Paper 1 Lesson 5: Landlord and Tenant law Flashcards
What are the features of a Valid Lease under Common Law?
- Right to exclusive possession
- Intention of parties to create a lease.
- There is a certain or definite period of term.
- Landlord’s interest is reversionary.
What is a lease in equity/equitable lease?
it is a lease that is created verbally or by action of parties (promissory estoppel).
There is no contract signed but is still valid and enforceable in court.
Term of lease must not exceed 3 years.
Tenant has equitable interest.
What is a Legal lease?
It is written - A tenancy agreement (TA).
THe tenancy agreement will show the tenant’s interest during the lease term.
If lease term is less than 3 years - must be in writing.
If lease is more than 7 years including option to renew - the TA can be registered under Land Titles Act.
If lease is less than or equals to 7 years, need not register but can lodge caveat (optional).
What are the 3 types of lease?
- Fixed term lease/tenancy.
- Tenancy at Will.
- Periodic Lease/Tenancy.
What is a Fixed Term lease/tenancy?
- Has a definite duration.
- Comes to an end automatically when term runs out.
- If tenant remains on ppty after term ends without landlord’s consent, he becomes a tenant at sufferance (trespasser).
What is Tenancy at Will?
The landlord allows tenant to occupy the premises till either party terminates the lease at any time, by giving reasonable notice to quit or by death of either party.
*May last for years without payment of rent. Can be terminated for any reason, or no reason at all.
What are some scenarios that Tenancy at Will exist?
- May exist for a temp period of time where a tenant wishes to take possession of the property and the landlord agrees but there’s insufficient time to nego and complete a new lease. As such, tenancy at will is terminated once the new lease is negotiated and signed.
- May exis if seller gives buyer an early handover before completion of sale. Tenancy at will ends once the buyer becomes the legal owner of the ppty. (similarly if the buyer allows seller to have extension of stay after completion of sale).
What is periodic lease/tenancy?
This is known as the tenancy from year to year, month to month or week to week, determined by the term of the payment of rent with the same tenant.
There is no fixed term, and can be created without writing.
Either party can terminate a periodic tenancy when the period or term is nearing completion, by giving notice to quit to the other party.
Cannot terminate a periodic tenancy before the period has ended without incurring an obligation to pay for the months remaining on lease.
What is the difference between Express covenants and Implied Covenants?
Express covenants are agreed between parties, while Implied covenants are implied under Common & Statue Law.
Express covenants override Implied Covenants
What are some of the Landlord’s Implied Covenants?
- Quiet enjoyment
- Not to derogate the grant (not to prevent tenant from using the place e.g. rented a warehouse but cargo list is not working for a long period of time: landlord is liable).
- Premise must be fit for human habitation.
- Pay all taxes (landlord to pay).
- Landlord is responsible for all repair works.
What are some of Landlord’s Implied Power/rights?
- Giving 2 days advance written notice to enter premise for repair work. Notice not required for urgent repair.
- Landlord can enter the leased premise twice a year to inspect repair and require lessee to repair any defect.
- Landlord/his agent may enter at reasonable time to comply with public notice/statutory requirements (e.g. check on tenant’s WP/check for illegal immigrants).
- If rental is not paid for 30 days/breach of any covenants for 30 days, landlord can re-enter and terminate the lease.
What are some of Tenant’s Implied Covenants?
- Payment of rent.
- Not to assign or sublet without landlord’s permission.
- To pay all utility bills/telcom bills for own usage.
- Allow landlord and service man to enter for inspection & repair.
- Not to make alternations.
- Use premise for permitted purpose only.
- Take reasonable care of premise, except for fair wear and tear. not to commit waste.
What are the 4 types of Doctrine/Tort of waste?
- Permissive waste: didn’t bother to clean & maintain premises.
- Voluntary waste: making structural changes intentionally without consent (break down walls etc.).
- Equitable waste: Destructive conduct (cutting down trees without landlord’s consent).
- Ameliorating waste: tenant did an improvement to ppty without Landlord’s consent. Landlord can ask tenant to revert to original condition even if the improvement enhance the ppty value.
What are some common Express covenants in a Tenancy Agreement?
Standard terms of lease:
- Premises
- Date, Names of parties, property address, rights of parties. - Habendum
- Starting date, duration of lease. - Reddendum
- Rent, Date payable, deposit, service charge, Rent review.
Some common terms/clauses in a Tenancy Agree
- Escalation clause: Parties to agree to review the rent either during the lease term or at the expiry of the lease term.
- Rental clause: If lease is silent as to when rent has to be paid, rent can be paid in arrears by not exceeding 30 days. If rent is agreed to be paid in advance, it must be expressly provided in the lease.
