Legal and Regulatory Compliance Flashcards
What are the different types of party structure?
- A wall that stands astride the boundary of land belonging to two or more different owners
- ‘Party fence walls’ (e.g. a garden wall), but not things like wooden fences
- A wall that stands wholly on one owner’s land but used to separate two or more owners’ buildings
- Any wall, floor partition or other structure separating parts of buildings approached by separate entrances or staircases (e.g. flats)
When is a tenancy classed as a business tenancy?
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Why should a terminal schedule not be served under S146 of the Law of Property Act 1925?
Terminal Schedules should not be served under S146, as the tenant cannot forfeit a lease that is about to terminate naturally
Can you list the building regulations?
- A - Structure A=acro prop
- B -Fire Safety B = BURNS
- C Site preparation and resistance to contaminates and moisture C=contaminate
- D Toxic substances D is for DEATH
- E Resistance to sound E=EAR
- F Ventilation F=FART
- G Sanitation, hot water safety and water efficiency: G=GROSS
- H Drainage and waste disposal H=looks like a drain pipe.
- J Combustion appliances and fuel storage systems: J= JOTUL woodburner
- K Protection from falling, collision and impact: K looks like a person falling
- L Conservation of fuel and power: L=lighting
- L1B: Conservation of fuel and power in existing dwellings
- M Access to and use of buildings
- P Electrical safety P=POW
- Q Security in dwellings Q=M15
- R High speed electronic communications networks
- 7 - Material and workmanship: Approved Document 7
What types of dilapidations schedules are available?
- Interim Schedule
- Terminal Schedule
- Final Schedule
How can a tenancy be brought to an end?
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What might you expect to find in a landlord’s claim served after the end of a 25 year lease?
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What is a section 146 notice?
What is the notice?
It is a notice served under section 146 of the Law of Property Act 1925 by a landlord to their tenant to terminate a lease early due to a breach by the tenant of the terms of the lease.
It is only possible to issue such a notice if there is a right to forfeit the lease (a right of re-entry) written into the lease. The notice confirms that forfeiture proceedings (to terminate the lease) will be brought because a covenant (a contractual promise) in the lease has been breached unless the breach is not remedied (assuming the breach is capable of being remedied).
The types of covenant that are commonly breached include:
A covenant to maintain and repair the property; or
A covenant not to keep pets at the property.
What items would you expect to see within a ‘quantified demand’?
- Cost of repair works
- Loss of value of the property
- Loss of rent and service charge
- Insurance
- Security
- Utilities
- Cleaning
- Fees (e.g. professional/legal)
- Can you explain what you did at Wigmore Lane for the dilaps assessment?
- My instruction was on behalf of the tenant
- they were looking to assign their lease over to a new tenant including their dilapidations liability.
- The new tenant had provided a terminal schedule of dilapidations
- They wanted me challenge the costs the other party had established.
- The assignee also stated they were looking for a service charge cap in respect of the landlord’s plant which they deemed to be in poor condition, this was threatening negotiations.
- I carried out a full dilaps assessment - bascially I looked at it as if doing a terminal schedule of dilapidations to ascertain the tenants liabilities, I also reviewed the lease beforehand.
- I comissioned an M and E consultant to review the plant on the floor and also to review trhe landlords plant with their permission and comment.
- If they probe deeper you can mention the landlord plant was chillers and assignee tenant surveyor had done a visual inspection only. On review of maitnenace records by my M and E consultant we were able to reduce their concerns.
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What are dilapidations and what is a schedule of dilapidations?
Dilapidations
- refers to breaches of the lease covenants by either landlord or tenant, though mainly the latter, and the process of remedying the breaches.
Schedule of Dilapidations
- This is the formal listing of the alleged breaches of the contract.
- Dilapidations are not intended to profit the landlord. Any claim is merely intended to return the landlord to the same position as if the Tenant had performed their lease obligations.
What remedies are available to a landlord for dilapidations?
DURING THE COURSE OF THE LEASE:
- Specific performance (courts frown upon near end of lease say last 18 months)
- Court order complelling party to perform duties
- Apply to the Courts to end the lease under S146 of the Law of Property Act 1925 (can also use fofeiture but courts tend to favour tenant)
- erved by a landlord who wishes to commence forfeiture proceedings against a leaseholder following a breach of a lease.
- specify the breach complained of,
importantly if the breach is capable of remedy, require the leaseholder to remedy the breach, and
in any case require the leaseholder to make compensation in money for the breach.
