PLP Flashcards

Question

Which of the following would be classed as a disbursement for a buyer in a property transaction? SDLT Legal Fees The purchase price Proceeds from any related sale A mortgage loan

Answer 1

SDLT Correct. SDLT would be classed as a disbursement, along with search fees and Land Registry fees. A buyer must have sufficient funds to pay for these in addition to the costs of the transaction.

Answer 2

B. No, because the solicitor owes a duty of confidentiality to the owner. However, if the owner consents, then the solicitor can comply.

Answer 3

D. You can exchange, but you should advise your client that you will not be able to certify title to the lender unless you have a clear local search. legally/technically you can but you want to be careful! local searches is one of the biggest searches that you do (an important search, always get one!) when acting for the lender, the lender wants reassurance that it is safe (if no reassurance, then no loan) by going ahead (D) the risk is for the investor as the lender may not lend if there is no search (unless it comes back in time)

Answer 4

C. The solicitor should not proceed until the man allows the solicitor to speak to his partner to confirm instructions. "until the man allows" - slightly odd wording, don't read too much into it A - no conflict of interest B - no D - next best thing but how do you know email is authentic E - client declined to give the partner's work telephone number

Answer 5

technically, land law question D. Yes, because the light fitting is likely to be a chattel due to the slight degree of attachment.

Answer 6

E. Because the neighbour was the original party to the deed. it is a positive covenant but that is not why they can sue they can only sue because the NEIGHBOUR entered into the positive covenant directly with our client positive covenants do no run with the land

Answer 7

After receiving a draft contract and before exchange of contracts. Correct. Any issues which might arise need to be dealt with in the contract. You don’t necessarily know who the buyer is once you have received instructions from your seller client - you need the Heads of Terms. After agreeing the contract is too late - and the contract will be agreed by exchange. After completion is far too late. The best answer here is before exchange of contracts. Often it is once you have received the Heads of Terms - you will send the official copies and the standard CPSE replies if your firm has some prepared. If not, the buyer’s solicitor will send their standard set of CPSEs and enquiries.

Answer 8

Your client can see if they can persuade the seller to honour the original price, but if the seller refuses, then your client will unfortunately lose the property. Correct. Until exchange of contracts, either party can walk away from the deal without incurring any liability. The seller can choose to sell to another party who is offering a higher price without any liability - this is know as 'gazumping' in practice. There is no obligation on the seller to prove another genuine offer has been received and the buyer would not be able to recover the costs of their searches and survey from the seller.

Answer 9

Your client may wish to a claim for damages from the seller based on misrepresentation Correct. Although the principle 'caveat emptor' means the buyer takes the property as it find its and there is no onus on the seller to disclose patent incumbrances or physical defects in the property, the seller cannot mislead the buyer by answering questions dishonestly, which it has done here. The standard conditions of sale do not require the buyer the prove they were induced to reply on the conduct or statement; it is sufficient to prove that there was an error or omissions, which there has been there. The client can therefore make a claim for damages.

Answer 10

You should advise your client that you will need to disclose this to your lender client, and if your client does not give their consent to you doing this, you will need to cease acting for both buyer and lender. This is correct. In residential transactions it is common for the buyer's solicitor to act for the lender because there is unlikely to be a conflict of interest between these parties. On the facts, you have a duty to disclose (CCS 6.4) all information material to the matter which you have knowledge, which includes the fact the balance of the purchase price is being met by a company who deal in personal loans, not the buyer ie in breach of one of the conditions of the mortgage. The duty of confidentiality (CCS 6.3) that you owe your buyer client will override the duty, which means you cannot disclose this information without the permission of the buyer. If the buyer does not give consent, you will have to cease to act for the lender. You would be advised to stop acting for the buyer as well.

Answer 11

Pay Stamp Duty Land Tax and register the buyer as owner of the property, and the lender as a chargee, at the Land Registry. Correct. These are the main tasks for the buyer's solicitor to carry out after completion.

Answer 12

Official copies of the register, title plan and copies of documents referred to in the official copies where the relevant rights have not been fully extracted. Correct, you have understood which documents comprise the title to registered land.

Answer 13

1) Property Register, 2) Proprietorship Register, 3) Charges Register. correct

Answer 14

gives the registered proprietor’s (owner’s) name and address, the class of title and entries affecting ownership Proprietorship register describes the property and any rights benefiting the property (eg, covenants or easements) Property register lists rights burdening the property (eg, mortgage, covenants, easements and leases) Charges register

Answer 15

The land has the benefit of a right of way contained in a conveyance dated 27 March 1970. Correct. The buyer’s solicitor would need to see a copy of this conveyance to establish the details of the right of way eg which piece of land the right of way is over and any restrictions on its use.

Answer 16

Maintenance, Adoption, Registration of the burden and Adequacy. Correct. You have understood the four issues to consider and discuss when the property has the benefit of a right of way.

Answer 17

The burden of the right of way should be registered in the charges register of the servient land. Correct. If the servient land is unregistered you would put a caution against first registration over the land so that you can ensure the burden of the right of way is registered in the charges register once the servient land is registered.

Answer 18

The Property Register describes the property using the postal address and also by referring to the Title Plan. correct

Answer 19

Title Absolute Yes, this is the best class of title.

Answer 20

Is granted when the registered proprietor has shown that they have physical possession of the property, but has no title deeds or is claiming through adverse possession (‘squatters’ rights’) Possessory title Is where there is a specific defect in the title. An example would be where a deed known to contain covenants or easements was missing on first registration. Qualified title Is granted when the leaseholder cannot provide evidence of the landlord’s title to the land. Good leasehold title The best and most common class of title. It indicates no issues – the proprietor has satisfied the Land Registry that it is the true and proper owner of the property. Title absolute

Answer 21

Where the seller is the executor of a deceased person’s estate This is correct. The seller is usually the registered proprietor. An exception would be where the seller is the executor of a deceased person’s estate.

Answer 22

A lease granted out of the property. Correct. A lease granted out of the property burdens the property and appears in the Charges Register. Interests burdening the property Mortgage in favour of a lender — Usually, an undertaking is given on completion to discharge this so that the buyer takes free of mortgage. Leases — These would normally be expected from the agent’s property description, but should always be reported, together with their terms. Easements — We looked at the benefit of easements in the property register – conversely, the land may be subject to rights of way, rights of light, rights of service media (pipes, cables, etc). These should always be reported to the client. Covenants (restrictive or positive) — Either restrictive or positive covenants may be listed in the charges register — the important point is that it is their burden, not the benefit. These should always be reported to the client, with advice on appropriate action.

Answer 23

If there is a mortgage / charge over the property, there will be two entries in the Charges Register and one entry in the Proprietorship Register regarding it. Correct. A mortgage / charge will have two entries in the Charges Register giving details of the mortgage / charge and also one entry in the Proprietorship Register – the lender’s Restriction.

Answer 24

Ensuring it transfers the buyer's purchase monies to the lender on completion so that the lender can redeem its mortgage loan before then transferring the balance to the seller This is correct. The buyer's solicitor will not transfer the purchase monies to the seller's lender, it will sell them to the seller's solicitor. The other options are all something the buyer's solicitor should ensure it does to make sure the buyer takes the land free of the seller's mortgage.

Answer 25

Contact the person owning the land with the benefit of the covenant to request their written consent for the proposed breach. Correct. As the person owning the land with the benefit of the covenant has already been approached insurance is no longer available as an option (otherwise getting an insurance quote would have been the first solution to attempt). We are requesting permission to breach a covenant here so easements are not relevant. The Upper Tribunal (Lands Chamber) is a last resort as it is time consuming and expensive. incorrect Contact an insurance company for a quote for insurance in respect of the proposed breach. Incorrect. The option of approaching an insurer is no longer available as the person with the benefit of the covenant has already been contacted.

Answer 26

The past breach is not continuing and so no solution is needed unless the person owning the land with the benefit of the covenant has claimed they suffered loss. Correct. As the buyer is removing the porch (the alteration which breached the restrictive covenant), the past breach will not be continuing and so a solution is not needed unless the person owning the land with the benefit of the covenant has complained about the breach or claimed for loss. incorrect The buyer’s solicitor should arrange an insurance policy covering the past breach of the covenant. Incorrect. Insurance is a solution for a past breach of a restrictive covenant although as it is the seller’s breach, the buyer’s solicitor would ask the seller to obtain and pay for the insurance policy. The seller’s solicitor should arrange an insurance policy covering the past breach of the covenant. Incorrect. Insurance is a solution for a past breach of a restrictive covenant however, since the buyer is removing the porch (the alteration which breached the restrictive covenant), the past breach will not be continuing and so a solution is not needed unless the person owning the land with the benefit of the covenant has complained about the breach or claimed for loss.

Answer 27

Insurance must be tried before approaching the person owning the land with the benefit of the covenant. Correct. Once the person owning the land with the benefit of the covenant (PWB) is approached insurance will be unavailable since the PWB has been alerted to the breach and is now much more likely to be aware they can make a claim for loss. incorrect Insurance for a future breach of a restrictive covenant is expensive because it is difficult for the insurer to assess the risk of the breach occurring. Incorrect. Insurance for a future breach is expensive because it is difficult for the insurer to assess the risk of the person who owns the land with the benefit of the covenant (PWB) coming forward to make a claim for loss. This is because the breach has not occurred yet so there is no time period for which the breach has occurred and the PWB has not come forward which the insurer can use to assess the risk of the PWB coming forward in the future.

Answer 28

The buyer will be contractually bound by the positive covenant if an indemnity covenant note appears in the proprietorship register as the seller will require an indemnity covenant from the buyer. Correct. Positive covenants do not run with the land but can be made contractually binding if there is a chain of indemnity covenants. An indemnity covenant note on the proprietorship register shows whether the seller gave an indemnity covenant and the standard conditions in the contract require the buyer to give an indemnity covenant if the seller did.

Answer 29

1) Insurance against the PWB claiming loss caused by the breach, 2) Approaching the PWB for consent to breach the covenant. Correct. As the breach is a future one to be carried out by the buyer, the seller will not remedy it. The PWB should not be approached prior to an insurance quote being obtained as once the PWB is approached insurance will not be available (it will be a condition of the insurance that the PWB has not been and will not be approached). The Upper Tribunal (Lands Chamber) is not available for positive covenants (s.84 LPA 1925).

Answer 30

An epitome is a set of copies of relevant title documents with a front sheet setting out details of the documents. correct

Answer 31

1) 1 December 1990 and 2) 1 April 1998 correct

Answer 32

The 1956 conveyance, the 1977 conveyance, and the seller’s mortgage. The 1956 conveyance, the 1977 conveyance, and the seller’s mortgage.

Answer 33

- Conveyance dated 1988 between Acton (Millinery) Ltd and Susan Wolston. - Mortgage dated 1988 between Royal Bank of Scotland plc and Susan Wolston.Correct. correct The 1988 conveyance is the root conveyance (the conveyance to the current seller) and must be included. The 1988 mortgage is the current seller's mortgage, entered into at the same time as the root conveyance. This must be included in the epitome, even though it will be redeemed at completion (and even if it has already been redeemed, as it post-dates the root of title).

Answer 34

The seller should have affixed their company seal in the presence of two directors or one director and the company secretary who have both signed the conveyance. The buyer should have executed the conveyance by signing with a witness, sealing and delivering it. Correct. These were correct execution methods for conveyances dated pre 31 July 1990.

Answer 35

Get the seller to arrange for the root conveyance to be stamped as soon as possible. This is correct. You would need to see evidence of this before exchange and completion.

Answer 36

The 1989 conveyance could be a good root of title provided it contains a certificate of value. Correct. The 1989 conveyance does not have an ad valorem stamp but provided it has a certificate of value (to go with the PD stamp) then it has been correctly stamped. The last date for compulsory first registration was 1 December 1990 and you have no information to tell you that the property was in an area that was subject to compulsory first registration before this date. Provided the 1977 conveyance (with plan) is included in the epitome, it does not matter that the description of the property in the 1989 conveyance is only by reference to the 1977 conveyance.

Answer 37

need to do this set of MCQS (Title Issues)

Answer 38

B. (1) is a restrictive covenant and (2) is a positive covenant and both would be entered on the Charges Register. Covenants (restrictive or positive) — Either restrictive or positive covenants may be listed in the charges register — the important point is that it is their burden, not the benefit. These should always be reported to the client, with advice on appropriate action.

Answer 39

B. A conveyance to your client dated 25 October 1989 in your client’s former name together with a marriage certificate showing your client’s former name and spouse’s name (matching client’s current name) different names would cast doubt! so need marriage certificate a will does not convey title (just wishes) you want a conveyance!

