasing business premises, 2020 say with regards to the negotiations of heads of terms?

Answer 26

Must be approached in a constructive and collaborative manner. An unrepresented party must be advised about this code and must be recommended to obtain professional advice. The agreed terms of a lease must be recorded in written heads of terms and must summarise the position on a number of aspects. Negotiations should produce letting terms that achieve a fair balance between the parties’ commercial interests.

Question 27

What is a lease?

Answer 27

A contract by which one party conveys land, property, services, etc. to another for a specified time, usually in return for a periodic payment.

Question 28

Do tenants have to pay VAT on rental payments?

Answer 28

Depends on if the property is ‘opted for VAT’ by the landlord.

Question 29

What is an AGA?

Answer 29

Authorised guarantee agreement. Requires the tenant who assigns a lease to guarantee the performance of the lease obligations by the party to whom the lease is assigned.

Question 30

What provisions can there be in the lease to mean that a tenant does not require an AGA to assign a property?

Answer 30

If the new tenant is financially strong enough.

Question 31

What are the twelve core principals of the RICS UK Commercial Estate Agency Professional Statement, 2016?

Answer 31

Honesty, fairness, transparency, professionalism, due skill, care and diligence, ensure Terms of business are fair and clear with details of complaints handling procedure, avoid conflicts – deal with them openly and fairly, don’t discriminate unfairly, keep communications fair, decent, clear, timely and transparent, keep client money separate with adequate insurance, honest and truthful advertising/marketing, Hold appropriate PII, Identify client and make clear obligation to all parties, give realistic assessments using market evidence and best professional judgment, carry out inspections etc. As per the clients wishes with due regard to security and safety.

Question 32

What is a tenancy at will?

Answer 32

A tenancy for an unspecified length formed by a written agreement. Landlord can evict the tenant at any time.

Question 33

When should you not undertake an instruction?

Answer 33

If you are not competent, If you suspect Money laundering, If there is a conflict.

Question 34

You mention that the lease is inside the act. What does this mean?

Answer 34

Under the Landlord and Tenant Act 1954, the tenant has the right to renew the lease.

Question 35

When negotiating with a party not represented by a surveyor, what would you advise them of?

Answer 35

Code for leasing Business Premises and suggest they get legal representation.