The leaseholder is afforded a reasonable time to remedy the breach if it is capable of remedy following service of the section 146 notice.
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Jervis v Harris Clause
- Serve an interim schedule formally under the landlord’s right of repair clause .
- If the tenant defaults on the notice enter the premises and undertake works.
- Costs may not be recoverable unless specified in the lease.
AFTER THE LEASE
- ONLY Damages recoverable- tenant cannot be asked to do the works.
What is the difference between a terminal and a final schedule of dilaps?
- terminal
- produced in last 18 months of tenancy or at the end.
What is the controlling legislation applicable to party walls?
Party Wall etc Act 1996
What is the dilapidations pre-action protocol and what is it’s objective?
The Dilapidations Pre-action Protocol
- produced by the Property Litigation Association in consultation with RICS.
- It relates to dilapidations claims for damages against tenants at the termination of a tenancy
- First published in 2002
- Requires the landlord’s surveyor to sign an endorsement confirming, amongst other things, they had followed the protocol.
- Adopted under the Civil Proceedure Rules in 2012
- The protocol applies to commercial property situated in England and Wales.
OBJECTIVE
- aim of preventing landlords exaggerating claims and to lead the way for early settlements without involvement of the courts.
- encourage the exchange of early and full information about the dispute;
What different party wall notices are there?
- Section 1 - Line of Junction Notice
- Section 3 (for Section 2 works) - Party Structure Notice
- Section 6 - Notice of Adjacent Excavation
What clauses would you typically consider when undertaking a schedule of dilapidations?
When should a schedule of dilapidations be served and how long after the expiry of the lease?
- A schedule of dilapidations can be served at any time during a lease
- Up to twelve years after expiry if the lease is under seal
- Six years after expiry if the lease is under hand.
- Some leases do impose other caps on timing of service.
- There are differences in the type of schedule served depending on the timing in relation to the lease duration.
Explain how the Landlord and Tenant Act 1954 protects business tenancies.
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What documents would you examine prior to preparing a Schedule of Dilapidations?
- Lease
- Schedule of condition (including photos)
- Inventories
- Scaled plans
- Licenses or other consents for alterations
- Fit-out specifications
- Side letters or other written agreements
How would you limit a dilapidations claim being made?
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When should a terminal schedule of dilapidations be served?
- In the last 3 years/18 months of the lease.
What is a FRI lease?
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Explain your understanding of Capitol Park Leeds v Global Radio Services (2020).
The lease gave the tenant the right to determine it if, amongst other things, it “gave vacant possession of the Premises to the Landlord on the relevant Tenant’s Break Date”. “The Premises” was a defined term, including the original building on the property and landlord’s fixtures, whenever fixed.
The tenant started dilapidations work and in that context stripped out significant elements of the base build and landlord’s fixtures including radiators, lighting and ceiling tiles and grids. It stopped work in the hope of negotiating a settlement and surrender with the landlord, but was unable to do so. It did not replace the elements of the building which it had removed, leaving it, in the Judge’s words, “an empty shell of a building which was dysfunctional and unoccupiable”.
The Judge, Deputy High Court Judge Benjamin Nolan QC, however, held that the tenant had not complied with the break condition. What it had delivered up on the break date was not “the Premises”, as that term was defined in the Lease. He also held that the tenant had not established, on the facts, that the landlord was estopped from relying on the failure to comply with the break condition.
Permission to appeal to the Court of Appeal has been granted.
When does the Party Wall etc Act come into play?
The Act covers:
- Proposals to erect a new wall at a boundary that is not already built on (Section 1)
- Various work proposed directly to an existing party wall or structure (Section 2)
- Excavation within 3 or 6 metres of a neighbouring building or structure, depending on the depth of the hole or proposed foundations (Section 6)
Can you tell me any case law regarding dilapidations?
- Proudfoot v Hart 1890
- Principle of “age character and locality’,
- Which essentially restricts the standard of repair to that appropriate for a property of that nature
- Jervis v Harris 1996
- essentially a landlord’s right to enter the property and repair on the tenant’s default, reclaiming the costs (not as per the Leashold (property) Repairs act 1938.
- Shortlands V Cargil 1995
Section 18 LTA 1927
Shortland was landlord
it was suggested that there could be no loss because the building was alleged to have a negative reversionary value.
However, the court held that there could be even greater negative value as a result of the disrepair.
Valuation A in repair (hypothetical)
and valuation B at present condition.