Answer 40

D. The power of attorney, the root of title and the death certificate. power of attorney - cast no doubt root of title needed no need for previous conveyances as it does not add anything (unless it deals with additional rights that predate root of title) also need to check when unregistered: land charges search against the name (not the address of the property)

Answer 41

Before exchange of contracts Correct This is correct. It is a report setting out all the matters relating to a property that the purchaser must review and make their mind up whether to buy the property. A purchaser is committed to purchase the property at exchange of contracts therefore the report must be sent out in good time before this point. It is unlikely that as soon as a solicitor has been instructed by the client that they would have had the search results and carried out the title investigation. It usually takes a few weeks for a solicitor to carry out the title investigation and then compile the report.

Answer 42

Giving the client all material information of which the solicitor has knowledge in a way that the client can understand. Correct. A well drafted report on title will help with these requirements.

Answer 43

Details of any rights benefiting the property. Correct This is correct. The rights benefitting the property will be evident in the conveyancer’s title investigation of the property. The conveyancer would not have inspected the property and indeed it would make it clear as a limitation in the report that such an inspection had not taken place. The conveyancer’s terms and conditions of business would have been sent to the client upon being instructed. The report will not advise on the value of the property and whether the property is being purchased for the right price. This is something a surveyor would be able to advise on, not a solicitor.

Answer 44

Highways search Correct Correct. This is a search with the Highways Authority, rather than the Local Authority. The Local Search are enquiries with the Local Authority of the property.

Answer 45

Drainage and Water Correct. This search will always be carried out. The search checks matters such as whether foul and surface water from the property drain to a public sewer, and whether the property is connected to a mains water supply.

Answer 46

A channel provider, such as SearchFlow Correct. The searches themselves are provided by channel providers (who offer an 'ordering service'), such as SearchFlow, Thames Water Property Searches and GlobalX. Requesting searches via such channel providers is a typical trainee / paralegal job.

Answer 47

The Local Authority Search Result (CON29). Correct Correct. There is a question to the local authority at enquiry 2.2 asking if there are any public rights of way (which would include footpaths) that abut or cross the property. The Local Land Charges Search Result does not record details of footpaths, instead it records charges such as general and specific financial charges, planning charges, listed buildings charges. The Property Register of the Official Copy reveals rights benefitting the property such as private rights of way, not public footpaths. The Search of the Index Map Result reveals whether the area searched is registered or unregistered land, it does not provide any information on an any specific rights of way and indeed the Land Registry does not record public footpaths on its registers.

Answer 48

The Local Authority Search Result (CON29). Correct Correct. There is a question to the local authority at enquiry 1.1(f) asking if there are any building regulation approvals and completion certificates issued in respect of the property.

Answer 49

The LLC1 reveals planning permissions and restrictions against permitted development (known as an Article 4 Direction). Correct Correct. The LLC1 is always carried out and the result reveals among other matters planning permissions granted (not refused) and restrictions against permitted development (an Article 4 Direction). In every transaction the LLC1 is submitted to the local authority (usually via an online search platform such as Searchflow) together with the CON29. The solicitor may raise additional enquiries on CON29O but this is not required in every transaction. It is the CON29O that will reveal whether a property is registered as common land or town or village green, not the LLC1.

Answer 50

Yes, although he will not require planning permission for the internal works, he will require planning permission for the change of use. Correct. s. 55(2)(a) TCPA 1990 states that internal works do not constitute development. Classes E(g) (offices) and C3 (dwelling house) of TCP(UC)O 1987 were the relevant use classes. Changing from one use class to another is a ‘development’ because it is a material change in use’ unless the change is one that is permitted under Part 3, Schedule 2 GPDO 2015. Under the GPDO this is not a change of use that is ‘permitted development’. It would have been a change from B1 to C3 under the pre-1 September TCP(UC)O 1987 but was also not permitted under the GPDO 2015 so does not fall within the transitional provisions.

Answer 51

Any planning permission granted for development is likely to be subject to more onerous conditions than if the property was outside of the conservation area and the Local Planning Authority (LPA) may have made an Article 4 Direction. Correct. Areas are designated conversation areas because they have a special character or appearance and hence it is likely that any planning conditions (e.g. bricks to be in keeping with the surrounding buildings) will be more onerous than in areas outside of such an area. Article 4 Directions are also very common in conservation areas.

Answer 52

Planning permission for the material change of use and building regulation consent for the internal works. Correct. The building works are internal works and therefore do not constitute development (s.55(2) TCPA 1990). Planning permission for the internal works is not required. The change of use of the property from a warehouse (Class B8) to a restaurant (Class E(b)) is a ‘material change of use’ which constitutes ‘development’ and hence planning permission is required for the change of use. This change does not fall within the GPDO 2015, nor would it fall within the transitional provisions (being a change in the pre-1 September TCP(UC)O 1987 from B8 to A3). As internal works are taking place, building regulation consent is required. incorrect Planning permission for the internal works, planning permission for the material change of use and building regulation consent for the internal works. Incorrect. The building works are internal works and therefore do not constitute development (s. 55(2) TCPA 1990). Planning permission for the internal works is not required. The change of use of the property from a warehouse (Class B8) to a restaurant (Class E(b)) is a ‘material change of use’ which constitutes ‘development’ and hence planning permission is required for the change of use. This change does not fall within the GPDO 2015, nor would it fall within the transitional provisions (being a change in the pre-1 September TCP(UC)O 1987 from B8 to A3). As internal works are taking place, building regulation consent is required.

Answer 53

If planning permission had been needed, the time limit for the local authority to bring enforcement action for the seller not obtaining planning permission is 4 years from the date of substantial completion. Correct. The correct time limit for enforcement of lack of planning permission is 4 years from the date of substantial completion (s. 171B TCPA 1990).

Answer 54

Request that the seller obtains a Regularisation Certificate before completion. Correct. Building Regulations is concerned with how the works take place – so building materials, insulation, health and safety, fire escapes are all matters that building regulations covers. All works whether internal or external require Building Regulations. The seller should be asked to rectify the situation and obtaining a Regularisation Certificate is retrospective consent by the local planning authority that they are happy with the construction work. If you did not obtain a Regularisation Certificate, the local planning authority could apply for an injunction at any time requiring your client to alter or remove works. This would not be fair since it is the seller who should have obtained the consent and who should pay for any works that need to be carried out in order to obtain the correct approval. incorrect Advise the buyer to obtain a Regularisation Certificate before exchange of contracts. Incorrect. Building Regulations is concerned with how the works take place – so building materials, insulation, health and safety, fire escapes are all matters that building regulations covers. All works whether internal or external require Building Regulations. It is the seller here who should be picking up any costs or doing any of the running around of obtaining a Regularisation Certificate as it is the seller who is at fault here and the seller should ideally be in a position to confirm at exchange of contracts that obtaining the regularisation certificate will be possible by completion.

Answer 55

Non-compliance could result in a fine and the local authority carrying out the necessary work at the land owner's expense. correct

Answer 56

The CPSEs will be requested by the buyer’s solicitor. Correct. The buyer will request the CPSE.1 and any relevant supplemental CPSE enquiries are raised usually by email. The seller’s solicitor will then ask their client to complete and when received back, will send on to the buyer’s solicitor.

Answer 57

Confirm and update where necessary replies to enquiries if completed more than two months earlier. Correct. This is from paragraph 15 of the Protocol. incorrect Additional enquiries seeking the seller’s opinion may be raised. Incorrect. Enquiries asking for the seller’s opinion are not allowed, only enquiries of fact are allowed. Raising an additional enquiry to clarify issues arising out of the buyer’s mortgage. Incorrect. The seller does not have any information about the buyer’s mortgage. This would be communication between the buyer’s solicitor and the buyer’s lender. Submission to the buyer’s solicitor of Property Information Form (TA6) and CPSE.2. Incorrect. TA6 is to be used in residential transactions but not CPSE.2.

Answer 58

No, the director should have spoken to the site manager. Correct. The seller should make reasonable efforts to check records AND speak to appropriate people in the organisation.

Answer 59

The Protocol can be used in residential transactions of freehold and leasehold property. correct

Answer 60

Standard Conditions of Sale (incorporated into the contract), Property Forms, Formulae for exchange, Code for Completion by Post. correct

Answer 61

A buyer’s solicitor additional pre-contract enquiry as follows: “Has the property ever suffered from an infestation of rodents?’ Correct. This is an enquiry of fact, not opinion and the seller should give a reply. incorrect A buyer’s solicitor sending two pages of standard enquiries, as well as the Property Forms to the seller’s solicitor. Incorrect. This would be a breach of the Protocol. The seller’s solicitor should only attend to the Property Forms and any additional enquiries that are essential to the transaction.

Answer 62

CLC searches against: (1) Company A for the period 1926 – 1945; (2) Company B for the period 1945 – 2003; (3) Company C for the period 2003 – present date. Correct. CLC searches are carried out against previous owners of the property for their periods of ownership. You would need a CLC search against Company A. As you don't know when they bought the property, you would carry out the search from 1926, the year when the CLC register was started. However, you do know that Company A sold the property in 1945, so you only need search up to then. The CLC search against Company B will be for the period 1945 to 2003, as you know that this is the period that they owned it. The CLC search against Company C will be for the period of their ownership, being 2003 to the current year. Note that the searches against companies A and B can be relied upon whenever they are dated, so if the seller's solicitor provides them, the buyer's solicitor need not carry out fresh searches. However, the search against Company C will need to be carried out again just before completion to confer priority.

Answer 63

You need to ensure another trustee is appointed to pay the purchase money to so the restriction will not apply. Correct This is correct. This restriction tells us Mark and Philip are beneficial tenants in common and prevents a sale by a sole owner. This means a sale by Mark alone is not permitted and would not be registered by the Land Registry. A second trustee needs to be appointed in order to comply with the restriction. This will overreach Philip's beneficial interest, which will have passed under his estate because the right of survivorship will not have applied on his death.

Answer 64

Restrictive covenants bind successors in title so the seller should obtain restrictive covenant insurance to cover liability for breach of covenant. Correct. The burden of restrictive covenants bind successors in title as long as they are correctly registered, which is likely, as the restrictive covenant referred to is in the Charges Register of the Official Copies. As restrictive covenants run with the land and bind successors in title, they do not require an indemnity covenant in the Proprietorship Register to make them binding unlike a positive covenant.The seller has breached this restrictive covenant, and as a past breach it is the seller who is responsible for obtaining restrictive covenant insurance. While the other answer options might sound plausible, they are each incorrect. Note also that a firm of solicitors cannot arrange an insurance policy under section 19(1) FSMA 2000 unless they are authorised or exempt.

Answer 65

No. It is neither legally sufficient nor physically adequate. Correct. Although the lane may be sufficient for the ultimate intended use of the property, it will not be sufficient for the construction of the office. Construction requires heavy vehicles such as dumper trucks and cement mixers. They will not be able to access the site due to both the physical and legal constraints of the right of way.

Answer 66

1) is a restrictive covenant and (2) is a positive covenant and both would be registered on the Charges Register. Correct. Both restrictive and positive covenants are registered on the Charges register at the Land Registry. The Proprietorship Register deals with restrictions on the owner of the land's ability to deal with it rather than restrictions over the land. Restrictive covenants are contracts entered into between the covenantor (the owner of the burdened land) and the covenantee (the owner of the land taking the benefit) which restrict the right of the covenantor and their successors in title to freely use the burdened land eg a restrictive covenant not to use the property for anything other than a dwelling house. The covenant could be worded positively but still be a restrictive covenant eg a covenant to use the property only as a residential dwelling. Positive covenants are contracts entered into between the covenantor (the owner of the burdened land) and the covenantee (the owner of the land taking the benefit) which require the covenantor to do something with / on / to the property e.g. to build and maintain a fence along the boundary of the property. The covenant could be worded restrictively but still be a positive covenant e.g. not to allow the boundary fence to fall into disrepair. An aid to working out whether a covenant is restrictive or positive (regardless of whether it is worded negatively or positively) is the ‘hand in the pocket test’. If you have to ‘put your hand in your pocket’ i.e. pay out money to comply with the covenant then it is a positive covenant (one obliging you to do something).

Answer 67

B. Advise your client as to the risks of not carrying out searches, and ensure that they understand before you proceed. but finish choices from w3 collaborate

Answer 68

D - flooding risk based on historic and other publicly available date

Answer 69

A. Yes, although she will not require planning permission for the internal works, she will require planning permission for the change of use.

Answer 70

You should advise that indemnity insurance be taken out against the risk of enforcement, and that the loft conversion may not be safe to use if it doesn’t comply with building regulations.

Answer 71

The local authority has four years from the date of substantial completion of the patio and porch to take enforcement action against NHL. Correct.

Answer 72

The local authority is out of time to enforce against the landlord for the lack of planning permission for the building work but they are within the time limit to enforce for the unauthorised change of use. Correct. This answer reflects the enforcement periods for lack of planning permission for works (four years) compared to lack of planning permission for a material change of use (ten years). The local authority is out of time to enforce against the landlord for the lack of planning permission for both the works and change of use because more than four years have passed since the works and change of use were completed. Incorrect Incorrect. Please review your materials on how long a local authority has to enforce for a lack of planning permission for both works and a material change of use, when neither breach was deliberately concealed.