- Covenant to allow access clause:
If landlord wants to have access to premises to conduct viewings for new tenant/to sell the ppty with tenancy, landlord must have a covenant to ALLOW ACCESS. Otherwise, tenant is entitled to quiet enjoyment. - Deposit clause: Deposit money to be held by landlord as security till end of lease, subject to any deductions/damages caused by breach. *Not to be used to offset rent and is refundable after lease.
- Charges clause: to indicate who is supposed to pay for what.
- Repair clause: list the standard of repair a tenant is expected to fulfil, according to age, locality, character of the property at the time the lease is granted.
- Non-disturbance clause: Provision where tenant will continue to occupy the ppty even when ppty is sold/taken over by creditors.
If mortgaged, banks need not recognise the lease unless it is authorised by the bank or by law or bank consent to the lease. Otherwise tenant can be evicted.
- Forfeiture clause: Implied covenant allows landlord to repossess the property upon default rent/illegaluse.
- Interest on arrears clause: If landlord wishes to charge interest on late payment, it must be expressly agreed.
- Option to renew clause: landlord agrees to let tenant have the first option to extend lease after fixed term before offering the ppty to another person. *Not compulsory
Under ‘Retail Premises Act’, what are the leasing principles?
1. Exclusivity
not to include clauses that prevents or restricts a tenant from opening a branch or franchise within a certain radius from leased premise. (can be included if mutually agreed on both sides).
2. Costs to prepare the lease agreement and third party costs
- Cost must be transparent, legitimate, justifiable and no profiteering.
3. Advertising and Promotion charges and Service charge
- Landlord is entitled to adjust service charge and/or A/P charge during the lease term, provided that the overall gross rent payable by tenant during lease term after such adjustment in the service charge and/or A/P charge does not increase.
4. Pre-termination by landlord due to landlord’s redevelopment works
- WIth this clause, landlord to give no less than 6 months prior written notice to tenants.
5. Material Adverse Charge
- Not mandatory, but landlord n tenant should re-nego lease agreement in cases where tenant is prevented, obstructed or hindered from performing its typical business activity at the leased premises due to events beyond tenant’s control.
6. Pre-termination by tenant
- Tenants must be allowed to pre-terminate lease if a) business is insolvent b) tenant loses distributionship or franchise rights by giving 6 months written notice to landlord.
7. Security deposit
- Lease agreement of up to 3 years or for premises up to 5000sqft must not provide for a security deposit that exceeds an amount equal to 3 months gross rent.
8. Floor Area Alternative
- Landlord to provide registered surveyor’s certificate confirming the surveyed area of the retail premises. (not applicable for 300sqft or less).
If surveyed area is larger than floor area n the diff is more than 5%, the rent increment Is capped at 5%. If diff is less than 5%, rent increment to be based on surveyed floor area.
9. Bulding maintenance
- Landlord to maintain building.
10. Rental formula
- Consistent throughout rental period.
- Parties can mutually agree on formula, signed agreement to be submitted to FTIC within 14 days.
Lease is a _________ right in land.
Proprietary
What are the remedies for breach of covenants in TA?
- Damages for unpaid rent.
- can be settled with mediation, arbitration, or tribunal (e.g at Small tribunal court for resi lease term not exceeding 2 years). - Specific performance:
- Landlord can apply to court for a writ of distress/seizure under Distress Act for unpaid rent of up to 1 year (implied). Tenants goods are seized & auctioned off by sheriff if they failed to pay the rent according to court order.
*Things that does not belong to Tenant cannot be seized - Injunction
- Landlord can forfeit the lease. Forfeiture or eviction means to repossesss the premises and extinguish the tenant’s interest. (by Writ of possession).
What are the Landlord’s agent duty for lease?
- Check ownership
- Check validity of tenant’s passes
- Prepare TA.
- Ensure all owners sign the TA.
- Prep inventory list
- Prepare Property condition report.
What are the Tenant’s agent duty for lease?
- Prep Letter of Intent (LOI) for lease.
- Check validity of tenant’s passes
- Stamp the TA (tenant pays).
- Help tenant to apply power supply.
What is a Letter of intent (LOI)?
It is an offer from tenant to landlord stating the basic terms of the lease. If “subject to contract” is stated, it is not valid until the final agreement, which is the TA is signed.
*If LOI does not state “Subject to contract”, then it can be a contract if completed with the other 3 essential elements of contract (offer/acceptance/consideration).
What is the minimum lease term for renting out a Private residential property?
3 months.
What is the min area size per occupant and max number of occupants in a unit (regardless of how big it is)?
10sqm, 6 pax.
What are the 3 due diligence checks that housing agents have to perform on tenants?
- Check original passes
- Check original passport
- Verify the validity of pass