Proudfoot v hart 1890
Principle of ‘Good tenantable repair’
to keep a house in good tenantable repair the tenants’ obligation is to put and keep the premises in such repair as having regard to the age, character and locality of the house, would make it reasonably fit for the occupation of a tenant of the class who would be likely to take it.
E.g. compared a property in grovener square to that of one in spittalfields which in 1890 would have been a startk contrast.
The age of the house must be taken into account, because nobody could reasonably expect that a house 200 years’ old should be in the same condition of repair as a house lately buil
Tiger V Sunlife 2013
LTA 1927
Tenant Tiger had a 35 year lease with landlord sunlife
Tiger argued even if they’d left the premises in good repair, sunlife would still have had to carry out the major refub it did.
Tried to argue under section 18
Judge said diminution in value of the building would have been greater than the cost of the works
landlord won - 1.4 million
Jervis V Harris 1996
Leasehold Property (Repairs) Act 1938
Case confirmed a landlord is entitled to serve a schedule of wants of repair on the tenant and enter the property and carry out the works in default of the tenant doing so
the debt that is then claimed in respect of the cost of the works undertaken by the landlord does not have to be pursued in a manner that complies with the Leasehold Property (Repairs) Act 1938.
Scottish versus BT 1994
Loss of rent (landlord and tenant 1927)
Where a landlord claims loss of rent as a head of damages at the end of the term of the lease, it is ‘an essential prerequisite that it should be demonstrated on the balance of probabilities that the carrying out of those repairs after the end of the term has prevented or will prevent the letting of the premises for that period.’
because the relevant market at the time was so depressed that it was impossible to show that the landlord would have been able to relet the premises to better advantage even if the premises had been delivered up in repair
The decision also suggested that, if a landlord were to give notice to the tenant that it was required to reinstate alterations the tenant might be able to have a reasonable period to stay at the property to enable it to complete the necessary works.
Loss of rent (landlord and tenant 1927)
Where a landlord claims loss of rent as a head of damages at the end of the term of the lease, it is ‘an essential prerequisite that it should be demonstrated on the balance of probabilities that the carrying out of those repairs after the end of the term has prevented or will prevent the letting of the premises for that period.’
because the relevant market at the time was so depressed that it was impossible to show that the landlord would have been able to relet the premises to better advantage even if the premises had been delivered up in repair
The decision also suggested that, if a landlord were to give notice to the tenant that it was required to reinstate alterations the tenant might be able to have a reasonable period to stay at the property to enable it to complete the necessary works.
What does line of junction mean?
Line of junction
The term line of junction is often used in the party wall world to mean a boundary line
What information would you include in a Schedule of Dilapidations?
- Item number
- Clause number breached
- Details of breach
- Remedial works required
- Cost of remedial works
What is a ‘quantified demand’?
A document that enables the tenant to understand the full extent of the landlord’s claim for damages at the end of the tenancy
Explain supersession.
The essence of supersession is that the landlord should only claim for the amount lost as a consequence of the tenant’s breaches and that there is no such loss
where items have been ‘superseded’.
What is Section 18 referring to in terms of dilaps?
Section 18 of the Landlord and tenant act 1927
- places a cap on damages that can be obtained at the end of a lease to stop landlords from profiting from the claim.
- It only relates to matters of repair not reinstatement
There are two limbs:
LIMB 1 DIMINUTION OF VALUE
- The repair costs claimed must not exceed the amount the value of the reversion (the property in repair) is diminished by the tenants act.
- AKA the value lost in the property due to the tenant’s breach.
- A Diminution valuation is carried out by a specliast valuer and seeks to ascertain this value lost due to the tenant’s breach.
LIMB 2 SUPERCESSION
No repair costs shall be recovered if following the termination of the tenancy the building will be demoolished or structural alterations which would render the repairs valueless.
What are the requirements for a ‘quantified demand’ in relation to the PLA Protocol?
The PLA Protocol states the quantified demand must:
- Fully substantiate the claim
- Should be sent to the tenant within 56 days of terminating the lease
- Specify a date for the tenant’s response (usually 56 days after receiving the quantified demand)
- Not include items of work that are likely to be superseded by the landlord’s intentions for the property
- Be prepared in accordance with the principles set out in the RICS ‘Dilapidations’ Guidance Note
What is a right to light?
A right to light is a right to receive sufficient light through a ‘defined aperture’, allowing ordinary and comfortable use and enjoyment of a dwelling, or ordinary beneficial use and occupation of other buildings
How can you check if a footpath is an easement?