Answer 73

Highways Search Correct This is correct. The primary reason for carrying out a Highways Search is to ensure that the boundary of the property abuts a public highway. The result of a Highways Search would include a plan, showing exactly where the public highway ends and the Track begins. The CON 29 tells you whether there are roads in the vicinity of the property which are adopted/public. Replies to CPSE enquires are given by the seller and would not be definitive on this issue. A site visit would not provide the definitive confirmation required.

Answer 74

Yes as there is no time limit for enforcement re: the lack of building regulations approval by the local authority. Correct. The local authority can apply to court to enforce the building regulations by injunction at any time. While the other answer options might sound plausible, they are each incorrect. Breach of conditions apply to planning permission only. The four year enforcement period related to planning permissions. The ten year enforcement period related to planning permissions. The liability for lack of building regulations approval will pass to the buyer on completion. incorrect Yes as you would need to check the building regulations approval conditions as if breached there is a ten year enforcement period by the local authority starting from the date of the breach of condition. Incorrect Incorrect. Breach of conditions apply to planning permission only. Review your materials on enforcement periods for planning permission and building regulations. No as the building works were carried out over ten years ago and therefore are outside the local authority’s enforcement period re: the lack of building regulations approval. Incorrect Incorrect. This enforcement period related to planning permissions. Review your materials on enforcement periods for planning permissions and building regulations. No as the seller was responsible for the building works in 2008 it will not become a problem for the buyer. Incorrect. The liability for lack of building regulations approval will pass to the buyer on completion. Review your materials on enforcement periods for planning permissions and building regulations.

Answer 75

There is nothing he can do as the planning contravention is outside the enforcement period from the date of the change of use. Correct Correct. This change of use of a building to a single residential property has a four year enforcement period which has now expired. While the other options appear plausible they are not. This change of use of a building to a single residential property has a four year enforcement period which has now expired. The enforcement period for change of use is not unlimited. An injunction applies mainly to lack of building regulations. This is not a permitted development.

Answer 76

LLC1 search; CON29 search; environmental desktop search and Commercial Property Standard Enquiries. This is correct. Whether the property is listed will appear in the LLC1. Contaminated land notices and building regulations approval are only detailed in the CON29. Flooding risk appears in the environmental desktop search and the seller will confirm in the CPSEs whether the fence needs repairing. LLC1 search; CON29 search and environmental desktop search. Incorrect This is incorrect. The seller will confirm in the CPSEs whether the fence needs repairing.

Answer 77

The Local Authority Search Result. Correct. There is a question to the local authority at enquiry 2.2 asking if there are any public right of ways (which would include footpaths) that abut or cross the property. While the other answer options might sound plausible, they are each incorrect. The Local Land Charges Search Result does not record details of footpaths, instead it records charges such as general and specific financial charges, planning charges, listed buildings charges, light obstruction notices. The Property Register of the Official Copy reveals rights benefiting the property such as private rights of way, not public footpaths. The Search of the Index Map Result reveals whether the area searched is registered or unregistered land, it does not detail any specific rights of way and indeed the Land Registry does not record public footpaths on its registers. The Commons Registration Search result (this is an optional enquiry in the Local Authority Search) will reveal whether the property is registered common land or town or village green under the Commons Registration Act 1965 or the Commons Act 2006. Search of the Index Map Result. Incorrect. Please review your materials on the purpose of pre-contract searches and search results.

Answer 78

The solicitor should review the Desktop Environmental Search. Correct. The Desktop Environmental Search will confirm if the property is likely to flood (in addition to confirming if the property has ever been used for a contaminative use). While the other answer options might sound plausible, they are each incorrect. The Waterways Search will reveal a wide range of information in relation to the river running through the grounds of the property, including who has liability for the maintenance of the river banks, whether there are any rights of way along the river banks, whether there are any drainage or fishing rights and whether there are any water abstraction licences in place. It will not, however, reveal any information regarding the flood risk. The Drainage and Water Search checks matters such as whether foul and surface water from the property drain to a public sewer and whether the property is connected to a mains water supply. It does not contain any information relating to the flood risk. The Local Land Charges (LLC1) Search will reveal a number of matters regarding the surrounding area and the local environment such as planning permissions that have been granted, other planning matters such as Enforcement or Stop Notices, tree preservation orders, smoke control orders, financial charges such as road-making charges and whether the area is a Conservation Area. There is, however, no information within the LLC1 relating to the flood risk. The Enquiries of the Local Authority (CON 29) results will similarly reveal a large amount of information concerning the surrounding area such as further planning information, the status of roads in the vicinity of the property and whether there are any public rights of way affecting the property. They will again, however, not provide any information relating to the flood risk.

Answer 79

It confirms to the recipient matters relating to the property through a series of statements of facts and disclosures This is correct. It confirms to the recipient matters relating to the property through a series of statements of facts and disclosures. It is not a report on the security deed (eg charge by way of legal mortgage) being valid and enforceable.

Answer 80

Before exchange of contracts. Correct Correct. A buyer’s solicitor should not exchange contracts unless the source of funds is confirmed. Exchanging without confirmation means the lender could have issues with the property and then not want to lend, leaving the buyer contracted to buy without access to the main source of funds. There would be financial penalties under the contract if the buyer did not complete.

Answer 81

The deed that creates the security interest and is registered at the Land Registry. --Legal charge The commercial equivalent of a mortgage offer. This will set out the terms and conditions of the loan. -- Facility letter A document in which a solicitor certifies that the title to the property is satisfactory for lending purposes. -- Certificate of title A formal offer by the lender to lend. It is subject to the lender being satisfied with the transaction and the security (ie, the property) and will set out the terms and conditions of the loan. -- Mortgage offer

Answer 82

Contracts for the sale of land must be in writing and all the relevant terms must be incorporated into the contract. Correct Correct. This is indeed two of the requirements for a valid land contract. The contract will also need to be signed by, or on half of the parties to the contract.

Answer 83

Standard Conditions (either the Standards Conditions of Sale or the Standard Commercial Property Conditions) Correct Correct. The standard conditions will always be incorporated into a contract for the sale of land. They contain conditions that are common to all transactions and it is far easier to incorporate these by reference rather than write them all out again in the contract.

Answer 84

A standard form contract for sale incorporating the standard conditions of sale and pre-printed special conditions. Correct Correct. It is usual for the solicitor to prepare the standard form contract for sale incorporating the standard conditions for sale for residential transactions and the pre-printed special conditions will be at the back page of the standard form contract. A tailor made contract is used mostly in commercial property transactions which this isn’t.

Answer 85

Special conditions may be used in both residential and commercial property contracts to add to or amend the standard conditions Correct This is correct. The Standard Conditions of Sale may be amended, excluded or supplemented by 'special conditions'. This applies in respect of both residential and commercial property transactions. Though, in respect of residential transactions, if the seller's solicitor is following the Law Society Conveyancing Protocol, special conditions may only be added if 'absolutely necessary for the purposes of the transaction'.

Answer 86

A seller who is a trustee Correct Correct. A trustee would usually give only a limited title guarantee.

Answer 87

By the seller’s solicitor as agent for the seller. Correct Correct. Holding the deposit as agent for the seller means the money belongs to the seller and the seller is free to use it from exchange of contracts. If the deposit was held as stakeholder this means that the seller’s solicitor is custodian of the deposit for both parties: the deposit may not be released to the seller until completion.

Answer 88

The buyer is deemed to buy the property subject to any incumbrances which would be revealed by a prudent buyer's searches and enquiries. SCPC (used in commercial transactions) The seller needs to disclose any incumbrances (rights burdening the property that are not apparent on inspection) that are registered at the Land Registry (reg land), the Land Charges Registry (unreg land) and at Companies House. SCS (used in residential transactions)

Answer 89

False Correct Correct. Both SCS and SCPC state that 'time is NOT of the essence until a notice to complete is served'. This means that if a party fails to complete, the non-defaulting party cannot not yet walk away from the transaction.

Answer 90

2pm Correct This is correct. The time for completion under both SCS and SCPC is 2pm. For the buyer's solicitor this means that the money must be received by the seller's solicitor before 2pm.

Answer 91

The man is to transfer the property with full title guarantee and agrees to appoint a second trustee who will give limited title guarantee in the transfer deed. Correct Correct. A buyer from a sole surviving tenant in common would be expecting a title guarantee from both the surviving tenant in common AND from the second trustee appointed to overreach any beneficial interest in the property. However, the second trustee is often not appointed until completion. The sole surviving tenant in common will be named as the ‘Seller’ in the contract and will agree (by way of a special condition) to appoint the second trustee on completion. A trustee will usually agree only to give limited title guarantee as it has limited knowledge of the property.

Answer 92

Occupier consent's - the adult son should sign the contract to confirm they will vacate on or before completion Correct This is correct. The seller's solicitor would need to obtain the signature of the adult child, who would need to be advised to seek independent legal advice.

Answer 93

The buyer should ensure pre-written special condition 3(a) is included and attach a list of any other fittings/chattels that are agreed the buyer will purchase Correct Correct. The washing machine and dryer are not fixtures and will not therefore pass automatically to the buyer on a purchase. Fittings / chattels that the buyer would like including need to be expressly included in the contract. In a residential contract there is a pre-written special condition that allows the parties to specify any fittings / chattels (also called contents) that are to be included in the sale and any fixtures which are to be excluded.

Answer 94

SCPC special condition A1 should be expressly incorporated because VAT is not chargeable on the sale. Correct Correct. The sale of an old commercial property where the seller has not opted to tax is not chargeable to VAT. SCPC special condition A1 is the relevant provision to incorporate to reflect the position that VAT is not payable in the contract.

Answer 95

VAT is chargeable on the sale of the property. The property is either a new (up to 3 years old) commercial property or an old (more than 3 years old) commercial property with an option to tax. Correct Correct. SCPC 2 is the default position which is that VAT is chargeable on the sale of the property. The purchase price should state it is exclusive of VAT. The possible reasons why the sale of a commercial property would be chargeable to VAT are that it is a new commercial property or an old commercial property where the seller has made an option to tax.

Answer 96

A new (up to 3 years old) commercial property is being sold. Correct Correct. VAT is chargeable on the sale of a new (up to 3 years old) commercial property but the default position is that the purchase price is deemed to be VAT inclusive unless the contract states otherwise. If the purchase price was not expressly stated to be exclusive of VAT it will be deemed to be VAT inclusive. The seller will have to account for the VAT element out of the purchase price to HMRC and will be left only with the remainder.

Answer 97

To send the seller’s part of the contract to the buyer’s solicitor on that day. Correct. You spotted the deposit is sent by the buyer’s solicitor to the seller’s solicitor and not the other way round.

Answer 98

Draft a certificate of title and send it to the lender. Correct Correct. If the purchase is being funded with the aid of a mortgage the solicitor must draft a certificate of title and send it to the lender. If the lender is satisfied with the content of the certificate then the loan will be available to the buyer on the day of completion. There are different certificates of title for commercial and residential transactions. However in both cases it will set out the same type of information about the property as a report on title (ie that the title to the property is good and marketable and acceptable security for the lender)

Answer 99

By telephone, whereby each solicitor has their client’s part of the contract and they agree to exchange during a telephone call. Correct Correct. This is the most common method of exchanging contracts.

Answer 100

Your client can see a copy of the certificate of title, but it is designed for a specific purpose and you should stress that your report on title would be more useful to your client.

Answer 101

B. Limited title guarantee means that the seller covenants that no third party rights have been created over the period of the seller’s ownership.

Answer 102

Ask the seller whether they are willing to accept a reduced deposit, and advise of the risks, and if necessary advise the solicitor acting on the seller’s purchase of any reduction to that deposit.

Answer 103

Selling with limited title guarantee means the seller covenants that the seller is not aware of any rights having been granted over the property during the period of the seller's ownership, but the seller doesn't make any covenant about rights before that. Correct Correct. The key difference of limited title guarantee from full title guarantee is that the seller is only guaranteeing what has occurred at the property during the seller's ownership. Note that if the seller inherited or was given the property, then this period extends to the last transaction for value (ie, sale). incorrect Selling with limited title guarantee means the guarantee is limited in time to the period for which the buyer owns the property. Incorrect Incorrect. There is nothing in the statute which says this. A covenant in English law binds for life. Selling with limited title guarantee means the seller is selling the property free from all charges and incumbrances (monetary or otherwise) and free from all rights exercisable by third parties, including those the seller does not and could not reasonably know about. Incorrect Incorrect. This looks like the definition of full title guarantee, but goes further as it refers to matters the seller does not and could not know about, which the title guarantee does not cover.

Answer 104

To forward the seller’s part of the contract to you by DX this evening. Correct Correct. As you are acting for a buyer client, in accordance with Formula B you would have received an undertaking confirming that the seller’s solicitor would send the seller’s part of the contract to you by DX this evening. The outstanding mortgage will be dealt with at completion. To forward the seller’s part of the contract to you and to send the deposit to the lender to discharge the mortgage and to forward proof of discharge to you on receipt. Incorrect Incorrect. Please review your notes on the procedure for exchange on a property purchase. You need to understand at what stage of the transaction an existing mortgage would get discharged.

Answer 105

The buyer’s solicitor should draft a special condition for insertion in the contract specifying that on or before the completion date the seller must repair the roof of the property to the reasonable satisfaction of the buyer. Correct This is correct. Special conditions are required to deal with specific matters agreed between the parties. Caveat emptor would mean that in the absence of a special condition, the responsibility for the repairs would fall to the buyer. s2 Law of Property (Miscellaneous Provisions) Act 1989 states that all the terms agreed between the parties must be incorporated in the contract, so the seller’s promise to repair the roof would not be binding without being in the contract.

Answer 106

The seller is under no obligation to insure the property; the common law position prevails, meaning that the buyer bears the risk at exchange. Correct This is correct. Since there is no variation to the SCPCs in the contract, under condition 8.1 of the SCPC, risk in the property passes to the buyer on exchange of contracts under common law (even without an express provision). The buyer should therefore be able to claim on its insurance for the damage. If for some reason the buyer does not have insurance cover, it will have to bear its own loss for the damage resulting from the fire and it will be obliged to complete the purchase on the contractual completion date. incorrect The buyer bears the risk at exchange and if it does not have insurance cover it will not be obliged to complete the purchase on the contractual completion date. Incorrect This is incorrect. Please review your materials on the key conditions contained in the SCPCs, in particular condition 8.1.

Answer 107

A contract incorporating the Standard Commercial Property Conditions, but not incorporating any of the Part 2 VAT provisions as it is a standard-rated supply. Correct Correct. Newly constructed commercial property is standard rated, and the Standard Commercial Property Conditions will be most appropriate for this.

Answer 108

TR1 executed by deed. Correct Correct. Section 52 of the Law of Property Act 1925 states that to transfer the legal estate in land a transfer must be by deed. Although the land is unregistered, purchase will trigger compulsory first registration of the land and so the Land Registry’s Form TR1 will be used as the Transfer Deed. A TP1 is used when only part of a registered title is being purchased. As s 52 of the Law of Property Act 1925 states that to transfer the legal estate in land a transfer must be by deed, it cannot be signed under hand but needs the formality of being executed as a deed.

Answer 109

Nothing. Panel 3 should be left blank until completion. Correct Correct. The date in panel 3 is the date the TR1 is completed. It will be filled in by hand when the solicitors complete the purchase. Panel 3 is only filled in by hand when the solicitors actually complete the purchase (when the completion monies are received). This should be on the completion date which was specified in the contract however may not be eg if completion is delayed. The date in panel 3 is the date the TR1 is completed and not the date of the contract, which is the date of exchange.

Answer 110

Mr Smith’s death certificate. Correct Correct. There is no separate deed of appointment to send as the second trustee was appointed in the TR1. The buyer’s change of name certificate does not need to be sent as the Land Registry only need evidence if the name of the seller is different from the name of the registered proprietor they have on the register of title. incorrect Mr Smith’s death certificate, the separate deed of appointment of the second trustee and the change of name certificate. Incorrect Incorrect. Please review your materials on the Transfer Deed, in particular focusing on the notes on completing panel 4 in the TR1.

Answer 111

Transferor: Executed as a deed by [name of company] acting by [a director and its secretary] [two directors] Signature of Director: …………… Signature of [Director] [Secretary]: …… Transferee: Signed as a deed by [full name of individual] [signature] In the presence of:…………[signature of witness] [print in block capitals the full name and address of the witness] Transferee: Signed as a deed by [full name of individual] [signature] In the presence of:…………[signature of witness] [print in block capitals the full name and address of the witness] Correct Correct. Both the transferor (seller) and both of the transferees (buyers) must execute the TR1. The transferor must always execute the TR1 and the transferees must execute if panels 10 (a declaration of trust to be completed if there is more than one transferee) and/or 11 (additional provisions eg an indemnity covenant) of the TR1 have been completed. Here panel 10 would have been completed as there is more than one transferee. The execution clauses set out are the appropriate ones for a company transferor and individual transferees.

Answer 112

30 working days from the OS1 search result. Correct Correct. It is a common mistake to say the priority period of an OS1 is 30 days. It is actually 30 working days. 15 working days is the protection period given by a K15 Central Land Charges search. 2 months is the time period for first registration at the Land Registry (post completion of the purchase of unregistered land).

Answer 113

OS1 search only. Correct Correct. As this is a registered property and your client is purchasing the whole of the title, a Form OS1 search will always be required. A bankruptcy search is not required to be undertaken against any individual seller of registered land (any bankruptcy would appear on the register of title and therefore on the OS1 search result). As this is not unregistered land, no Central Land Charges search (K15) is required either. Central Land Charges searches K15 are only relevant for unregistered land and would be carried out against the seller not the buyer to check for adverse entries and to give a protection period. As no buyer’s lender is involved, there are no solvency searches needed against the buyer.

Answer 114

You need to carry out a Form K16 bankruptcy search in respect of the buyer. Correct Correct. The lender’s solicitors carry out solvency searches against the buyer. On this scenario, you act for the buyer’s lender so you must carry the appropriate solvency search against the buyer pre-completion. As the buyer is an individual, the appropriate solvency search is a K16 bankruptcy search. If the seller is bankrupt it will appear on the OS1 search result and so no bankruptcy search is required in respect of the seller. Companies House searches (in respect of companies) are carried out at Companies House to check solvency pre-completion. K16 bankruptcy searches or K15 CLC searches which include bankruptcy are both carried out at the Central Land Charges Department. None of the solvency searches are carried out at the Land Registry.

Answer 115

To undertake forthwith to pay the lender the money required to redeem the mortgage and to forward Form DS1 to the buyer’s solicitor as soon as the seller’s solicitor receives it from the lender. Correct Correct. This is the Law Society’s recommended form of seller’s solicitor’s undertaking re: the seller’s mortgage / charge. The seller’s solicitor is not able to discharge the mortgage as only the seller’s lender can do that. The seller’s solicitor will need to pay the money required to redeem the mortgage to the seller’s lender. This is likely to be paid out of the completion monies but it is the redemption amount and not the amount of the completion monies that must be paid over. In registered land the seller’s solicitor will receive a Form DS1 from the lender discharging the mortgage, a receipted mortgage is used in unregistered land to show a mortgage has been discharged. The seller’s solicitor cannot forward the receipted mortgage or DS1 until they receive it from the seller’s solicitor so they cannot undertake to send it immediately. incorrect To undertake forthwith to pay the lender the money required to redeem the mortgage and to forward Form DS1 immediately to the buyer’s solicitor. Incorrect. Please review your materials on requisitions on title, in particular focussing on the form of the seller’s solicitor’s undertaking provided pre-completion in respect of the seller’s mortgage / charge.

Answer 116

The Completion Information and Undertakings Form asks for details of the bank account to send the completion monies to. Correct Correct. The Completion Information and Undertakings Form is sent by the buyer’s solicitor to the seller’s solicitor to obtain information about completion. Form TA13 is one example of the Completion Information and Undertakings Form. Firms can use their own in house version. The Completion Information and Undertakings Form is completed by the seller’s solicitor and signed by the seller’s solicitor. This is important as only a solicitor can give an enforceable undertaking and the Completion Information and Undertakings Form requests an undertaking in respect of the seller’s mortgage / charge.

Answer 117

They ask for key information regarding completion and deal with relevant undertakings required from the seller’s solicitor. Correct Correct. Questions on the registers of title are asked pre-exchange in the title investigation stage. Whilst the pre-completion requisitions on title deal with undertakings they also ask for practical information regarding completion. Requisitions on title are questions asked of the seller’s solicitor regarding practical information for completion and dealing with relevant undertakings required from the seller’s solicitor. incorrect They are undertakings which the seller’s solicitor has to provide before completion. Incorrect Incorrect. Please review your materials on requisitions on title in particular on the content of the requisitions on title which includes more than just undertakings.

Answer 118

The Code contains professional undertakings. Correct Correct. The Code is a voluntary procedure for postal completion. The Code can be used for the completion of both residential and commercial property purchases. The Code enables the seller’s solicitors to act as agent for the buyer’s solicitors. Completion occurs at the seller’s solicitor’s office as they hold the executed TR1 and receive the completion monies.

Answer 119

The transfer and mortgage deed only. Correct Correct. The buyer will need to execute the transfer as they are giving an indemnity covenant, and the mortgage deed because they are buying with a mortgage.

Answer 120

Written confirmation of completion must be sent to the buyer’s solicitor as soon as possible after completion and in any event by the end of the working day following completion. Correct Correct. The Code says that the TR1 must be sent to the buyer’s solicitor as soon as possible after completion and in any event by the end of the working day following completion. The Code also says that as soon as possible after completion the seller’s key holder is to be notified and authorised to make the keys available to the buyer immediately and the seller’s solicitor is to confirm the date and time completion took place to the buyer’s solicitor. The Code does not put a requirement on the seller’s solicitor to notify their client as it governs the process of completion between the two solicitors. The seller’s solicitor will of course let their client know completion has occurred as soon as possible as best practice. The Code does not place a requirement re: the DS1 on the seller’s solicitor. The seller’s solicitor will fulfil the terms of their undertaking regarding any seller’s mortgage / charge but the usual form of undertaking will be to send the DS1 to the buyer’s solicitor. It will then be the buyer’s solicitor’s post-completion task to arrange for the mortgage to be removed at the Land Registry.

Answer 121

Provided the buyer completes by 2pm on Monday your client is entitled to three days of compensation under the SCS. Correct You correctly identified that the seller, who is not in default, would be able to claim compensation under the SCS for three days (Friday, Saturday and Sunday - the days of default). The compensation is payable for each day that the buyer does not complete by 2pm (the latest time for completion under the SCS), including the weekend. Under the SCS, time is not of the essence until a notice to complete has been served. The seller would not be entitled to take the buyer's deposit until the expiry of the notice to complete and rescission by the seller. There is no need to serve a notice to complete in order to trigger the right to compensation, although it is common in practice for a non-defaulting party's solicitor to serve the notice to complete to protect their client's right to keep the deposit and rescind the contract after ten working days following the service of the notice (excluding the day the notice was given).

Answer 122

The hotel and storage costs of £750. Correct.

Answer 123

If the seller serves a notice to complete, the buyer fails to complete in accordance with the notice and the seller rescinds the contract, the seller is no longer entitled to contractual compensation under the SCS. Correct Correct. The SCS compensation is for delayed completion. Completion has to actually occur for the compensation to be payable. If the contract is rescinded, completion cannot occur and there is no entitlement to contractual compensation although common law damages could be claimed for any loss suffered from the breach of contract. Time is not of the essence under the SCS until a notice to complete is served. The notice needs to expire before the seller can rescind the contract and keep the buyer’s deposit. The seller is not entitled to rescind the contract or keep the buyer’s deposit under the SCS until a notice to complete has been served and the notice period has expired. The seller can rescind the contract once the notice to complete has expired but rescission is not automatically triggered by the expiry of the 10 working day notice period in the notice to complete. incorrect If the seller serves a notice to complete and the buyer fails to complete before the notice has expired, the contract will be deemed to be automatically rescinded immediately upon the expiry of the notice period. Incorrect Incorrect. Please review your materials on delay or failure to complete, in particular focussing on the notice to complete procedure and effect.

Answer 124

TR1, SDLT5, Buyer’s mortgage/charge and the Certificate of Registration of the Charge. Correct. The SDLT1 is the form sent to HMRC when SDLT is paid. HMRC will send back the SDLT5 acknowledgement of receipt which then needs to be sent with the Land Registry application. The Land Registry do not need the contract of sale, they need the purchase deed (the transfer – TR1) to register the change in registered proprietor (owner) of the land. The Land Registry do not need a plan of the property as it is already registered so they have a title plan already. As the buyer is a company, their mortgage/charge needs to be registered at Companies House post-completion. Companies House will return a Certificate of Registration of Charge and this needs to be sent to the Land Registry as well as the buyer’s mortgage/charge so that it is registered against the title. incorrect TR1, SDLT1, Buyer’s mortgage/charge and the Certificate of Registration of the Charge. Incorrect Incorrect. Please review your materials on post-completion steps, in particular focussing on the Land Registry application for registered land. Look at the difference between an SDLT1 and an SDLT5.