- Check the landlowners deeds or the occupiers lease
- Legally, sellers must disclose easements on their property during the sale
What is a party wall?
This is a wall that stands astride a boundary of land belonging to two or more different owners. Interestingly enough, the Act doesn’t just relate to party walls (that is why we have the etc. bit) and also it redefines different types of party walls.
What are dilapidations?
Dilapidations are breaches of leases due to the condition of the property being leased, either during or at the end of the lease period
What guidance is available in terms of dilapidations?
RICS ‘Dilapidations’ (2016) guidance note 7th Edition
What is a ‘Part 36 Offer’?
- A Part 36 offer is an offer made by either the claimant or the defendant as a tactical step designed to convince the other party to settle the claim early without the matter having to go to Court
- . A Claimant who makes a sensible part 36 offer is putting their opponent under pressure to come to the negotiating table
- The name comes from the Civil Procedure Rules (CPR)
- Made at any time until judgement
- ‘Part 36′ deals with offers made on a ‘without prejudice’ basis, which means any Part 36 offers will not be seen by the Court (if the case gets that far) until after the judgment has been made and an appropriate level of compensation awarded by the Judge.
What legislation governs rights to light?
- Prescription Act 1832
- Rights to Light Act 1959
What can you do if you need to access neighbouring land and the adjacent owner refuses access and the works are not covered by the Act and no easement exits,
- Under common law there is no right of access to neighbouring land, an owner can absolutely refuse access to their property,
- The Access to Neighbouring Land Act 1992 provides a court procedure for gaining access in certain circumstances. This takes form of an Access Order. Obtaining an Access Order through the courts can be time-consuming.
What effect do the Civil Procedure Rules have on dilapidations procedures?
- Introduced in 1999, the CPR are a series of rules that aim to encourage parties to avoid litigation by arriving at a settlement, thus reducing the number of cases going to court and saving expense and time
- Encourages the parties to exchange full information before proceedings are issued so everyone has a full indication of the case made against them
- Gives powers to judges to impose sanctions on a party whom they deem to have behaved unreasonably before or during the litigation, even if that party wins the claim (e.g. may make the winner pay some or all of the loser’s costs)
What is an Interim Schedule of Dilapidations?
Interim schedules of Dilapidations are:
- served during the lease term, and can be served at any time from lease commencement.
- Whilst there is no legal bar to an interim schedule being served in the last 18 months of the lease it is more usual for a schedule at this time to be a terminal one.
- An interim schedule is not usually costed as the intention is for the party upon which it is served to rectify the breaches of covenant.
What is a Final Schedule of dilapidations
Final Schedule of Dilapidations:
- can only be served after the lease has ended.
- Under the Limitations Act 1980 an action for damages can be brought up to twelve years after the lease end if the contract was under seal (six if ‘under hand’ i.e. simply signed) though it is rare for this to be the case, as proximity of time can impact significantly on a dilapidations claim.
- Final schedules are usually in support of a claim for damages and should be priced.
What are the possible defences for a tenant served with an interim schedule?
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Section 146
- Claim relief of the Leasehold Property Repairs Act 1938 within 28 days of schedule service, undertaking surviving works.
- Only if their lease is 7 years + with more than 3 years left to run they may be protected under the The Leasehold (repairs) Act 1938.
- Or undertake works.
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Jervis V Harris Clause
- Undertake works within given timescale
- Or seek Court relief against landlord entering the premises.
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If in final 18 months of the tenancy
- Negotiate with landlord, undertaking agreed works.
- Apply to Court for relief from the schedule.
- Undertake all the work
What is a party fence wall
Party fence wall
The first term we will look at is the party fence wall. This is a wall that doesn’t form part of a building and stands astride the boundary line between lands of different owners. In summary, it is used to separate these lands. Typically, it is a garden wall and that is what most people would call it, but it doesn’t include a wooden fence!
Can you tell me what legislation affects dilapidations and briefly how?
- The Law of Property Act 1925
- section 146 - interim dilaps
- The Landlord and Tenant Act 1927 and 1954
- Section 18 - Terminal dilaps (the 1927 act)
- The Leasehold Property Repairs Act 1938
- Protects tenants in 7 year+ tenancy with more than 3 years left to run.
- The Limitation Act 1980
- statue bars damage claims after 15 years.
- The Fraud Act 2006
- The Bribery Act 2010
Level 3.
When are you unable to serve an interim schedule of the dilapidations?
At the end of the tenancy or when it has expired, courts would also take a dim view in the final 18 months of the tenancy