Answer 125

30 working days from the date of the OS1 priority search result. Correct Correct. It is 30 working days rather than 30 days. This is the priority period of the OS1 priority search and the application to the Land Registry must be made before the priority period ends. The deadline runs from the date of the OS1 priority search result rather than completion as it is the OS1 search result which provides the priority period within which the Land Registry application must be made. The deadline runs from the date of the OS1 priority search result made pre-completion rather than the date contracts are exchanged as it is the OS1 search result which provides the priority period within which the Land Registry application must be made. incorrect 30 days from the date of the OS1 priority search. Incorrect Incorrect. Please review your materials on post-completion steps, in particular focussing on the length of the deadline for the Land Registry application made post-completion of the purchase of a registered freehold property.

Answer 126

1) Register the buyer’s mortgage at Companies House, 2) send the LTT Return and pay LTT at WRA and 3) apply to the Land Registry using Form AP1. Correct Correct. As the property is in Wales LTT is payable to the WRA rather than SDLT to HMRC. The buyer’s mortgage must also be registered at Companies House (or it will be void as against liquidators, administrators and any other creditors) as the buyer is a company. The Land Registry application is necessary as the transfer and the buyer’s mortgage need to be registered on the title to the property.

Answer 127

1) Payment of SDLT at HMRC within 14 days of completion and 2) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 working days of the OS1 priority search result. Correct Correct. SDLT rather than LTT is relevant as the property is in England and, as there was no early occupation by the buyer, the effective date which the 14 day deadline runs from is completion. The buyer’s mortgage does not need to be registered at Companies House because the buyer is an individual not a company. The deadline for the Land Registry application is 30 working days from the OS1 priority search result and, as well as registering the transfer, the application to the Land Registry would include applying to register the buyer’s mortgage at the Land Registry. incorrect 1) Registration of the buyer’s mortgage at Companies House within 21 days starting on the day after the date of completion, 2) payment of SDLT at HMRC within 14 days of completion and 3) application to the Land Registry to register the transfer and the buyer’s mortgage within 30 working days of the OS1 priority search result. Incorrect Incorrect. Please review your materials on post-completion steps. Think about whether the buyer’s mortgage must be registered at Companies House on these facts.

Answer 128

The consequences of failing to pay SDLT/LTT within the relevant deadline are penalties and interest. Correct. The consequences of failing to register a buyer’s mortgage at Companies House within the relevant deadline are that 1) the mortgage/charge is void against liquidators, administrators and other creditors; 2) the loan is repayable on demand; and 3) it could be construed as negligence on the part of the solicitor. The consequences of failing to apply to the Land Registry to register the transfer and the buyer’s mortgage within the relevant deadline are that 1) the buyer would take the property subject to any third party interests that may have been registered subsequent to its OS1 search; and 2) the buyer will only have beneficial title (not legal title) to the property until they are registered as the registered proprietor of the title at the Land Registry.

Answer 129

The amount of CGT payable depends on the rate of income tax an individual pays. Correct Correct. If CGT is payable the rate depends on whether the individual paying is a basic rate or higher rate taxpayer. SDLT/LTT are the taxes payable by the purchaser (transferee) on the transfer of property. CGT is a tax imposed on an individual who disposes of an asset (ie the transferor) and makes a chargeable gain. CGT is payable on the chargeable gain made when an asset is disposed of. The chargeable gain is calculated by taking the sale price and subtracting the purchase price, any allowable expenses and the annual exemption.

Answer 130

A sale at a profit of an individual’s UK holiday home used by them for two months of the year and let out for the rest of the year. Correct Correct. This would not fall under the principal private dwelling house exemption and CGT would be payable. CGT is not usually payable on gifts to a husband, wife or civil partner. Sale of an individual’s one home which has been lived in as a main home all the time it was owned, has not had part let out or used for business only and is less than 5,000 square metres in total falls under the principal private dwelling house exemption. The exemption allows the owner to have a single lodger and still applies in that case. CGT is payable on a gain. If the property was sold at a loss, there is no gain to pay CGT on.

Answer 131

The owner of the dwelling house was absent on an extended round the world holiday for a period of four years during the middle of the period of fifteen years in which they owned the house. Correct Correct. Only period(s) of absence not exceeding three years in total throughout the period of ownership are disregarded for the purpose of applying the exemption. Whilst you cannot let part of the dwelling house out under the conditions of the exemption, you are allowed to have a single lodger. Whilst the dwelling house should not be used for business, the full exemption is still available if there is duality of user ie a person works from home but not in a separate room which is used purely for business use.

Answer 132

E. The director and a witness.

Answer 133

E - Contractual interest for the number of calendar days’ delay and a claim for damages less the calculated interest. contractual compensation is not limited to working days!

Answer 134

D. The date of the result of the priority search, to avoid subsequent entries being made on the title which bind the purchaser.

Answer 135

Sainsways Plc - a UK supermarket chain established 80 years ago. Correct Correct. A chain of companies that has been trading for 80 years is more desirable than the other options shown.

Answer 136

A tenant's covenant to pay annual rent but no further sums. Correct Correct. An FRI lease would expect a tenant to pay the cost of insuring the property and, if appropriate, service charge.

Answer 137

It offers income, the potential for capital growth and is seen as reasonably secure. Correct. Commercial property offers all of these advantages.

Answer 138

It is a one year oral tenancy. Correct Correct. A tenancy of 3 years or under may be created orally.

Answer 139

A licence to occupy. Correct Correct. The nature of the agreement is that the key cutter may be required to move, and therefore does not have exclusive possession of any part of the premises. It is a licence. incorrect A periodic tenancy. Incorrect Incorrect. This arrangement does not give exclusive possession.

Answer 140

As the lease term is over 3 years, it will need to be executed as a deed. Correct Correct. A legal tenancy of over 3 years must be created by deed.

Answer 141

The term commencement date can be earlier, the same day, or later than the date of the lease. Correct. The term commencement date can be any of these.

Answer 142

The rent will remain the same because it is an upwards only rent review. Correct Correct. The hypothetical lease would take into account the landlord's neglect of the common areas, but the rent will not drop because the rent review is upwards only.

Answer 143

£14,000 Correct Correct. The rent will be increased to the open market rent. The increase due to the tenant's business (goodwill) would normally be disregarded. incorrect £10,500 Incorrect. This is an open market rent review, not index linked.

Answer 144

A 10 year lease of office premises negotiated by an RICS regulated agent. Correct Correct. The agent would be bound by the provisions of the Code. WHY is this "A 20 year advertising hoarding licence negotiated by an RICS member." wrong?? NOT A LEASE! it is a license

Answer 145

The solicitor should advise the landlord of the provision that does not comply. Correct Correct. Although the landlord is an RICS member and should be aware of the Code, having spotted the provision, the solicitor should advise the landlord.

Answer 146

When the Code applies, RICS members and regulated firms must follow mandatory requirements. They must follow good practice unless there are exceptional reasons for not doing so. Correct Correct. This correctly states the difference.

Answer 147

They should usually be carried out, but the client may decide not to bother in some instances (eg, a short tenancy). Correct Correct. The starting point is that searches should be carried out. If the client decides not to bother, then the solicitor should ensure that they are advised on possible consequences.

Answer 148

The landlord's solicitor dates the original lease. The tenant's solicitor sends the completion monies and dates the counterpart lease. Correct Correct. The original lease is that signed by the landlord; the counterpart by the tenant. The completion monies are paid by the tenant to the landlord through their solicitors. Incorrect The landlord's solicitor dates the original lease and the tenant's solicitor dates the counterpart lease. The parties exchange the agreement for lease under Formula B. Incorrect. Except for a residential long lease, it would be rare for an agreement for lease to be exchanged simultaneously with the grant of a lease.

Answer 149

An OS3 search. Correct Correct. As the lease is not registrable, priority is not needed, and an OS3 search is appropriate. WHY IS THE LEASE NOT REGISTRABLE?hope incorrect An OS2 search Incorrect Incorrect. An OS3 search would be more appropriate as the lease is not registrable.

Answer 150

The tenant's repairing covenant and the definition of the premises. Correct Correct. The tenant's repairing covenant is read in conjunction with the definition of the premises.

Answer 151

Because the tenant will be responsible for putting right any items that are in disrepair (save where arising from poor design or construction). Correct Correct. In an FRI lease, the tenant gives a full repairing obligation and will have to put the premises in good repair.

Answer 152

The landlord insures the warehouse and recovers the whole of the premium from the single tenant. Correct Correct. The landlord will normally insure, recovering the premium from the tenant.

Answer 153

C. The provision of services clause in the landlord’s covenants and the service charge obligation in the tenant’s covenants or in the schedule on services and service charge. correct A -- it is not going to be a tenant's repair since it is a common part B -- nothing to do with insurance/ it is a repair issue D -- is the wrong way around E -- irrelevant

Answer 154

D. Rents of comparable properties in the local area have increased in the last five years. correct ( cf assumptions and disregards) A -- tenant improvements disregarded B -- goodwill of the tenant disregarded C -- tenant in occupation is disregarded E -- not relevant to market rent! unless every property in landlord's portfolio is in the area (which we do not know on the facts)

Answer 155

A. The five year lease is preferable as complying with a break clause is onerous and can easily be forgotten. correct -- respect your clients instructions! don't engage yourself no longer than you need to B -- incorrect, not at landlord's discretion if served correctly C -- not necessarily true (cannot assume this) D -- not correct: you have a 10 year lease but have the ability to break after 5 years E -- not true! unless it was a rolling break clause from the 5 year point but still need to serve notice properly

Answer 156

Request completion monies from the tenant. Correct Correct. You will need to be in funds for all completion monies due, which usually will be the first quarter’s rent, service charge and insurance rent so this can be sent to the landlord’s solicitor at completion. Incorrect Carry out an OS1 search. Incorrect. Please revisit your understanding of the pre-completion steps required for the grant of a commercial lease and when an OS2 search is appropriate instead of an OS1 search.

Answer 157

Letting agents and other property professionals who are RICS members or in a RICS regulated firm must comply with mandatory provisions, and non-compliance may be taken into account in regulatory or disciplinary proceedings. Correct Correct. RICS members are bound by the Code's mandatory provisions. (The Code also contains statements of good practice, which RICS members should follow unless there is a good reason not to.)

Answer 158

The parties to the lease are ready to proceed to completion as soon as the form of the lease has been agreed. Correct. In this case, there is no need for an agreement for lease. WHY?? incorrect In a residential transaction for the sale of a newly constructed 999 year leasehold flat. Incorrect. In a residential transaction, it is usual to exchange before or simultaneously with completion. This document may be referred to as a contract, but it can also be described as an agreement for lease. The landlord is in the process of buying an office block with a rental void, and the tenant has agreed to take a lease from the landlord once the purchase completes. Incorrect. An agreement for lease would be useful here to tie the parties into the transaction conditional on the purchase of the office block completing. The tenant intends to take a high street premises for a restaurant, but first wants to apply for a premises licence which is essential for its business. Incorrect. An agreement for lease may be useful here so that the parties can commit to the lease, but completion of the lease is conditional upon the premises licence being obtained. The tenant is taking a unit in a shopping centre that is currently under construction. Incorrect. An agreement for lease would be used to lock the tenant in to taking the unit in once the shopping centre has been constructed.

Answer 159

A lease to run as long as the tenant firm is employed as the landlord's accountants. Correct. This is not a valid lease term. The lease term must be certain and may not continue indefinitely. A lease to run for 10 years, but may be brought to an end earlier if the tenant firm is no longer employed as the landlord's accountants. Incorrect Incorrect. This is a valid lease term. The lease term has a certain maximum duration, even though it can be brought to an end earlier.

Answer 160

Although the tenant can get out of the lease at 5 years, exercising a break is not straightforward, and there may be more Stamp Duty Land Tax payable on the longer term. Correct. Break clauses are generally strictly drafted, and if the tenant does not comply exactly with their requirements, the break notice will be invalid. As the length of the lease is relevant to SDLT calculations, there may be a greater amount of SLDT to pay.

Answer 161

£0 Correct Correct. The first PET was made more than 7 years before the man’s death. This means that the first PET is not chargeable. The second PET in March 2016 is a chargeable transfer. The value of the transfer (£200,000 ) is below the NRB, meaning no tax is payable. incorrect £16.560 Incorrect Incorrect. Note that the first PET was made more than 7 years before the man’s death and therefore it is not a chargeable transfer. You have calculated the value of the first PET and applied this against the NRB, thus reducing the amount of NRB available against the second PET. The value of the second PET is below the NRB, meaning no tax is payable.

Answer 162

£2,000 Correct Correct: The gift to the man’s son benefits from the annual exemption (‘AE’) for the 19/20 tax year. The AE for the 18/19 tax year was applied to the gift to the man’s daughter so is not available to be carried forward. The marriage allowance for a child of £5,000 is also deductible. It does not matter that the man gave his daughter the equivalent gift in the previous tax year. It is available to each child of the donor. The other options were wrong because they failed to apply both exemptions and/or incorrectly concluded that AE from the previous tax year was also available. £0 Incorrect Incorrect: Review your materials on lifetime exemptions and reliefs. The gift to the daughter was also made in the last tax year. What effect does that have on the availability of the annual exemption?

Answer 163

£6,000 (REVIEW) Correct Correct: The value of the gift to her mother is £4,000 after deduction of the annual exemption for the current tax year and the previous tax year was not used up. The value of the gift to her husband is nil as it is spouse exempt. The value of the gift to her daughter in the same tax year is £2,000 after deduction of the annual exemption for that year which is not used up by the gift to her husband. There is no annual exemption for the previous year as this has been used up. The gift to her son is eligible for 100% business property relief. The other options were wrong because they did not apply all relevant exemptions and reliefs. Incorrect £13,000 Incorrect: Review your materials on the spouse exemption and think about how this affects the cumulative total. £40,000 Incorrect: Review your materials on calculating tax on lifetime transfers. Note that the cumulative total is based on the chargeable value of the transfers. Not all of the transfers are chargeable, and some benefit from reliefs or exemptions that reduce their chargeable value.

Answer 164

£0 Correct Correct. APR applies to the agricultural value of property that has been owned and occupied for farming in the 2 / 7 years prior to death. The woman’s estate does not qualify for APR.

Answer 165

£5,200 Correct Correct: You needed to deduct one annual exemption, deduct the nil rate band and then tax the balance at 20%. £350,000 - £3,000 (tax year 17-18). The previous tax year’s annual exemption was used. £347,000 - £321,000 (the cumulative total was £4,000). £26,000 taxed at 20%. Incorrect £9,200 Incorrect: Review your materials on how to calculate the cumulative total. You deducted two annual exemptions. Only one annual exemption was available as the gift in September 2017 used up an annual exemption. You taxed the balance at 40% instead of 20%.

Answer 166

£0 Correct Correct. There is no SDLT on this Net Present Value. question: is the freehold value irrelevant to the fact pattern?

Answer 167

£2,000 Correct. The LTT is calculated as 1% of the £200,000 by which the NPV exceeds £225,000.

Answer 168

The lease is not registrable but can be noted against the landlord's title. Correct. The lease is more than 3 years but not more than 7 years. This is the correct answer.

Answer 169

It is likely that the landlord cannot unreasonably withhold consent if the alterations are considered an improvement from the tenant's point of view. Correct. As the alteration improves the premises from the tenant's perspective it would class as a tenant's improvement.

Answer 170

A copy of the lease. Correct. It is not usually necessary to include a copy of the lease.

Answer 171

The tenant must ask for consent, but the landlord may unreasonably withhold it. Correct. As it is not a fully qualified covenant, the landlord has no obligation to give consent. incorrect The tenant need not ask for consent, as the permitted use and proposed use are both in planning use class E. Incorrect. The permitted use is more specific than the planning use class. The tenant need not ask for consent, as the permitted use definition breaches the Code for Leasing Business Premises. Incorrect. The Code for Leasing Business Premises only regulates RICS members and regulated firms, but does not override the provisions of a lease. The tenant must ask for consent, and the landlord must act reasonably if withholding consent as the new use is not dissimilar. Incorrect. The use is specified in the lease, and the landlord need not give consent to a different use, even if only slightly different.

Answer 172

C. State a rent that is significantly above open market value. correct - this is a commercial consideration A -- you have to give length of the term B -- transparency of lease needed including rent review D -- no, again transparency! E -- no: have to be writing

Answer 173

D. Prepare a report on title for your client. correct -- tenant's solicitor does this first: who are you acting for? A -- landlord's solicitor does this B -- landlord's solicitor does this C -- landlord's solicitor does this E -- landlord's solicitor does this

Answer 174

D. The landlord has absolute discretion whether or not to give consent. correct -- absolute covenant = absolute discretion

Answer 175

The landlord cannot unreasonably withhold its consent to the works because the covenant is fully qualified. Correct This is correct. The covenant against the internal alterations is fully qualified. This means the landlord cannot unreasonably withhold its consent to the works. S. 19(2) of the Landlord and Tenant Act 1927 does not apply to alterations covenants that are already fully qualified. Leases will normally allow the tenant to make some alterations to the premises. Unless the lease stipulates otherwise, the tenant is free to carry out any alterations to the premises, subject to the legal doctrine of ‘waste’ which prevents alterations which would devalue the premises. However, the landlord will usually wish to control what alterations the tenant can undertake, especially in shorter leases. You need to be able to distinguish between absolute, qualified and fully qualified covenants in a lease and understand the effect of statute on certain covenants. S.19 (2) Landlord and Tenant Act 1927 applies to certain alterations covenants. It is important you understand when it will / will not apply. incorrect The landlord unreasonably withhold consent provided the proposed works do not constitute tenant's improvements. This is incorrect. The covenant is fully qualified, so the landlord must act reasonably whether the proposed works are tenant's improvements or not.

Answer 176

The Landlord will be able to withhold consent to the request to change the use of the property. Correct This is correct. S.19(3) of the Landlord and Tenant Act 1927 does not upgrade the qualified covenant into a fully qualified covenant so the Landlord does not need to act reasonably. This section does prohibit a landlord for charging a lump sum or an increase in the rent unless there are structural alterations taking place. The section also allows a landlord to require the payment of its legal fees as a condition of consent so there is no need for this obligation to be in the lease itself.

Answer 177

The alterations provision in the lease is a qualified covenant and, as the tenant’s proposed works are likely to constitute improvements, the landlord cannot unreasonably withhold its consent. Correct. The requirement for landlord’s consent means that the alterations covenant is a qualified covenant. Section 19(2) of the 1927 Act upgrades this to a fully qualified covenant where the works constitute tenant's improvements meaning the landlord cannot unreasonably withhold consent. As the tenant is presumably proposing the alterations to make the premises more suitable for its use, they would be likely to qualify as tenant's improvements.

Answer 178

You would advise the tenant that the landlord will likely be liable for repairing damage to the premises caused by flooding. Correct. Flooding is an insured risk, and these are excluded from the tenant's repairing obligation. It is likely (but you should check) that the landlord's obligations are to apply the money received from the insurers on repairing the damage.

Answer 179

The tenant is responsible for repairing the interior of the unit. The landlord is responsible for insuring the shopping centre and providing the services, recovering a proportionate part of the cost of doing so from the tenant. Correct Correct. Note that the landlord does undertake obligations in an FRI lease, but the cost falls upon the tenants. incorrect The tenant is responsible for repairing the interior of the unit. The landlord is responsible for insuring the shopping centre. The landlord need not covenant to provide the services, provided a managing agent is appointed to carry them out. Incorrect. The landlord will be obliged to carry out the services, and will recover the cost of doing so from the tenant. Managing agents may carry out the services on a day to day basis, but do so on behalf of the landlord.

Answer 180

Correct Correct. Assignment would not be appropriate here, as the tenant would be giving up control of the premises. The tenant does not need the premises at the moment, but may do in future.

Answer 181

The proposed assignee sells similar products to the shop next to the tenant's. Correct. In a shopping centre, the landlord will usually be able to impose a policy to mix the retail uses.

Answer 182

For an old lease, the outgoing tenant remains liable, but the incoming tenant only becomes liable if it gives a direct covenant to the landlord. For a new lease, the outgoing tenant is released from liability unless it enters into an authorised guarantee agreement. The incoming tenant automatically becomes liable. Correct. This states the liabilities of each party after assignment correctly.

Answer 183

The landlord's solicitor will require an undertaking for costs from the tenant's solicitor. Correct. This is the usual procedure.

Answer 184

Apply to the landlord for consent to the assignment. Correct Correct. It is not usual for long residential leases to require landlord's consent to assignment.

Answer 185

An OS1 search should be carried out for the assignee of a 10 year lease. Correct. A 10 year lease would be registered, and so an OS1 search should be carried out against the assignor's leasehold title.

Answer 186

The tenant wishes to be released from its repairing obligation. Correct. Underletting does not release the tenant from its repairing obligation (although it can in turn require the undertenant to comply with it).

Answer 187

The tenant will remain liable and the undertenant will be liable if the undertenant gives a direct covenant to the landlord. Correct. The tenant remains in a landlord/tenant relationship with the landlord. The undertenant will only be liable to the landlord if it gives a direct covenant (but it will be liable to the tenant as its immediate landlord).

Answer 188

The remainder of the term of the tenant's lease less three days. Correct. This is a certain term, and is less than the tenant's term.

Answer 189

The landlord's solicitor drafts the licence to underlet and the tenant's solicitor drafts the underlease. Correct. The landlord's solicitor will draft the licence to underlet, and it is for the tenant's solicitor to draft the underlease. incorrect The landlord's solicitor drafts the licence to underlet and the underlease for the tenant's approval. Incorrect. The tenant's solicitor will draft the underlease for the undertenant's (and the landlord's) approval.

Answer 190

The parties are ready to complete the licence to underlet and underlease. Correct. If the parties are ready to complete, there is no need for the agreement for underlease.

Answer 191

An OS2 search against the tenant's leasehold title. Correct. As the underlease is of part of the premises, an OS2 search of part should be carried out against the tenant's leasehold title.

Answer 192

A detailed specification of work to be carried out. Correct Correct. You would expect to find this in a licence for alterations. incorrect A direct covenant by proposed assignee or undertenant to the landlord to comply with the tenant obligations under the lease. Incorrect. You would expect to find this in a licence to assign or underlet (although not strictly necessary with a licence to assign a new lease). For a licence to underlet, a draft of the underlease. For a licence to assign, an authorised guarantee agreement. Incorrect. Both of these would not be unexpected. A covenant to pay the landlord's costs. Incorrect. Either type of licence will usually contain this.

Answer 193

To set out the credit checks and references that will be required of a prospective tenant. Correct. These will be carried out as part of the consent application, but as they will be done before the licence to assign is completed, they would not usually be referred to in the licence itself.

Answer 194

Because most long leases do not require landlord's consent to an assignment. correct

Answer 195

The landlord is required to act reasonably if withholding consent, and personal feelings are not a reasonable ground for withholding consent. The landlord will likely have to give consent within a reasonable time. Correct Correct. This is a qualified covenant against underletting (the landlord’s consent is required), which is automatically upgraded to a fully qualified covenant (s19(1)(a) Landlord and Tenant Act 1927). Furthermore, the landlord must make a decision within a reasonable time (s1, Landlord and Tenant Act 1988). As the prospective underlessee has good covenant strength, and the landlord's only objection is their personal relationship, it is likely that the landlord will have to give consent within a reasonable time.

Answer 196

The bookstore and the dry cleaners. Correct. The dry cleaners are the current tenant and are liable to pay the rent. The bookstore gave an AGA to the landlord in respect of the dry cleaners when they assigned to the dry cleaners. The landlord can therefore claim from the bookstore under the AGA. The original tenant (the clothes shop) will not have any original tenant liability as this is a new lease. The clothes shop’s AGA only covered the bookstore whilst they were the tenant.

Answer 197

Licence to assign and TR1 Correct. A licence to assign is needed to document the landlord’s consent. As the lease is registered, the assignment will need to be documented by way of Land Registry's standard transfer deed TR1. An assignment is the sale of an existing lease, not the creation of a new lease. There will be no new lease granted to the assignee. incorrect Licence to assign and deed of assignment. Incorrect. The assignment must be made by way of a TR1. Note that in this context the TR1 is a deed of assignment. Therefore, although the answer can be argued correct in a sense, it is not the best answer, as TR1 is more specific.

Answer 198

An OS1 search of the tenant's leasehold title. Correct. As the original lease was over 7 years, it would have been registered. It is the tenant's title that the assignee is interested in. incorrect An OS1 search of the landlord's freehold title (or if the landlord's title is unregistered a central land charges search against the landlord's name for the landlord's period of ownership) and an OS1 search against the tenant's leasehold title. Incorrect. You do not need to check the landlord's title, as the tenant's leasehold title will be registered.

Answer 199

The outgoing tenant if they entered into an authorised guarantee agreement, and the incoming tenant automatically on taking the assignment. Correct Correct. This is a new lease, and therefore liability shifts automatically from the assignor to the assignee on assignment. The outgoing tenant will only be liable if they have given an authorised guarantee agreement, but the incoming tenant will become automatically liable on assignment.

Answer 200

C. An assignment of the lease.

Answer 201

E. An OS3 search of the advertising agency’s leasehold title. lease is not over 7 years and therefore not registrable so OS3 search is needed OS3 needed regardless whether part or whole since it does not have to be registered

Answer 202

B. The chemist only.

Answer 203

D. Having security of tenure under LTA54 means the lease can only come to an end in one of the ways prescribed or permitted by LTA54 and the tenant or the landlord can apply to the court for an order for the grant of a new tenancy. both the landlord and the

Answer 204

D. The court can only order the grant of a new tenancy on such terms as it determines under the 1954 Act for a term not exceeding 15 years. correct example of where you need to know statute!

Answer 205

Before completion of the lease, you will need to serve a warning notice of contracting out on the tenant, and obtain a statutory declaration from the tenant. The lease will need to be amended to refer to the notice and declaration. Correct. The landlord's proposal to recover the premises at five years does not fall into a statutory ground, and the only way of ensuring that the tenant can be required to leave is to contract out the lease.

Answer 206

The tenant should vacate the premises on or before the CED. Correct. A s 25 notice is served by a landlord to terminate a protected tenancy whereas in this question we are asked for the correct method for the tenant to use. A s 26 notice/request is served by a tenant but it is a request for a new lease of the same premises which the tenant in this question does not want as we are told that they do not want to remain in the premises past the CED. A s 27 notice is served by the tenant and does terminate a protected tenancy but it must give three months’ notice and the tenant wants to end the lease on the CED which is only three weeks away so there is not sufficient time to serve a s 27 notice to end the lease on the CED. A tenant’s notice to quit is relevant for a periodic tenancy not for a fixed term tenancy as here. incorrect The tenant should serve a s 26 notice under the 1954 Act. Incorrect. Please review your materials on methods of termination of a protected tenancy in particular focusing on the two notices a tenant can serve and when each is appropriate. The tenant should serve a s 27 notice under the 1954 Act. Incorrect. Please review your materials on termination of a protected tenancy in particular focusing on the timing requirements for a s 27 notice. The tenant should serve a notice to quit. Incorrect. Please review your materials on termination of a protected tenancy in particular focusing on the type of tenancy which a notice to quit can be used for.

Answer 207

The tenant should serve a section 26 request on the landlord today. Correct. A s 26 request is served by a tenant, who is protected by the 1954 Act, to request a new lease of the same premises. The s 26 request includes the proposed commencement date of the new lease. The s 26 request can be served either before or after the contractual expiry date of the lease. However, as the proposed commencement date of the new lease 1) cannot be before the contractual expiry date of the lease and 2) there have to be at least 6 and no more than 12 months between the date the s 26 request is served and the proposed commencement date of the new lease, the earliest a s 26 request can be served is 12 months before the contractual expiry date of the lease. The s 26 request can then be served at any time from that date as long as another notice has not already been served under the 1954 Act (which has not happened on these facts). On these facts, 12 months before the contractual expiry date of the lease was 7 July 2021. That date has already passed as today’s date, stated in the question, is 1 January 2022, and no notices have yet been served under the 1954 Act so the tenant can serve a s 26 request at any time. As today is the earliest date they can serve the s 26 request, the tenant should do so today to request their new lease as soon as possible.

Answer 208

30 November 2022. Correct. A s 25 notice is served by a landlord, on a tenant who is protected by the 1954 Act, to terminate the tenancy. The 25 notice must specify in the notice the date at which the tenancy is to come to an end. The date of termination of the tenancy specified in the s 25 notice 1) cannot be before the contractual expiry date of the lease and 2) must be at least 6 months and no more than 12 months from the date the s 25 notice is served (which is today – 30 May 2022 on our facts). (s 25(2) and s 25(4) of the 1954 Act). As the contractual expiry date of the lease on our facts has already passed, the earliest date of termination that can be specified on our facts will be 6 months from today’s date (the date the s 25 notice is served). Incorrect 30 May 2022. Incorrect. Please review your materials on termination of a protected tenancy, in particular focussing on the two provisions in the 1954 Act regarding the date of termination which can be chosen (and which must be included in the s 25 notice) in relation to the contractual expiry date and the date the s 25 notice is served.

Answer 209

The landlord needs to serve a counter-notice within 2 months of the section 26 notice citing the relevant statutory ground of opposition to renewal. Correct. This is the correct procedure if the landlord wishes to oppose renewal. The landlord will rely on ground (g), being its intention to occupy the premises. It will be able to use the storage contracts to show a firm and settled intention. incorrect The landlord needs to serve a counter-notice within 2 months of the section 26 notice stating its opposition to renewal. If the tenant pursues the section 26 notice further, the landlord will need to give the relevant statutory ground on which it intends to rely. Incorrect Incorrect. The ground of opposition must be cited in the counter-notice to the section 26 notice.

Answer 210

It is administratively simpler. Correct. This is not a good reason - it is more complex to deal with a protected tenancy.

Answer 211

Although the detailed provisions have changed, the fundamental rationale remains the same. Correct. There have changes to the detail of the Act, but the fundamental rationale remains the same.

Answer 212

Security of tenure provides the landlord with greater flexibility over its own property. Correct. This is not a benefit - the landlord is more restricted in its use of the property. confused about: The landlord may be able to show that it has complied with the Code for Leasing Business Premises.

Answer 213

A monthly tenancy for a shop with a flat above it. Correct. A periodic tenancy can qualify for security of tenancy. The flat does not prevent the premises from qualifying as it is a subsidiary residential use.

Answer 214

A statutory declaration and reference to both the notice and statutory declaration in the lease itself. Correct. As 14 days have not elapsed since the landlord's notice, a statutory declaration is required. It is also necessary to refer to both notice and statutory declaration in the lease itself.

Answer 215

The tenancy does not have security of tenure under the Landlord and Tenant Act 1954 because it is an agricultural tenancy. Correct Correct. As an agricultural tenancy it would not qualify for security of tenure under the Landlord and Tenant Act 1954. It may qualify for a different type of security of tenure under the agricultural tenancy regime, but that is beyond the scope of this course.

Answer 216

The tenant can leave the premises on the last day of the contractual term, or it can remain in occupation beyond the last day. Correct Correct. The tenant is free to treat the contractual expiry as the end of its occupation, or to remain in occupation and hold over.

Answer 217

The landlord may forfeit the lease. Correct. The landlord may forfeit the lease even if it is protected.

Answer 218

They may serve notice to quit on the landlord. Correct. This is the correct procedure (more on this in the materials on termination). incorrect They can simply vacate the premises at any time. Incorrect. They would need to serve notice to quit. ( because this is a periodic tenancy) They will need to serve a section 27 notice. Incorrect. This would only be appropriate for a period of holding over. The correct procedure would be a notice to quit.

Answer 219

A friendly section 25 notice indicates that the landlord is willing to renew the lease; a hostile section 25 notice that the landlord intends to oppose renewal. Correct Correct. Both types are served by the landlord - the difference is in the landlord's attitude to renewal.

Answer 220

You would include both grounds in the notice. Correct. Where there is more than one ground, you should include them all. incorrect You would only include one ground. The ground of intention to occupy premises is better for your client because it is mandatory. Incorrect. If there is more than one ground, you should include them all. In this instance, it may be beneficial to include the persistent delay in rent, as if found, this would prevent your client from having to pay compensation.

Answer 221

Because if the rival supermarket becomes the landlord, then after five years of holding the reversion, they may oppose renewal on the basis of occupying the premises for their own use. Correct. This has happened in practice, and therefore this is why supermarkets may want to include a clause of this type.

Answer 222

The tenant wants to take advantage of a falling rental market. Correct. This is a good reason, as the tenant will otherwise be stuck on the rent last fixed by the previous lease.

Answer 223

The tenant serves a s27 notice to leave the week before the end of the contractual term. Correct. The tenant cannot use the section 27 notice to bring the lease to an end before the expiry of the contractual term.

Answer 224

A section 26 notice allows the tenant to initiate the lease renewal process if the landlord does not. Correct Correct. The section 26 notice gives the tenant a mechanism to initiate lease renewal rather than relying on the landlord. incorrect A section 26 notice does not need to include grounds for renewal. Incorrect. A section 25 notice need only include grounds for opposing renewal, not for renewal.

Answer 225

A lease term of 20 years, where the previous lease was 20 years. Correct. The court can only order a term up to 15 years. incorrect A lease term of 10 years, where the previous lease was 5 years. Incorrect. The court can grant a lease term of up to 15 years.

Answer 226

10 July Correct. The interim rent will become payable from the earliest date that could be specified in the section 26 notice as the proposed commencement date, ie, 6 months from service of notice. incorrect 10 January Incorrect. The date of the interim rent is not the date of service of the section 26 notice.

Answer 227

The landlord may wish to serve a hostile s25 notice. The tenant may wish to serve a section 27 notice that can bring the tenancy to an end at the end of the contractual term, or may just leave on the last day of the contractual term. Correct. This statement correctly summarises the position with the landlord's and tenant's notices.

Answer 228

28 February or 29 February if it is a leap year. Correct. Under the corresponding date rule, as there are not 31 days in February, the latest day of February is taken instead.

Answer 229

On L2 as it is the first in the chain of landlords who is a competent landlord. Correct. L2's interest will not come to an end in 14 months' time, and therefore L2 qualifies.

Answer 230

Surrender Correct. The tenant may be able to negotiate with the landlord to surrender the lease.

Answer 231

The landlord can exercise the break, but the tenant can hold over. Correct. The break is not invalid, but it cannot override the tenant's rights under the 1954 Act.

Answer 232

Z holds a freehold interest only, as the leasehold interest has merged into it. Correct. The lease has ended by being acquired by the same party as the freehold, Z. Z holds the freehold and the lease has ended by merger.

Answer 233

The tenant has breached its user clause. Correct. There may be damages payable, but there is no definable debt.

Answer 234

The landlord can sell the goods but must serve a further seven days' notice. Correct Correct. This is the correct procedure.

Answer 235

The tenant is proposing to assign the lease after the landlord has reasonably withheld consent. Correct. An injunction would be appropriate here to prevent the tenant from carrying out the unlawful assignment.

Answer 236

The landlord cannot forfeit the tenancy as there is no express right of forfeiture. Correct. As the tenancy is unwritten, there is no express right of forfeiture which the landlord must have to exercise forfeiture. Incorrect The tenancy would be deemed a monthly periodic tenancy, and the landlord can simply serve notice to quit. Incorrect. The agreed term is one year. It would only be deemed a monthly tenancy if the parties had not agreed a term. The landlord can forfeit without a section 146 notice. Incorrect. The landlord cannot forfeit here.

Answer 237

The landlord can seek forfeiture for the non-payment of rent, but not for the assignment. Correct. The landlord has waived forfeiture for the unlawful assignment by accepting rent from the assignee. However, the non-payment of rent is a new breach that gives rise to the ability to forfeit the lease.

Answer 238

The mortgage lender should apply for relief from forfeiture. Correct Correct. This is the correct procedure. The mortgage lender will then acquire the leasehold interest.

Answer 239

The landlord can pursue a damages claim, but will need to serve a section 146 notice and the damages will be limited to £1,000. Correct. The landlord can claim damages, but they will be limited to the reduction in the value of the reversion.

Answer 240

It provides a relatively quick and efficient way to deal with breaches of the repairing obligation, and if the tenant does not remedy the breach, allows the landlord to carry out the work and recover the whole cost of remedying the breach as a debt. Correct. These are the advantages of a Jervis v Harris clause.

Answer 241

The tenant can serve a counter-notice, which will make it more difficult for the landlord to proceed. However, the landlord will likely be able to depend on a Jervis v Harris clause anyway. Correct. The lease meets the requirements for a counternotice, being a term of 7 years or more, and 3 or more years left to run. As it is an FRI lease, it will almost certainly include a Jervis v Harris clause. Incorrect The tenant can serve a counter-notice, which will make it more difficult for the landlord to proceed. It is likely that the lease does not contain a Jervis v Harris clause. Incorrect. An FRI lease will almost certainly include a Jervis v Harris clause.

Answer 242

Forfeiture and a debt action. Correct. As other tenants are available, forfeiture would be an appropriate remedy. If the tenant does not settle the rent to avoid forfeiture, then the landlord will need to pursue an action in debt as well.

Answer 243

An injunction Correct. As the tenant has not yet breached the lease, an injunction would be the appropriate remedy to prevent the intended breach.

Answer 244

The tenant will be required to top up the rent deposit and pay the next quarter's rent as usual. Correct. If the landlord has had to take money from the rent deposit, the rent deposit deed will normally require the tenant to top it up.

Answer 245

[C] Your client can re-enter the premises and forfeit the lease without serving a s.146 notice. no need for notice for rent

Answer 246

[E] The tenant needs to owe rent for a minimum prescribed period. Prior to seizing the tenant’s stock, the landlord has to serve notice on the tenant of its intention to do so and let a further prescribed period expire. The landlord can only sell the tenant’s seized stock after giving the tenant notice of its intention to do so and then only after the expiry of a further prescribed period. tenant needs to owe rent for min period: 7 days then prior to seize: further 7 CLEAR days (exclude weekends and holidays) before selling: 7 CLEAR days

Answer 247

[C] £9,618.41 = Annual Rent + VAT + interest CRAR only applies to annual rent does not matter how it is described in lease includes VAT and interest

Answer 248

The landlord will be entitled to forfeit the lease, if there is a specific provision in the lease enabling it to do so, but must first serve a section 146 notice. Correct. A landlord’s ability to forfeit only arises if there is an express provision in the lease enabling it to do so. Before forfeiture can take place, however, the landlord must serve a section 146 notice. why no counter notice?? incorrect The landlord will be entitled to forfeit the lease, if there is a specific provision in the lease enabling it to do so, but must first serve a section 146 notice. The notice will need to include reference to the tenant’s entitlement to serve a counter notice. Incorrect. Whilst it is correct that a landlord’s ability to forfeit only arises if there is an express provision in the lease enabling it to do so and the landlord must, on these facts, serve a section 146 notice , please revisit your materials on landlord’s remedies, making sure you understand under what circumstances a counter notice would be required (see the Leasehold Property (Repairs) Act 1938).

Answer 249

The landlord will be entitled to enter the premises, if there is a specific provision in the lease enabling it to do so, to carry out the remedial works itself and claim the costs of doing so from the tenant as a debt. Correct. The case of Jervis v Harris concluded that the landlord can reserve the right to enter the premises, make good the damage itself and recover the cost from a tenant. If the lease describes those costs as a debt, this money would be recoverable by the landlord as a debt. The advantage of this for the landlord is that any sum claimed as a 'debt' is not subject to the same limitations or requirements as a claim for damages under s.18 of the Landlord and Tenant Act 1927 or under the Leasehold Property (Repairs) Act 1938.

Answer 250

A debt action. Correct. While the other options might sound plausible they are each incorrect. The landlord is happy for the tenant to remain and so it would not be in the landlord’s interests to forfeit the lease. CRAR can only be used to recover principal rent, VAT and outstanding interest– not service charge or insurance. Specific performance and injunctions may be appropriate in limited circumstances for other breaches of covenant, but not for non payment of rent. Therefore the landlord should sue for non payment of rent.

Answer 251

The landlord can forfeit the lease using either the peaceable re-entry method or the court action method, without having to serve a section 146 notice first. This is correct. A section 146 notice is not required where forfeiture is pursued for non-payment of rent (s146(11) Law of Property Act 1925). incorrect The landlord can forfeit the lease without having to serve a section 146 notice when using the court action method but would need to serve a s 146 notice if using the peaceable re-entry method. This is incorrect. Please review your materials on forfeiture and in particular the rules on whether a s 146 notice is required to forfeit for non-payment of rent. The landlord can pursue forfeiture but it would be advisable to pursue Commercial Rent Arrears Recovery at the same time. Incorrect This is incorrect. The landlord must choose one or other of the remedies, but cannot pursue them both. The landlord is unlikely to be successful in pursuing forfeiture as the tenant has already confirmed that it will repay the arrears in six months.

Answer 252

The tenant should try to negotiate with the landlord for a surrender. It is likely a reverse premium will be payable. Correct. The tenant's only option apart from alienation is to try to agree a surrender. As the landlord will be giving up 10 years of rent, the landlord is likely to want a lump sum from the tenant to compensate it for this. As the money goes in the same direction as the property interest, it would be a reverse premium.

Answer 253

Use of the property as a doctor’s surgery would be a future breach of the restrictive covenant and, as a first option, the buyer should try to obtain (at the buyer’s cost) a restrictive covenant insurance policy. This question is on a future breach of a restrictive covenant. It is about the best advice as to the options/solutions for a future restrictive covenant breach. Correct. Where there will be a future breach of the restrictive covenant on the part of the buyer, the first remedy that the buyer should consider is a restrictive covenant indemnity policy which the buyer should pay the cost of. Please refer back to your materials relating to the different types of covenants and the remedies that are available if they are breached depending on whether the breach was a past breach by the seller or will be a future breach by the buyer.

Answer 254

Undertake a Land Registry priority search using Form OS1. This is correct. The buyer’s solicitor would need to do this to ensure the buyer benefits from a priority period. The OS1 freezes the register given the buyer a priority period to register the transfer. It also reveals if any changes have been made to the register since the title was investigated pre-exchange. This question is on a buyer's solicitor's pre-completion steps. It is about selecting an appropriate pre-completion step undertaken by the buyer's solicitor on the purchase of a registered freehold property. -- Provide an undertaking to the seller’s solicitor to transfer the deposit monies. This is incorrect. Whilst it is important to ensure this has been done, this should have been done on or before exchange of contracts. It is not a pre-completion step.

Answer 255

A Central Land Charges Search on Form K15 against Mr B and Ms C. Correct. While the other options might sound plausible they are each incorrect. On a purchase of unregistered land, the transfer to the buyer must complete within the 15 working day 'protection period' in the Central Land Charges Search made against the name of the current seller. The 15 working day protection period in any pre-exchange Central Land Charges Search on K15 made against the current seller would have expired and therefore the search needs to be renewed before completion. This question is on pre-completion searches in unregistered land when you act for the buyer. It is about which pre-completion search the buyer's solicitor should carry out when the buyer is buying unregistered land from a company with the aid of a mortgage (you are not acting for the bank).

Answer 256

The replies to standard enquiries of the local authority Correct. There is a question to the local authority at enquiry 2.2 asking if there are any public right of ways (which would include footpaths) that abut or cross the property. While the other answer options might sound plausible, they are each incorrect. This question is on pre-contract searches. It is about the appropriate search to find out whether there is a public footpath on the property.

Answer 257

A local authority search (CON29) This is correct. The CON29 search shows all applications for planning permissions granted, issued, refused or pending. The LLC1 search will only show planning permissions that have been granted. This question is on which search to do to confirm whether an application for planning permission for building works was refused. It is about knowing which pre-exchange search a refusal of an application for planning permission would show up on.

Answer 258

Register the charge at Companies House within 21 days beginning the day after the creation of the charge, and at the Land Registry within 30 working days of the OS1 search. This question is on registered freehold post-completion steps. It is about the time limit for the registration of a buyer's charge at Companies House. Correct. This shows the correct timescale for both Companies House and the Land Registry. --- Incorrect. The timescale for Companies House should be calendar days, and for the Land Registry working days. Incorrect. The timescale for Companies House is incorrect, and the timescale for the Land Registry is only applicable for unregistered land, and fails to take account of the priority period. Incorrect. The timescale for Companies House is incorrect and the timescale for the Land Registry is only applicable for unregistered land, and fails to take account of the priority period. Incorrect. This answer deals with the registrations in the wrong order. It also confuses the two time scales and incorrect states that there is an MRO1 box on the AP1 form. The Land Registry will want to see that the charges has been registered at Companies House before registering it, and there is no mechanism for the two registrations to be combined.

Answer 259

The buyer’s solicitor should draft a special condition in the contract specifying that the seller must carry out the repairs to the roof of the property before the completion date to the reasonable satisfaction of the buyer. This question is on conditions in a sale contract for a property. It is about how a seller's promise to repair the roof of the property should be incorporated into the contract. This is correct. Special conditions are required to deal with specific matters agreed between the parties. Caveat emptor would mean that in the absence of a special condition, the responsibility for the repairs would fall to the buyer. s2 Law of Property (Miscellaneous Provisions) Act 1989 states that all the terms agreed between the parties must be incorporated in the contract, so the seller’s promise to repair the roof would not be binding without being in the contract.

Answer 260

This question is on VAT. It is about the VAT position on the sale of a commercial property, where the seller has opted to tax, to a bank which makes only exempt supplies. Correct. The option to tax a commercial building made by a VAT registered business seller means VAT is chargeable on the sale at 20%. The bank only makes exempt supplies (VAT is not chargeable on the goods and services it supplies) so the bank cannot recover the VAT it paid (input VAT) by offsetting it against output VAT it charges on goods and services it supplies since the bank cannot charge output VAT.

Answer 261

You will need to undertake a SIM search to check whether or not the neighbouring land is registered. This question is on the benefit of an easement in unregistered land. It is about what you should do next when acting for a buyer and discovering the property has the benefit of an easement. Correct. A SIM search will inform you whether or not the neighbouring land is registered. This is important as this will determine whether or not the easement will bind it. If the neighbouring land is unregistered then the easement will continue to bind the neighbouring land whilst it remains unregistered. If the neighbouring land is registered, however, the easement needs to have been registered on the charges register of the neighbouring land’s title in order for it to bind its current owners.

Answer 262

The seller should be asked to obtain and provide a Regularisation Certificate in respect of the extension works before completion. This question is on planning permissions and building regulations approvals for building works not being obtained. It is about the best advice to give the buyer of a property where an extension (not concealed) was built by the seller five years ago, and the seller did not obtain planning permission or building regulations approval for the works. Correct. This is the best option. There is no need to take any action regarding planning permission, as the extension works were completed more than four years ago, and were not concealed. They are immune from enforcement action. However, there is no time limit on the local authority applying for an injunction against a breach of building regulations. Moreover, if the extension is not compliant with building regulations, it may be unsafe. An indemnity insurance policy will cover the financial loss caused by enforcement action, but will not cover liability for injury or death caused by unsafe building work. If the local authority inspects the work and provides the regularisation certificate, this will eliminate the risk of enforcement action and confirm that the work is safe.

Answer 263

The company will have to pay for the damage because the buyer bears the risk between exchange of contracts and completion. This question is on the SCPCs and risk after exchange. It is about who bears the risk for a property (e.g. if it is destroyed by fire) after exchange when the contract incorporates the SCPC. Correct. Pursuant to the SCPCs the risk of the property passes to the buyer from the date of the contact, which is exchange. The buyer should have put in place insurance from exchange of contacts. The seller is no longer responsible for the property from exchange. The cost of repair is not shared between the parties, it will be at the buyer's cost. The seller does not have to maintain its insurance of the property until completion. The buyer's insurance policy should have been in place from exchange (not completion).

Answer 264

You would expect either Formula B with a ‘release of contracts’ or Formula C to be used at exchange because there is a residential chain of transactions, and exchange and completion for all of the transactions needs to be synchronised. This question is on the exchange formulae. It is about which formula is best to use to exchange in a residential purchase where the seller is simultaneously buying a new home at the same time as selling and the undertakings involved in the formulae. Correct. In residential conveyancing you often have a chain of transactions as is the case here. As such the solicitors involved have to ensure that exchange of all the contracts takes place simultaneously (and that all the transactions complete on the same day). Although Formula C was designed for chain transactions, it is rarely used in practice as it is too complicated. The most common method of tying chain transactions together is for each transaction to be exchanged under Law Society Formula B, but for the contract to be ‘released’ to the solicitor who has a related transaction to exchange until that related transaction has exchanged.

Answer 265

No planning permissions will be needed although building regulations approvals for the works will be required. This question is on planning consents. It is about whether planning permission for works, planning permission for a change of use and building regulations approvals are required when the use remains in the same class and the works are internal only. Correct. Under s55(2) TCPA 1990 the internal building works do not constitute development and so planning permission is not required for them. The change of use of the property, from a shop to a restaurant, where both uses are within the same use class is not a material change of use and so does not constitute development, so planning permission is not required for the change of use. Building regulations approvals are required for works carried out and cover safety matters such as structural integrity. They are a separate consent from the planning permissions.

Answer 266

You should not provide an undertaking to redeem the existing mortgage in the Law Society’s recommended form until you are holding the shortfall in your firm’s client account in cleared funds. This question is on the sale of a mortgaged property which has negative equity. It is about whether you need the shortfall that will need to be paid by the client to the bank in your client account and by when in the transaction. Correct. A solicitor can act on the sale of a property in negative equity, but care must be taken not to provide an undertaking (nor to agree to provide an undertaking) unless the shortfall is held in cleared funds in client account. Care must also be taken to have the client’s agreement that it is to be used for this purpose, and not demanded back.

Answer 267

The Seller can claim compensation and can serve a notice to complete by email on the buyer today after 2pm. The buyer will then have 10 working days, excluding today, to complete. This question is on the seller's remedies under the SCPC for delayed completion. It is about the detail of the remedies available to the seller under the SCPC if the buyer will be late completing. Correct. This answer reflects the contractual terms prescribed by the SCPC. The ten working day period, given to the defaulting party to complete, starts to run the day after the notice to complete has been deemed served. The notice to complete can be served at any time on the day of completion once the time for completion has passed. The time for completion is 2pm under the SCPC. The compensation is payable for every day of delay so that would include today (the day the buyer was supposed to complete) but would not include the day completion takes place, on these facts, as the buyer will be completing before 2pm. Unless 2pm has passed on the day the buyer completes, the buyer will not have been 'late' on that day. Finally, the Seller cannot both claim compensation under the SCPCs and also rescind the contract, they can only do one or the other. ---- Incorrect. Please review your materials as to how compensation is calculated when it is payable for late completion. The compensation is payable for every day of delay so that would include today (the day the buyer was supposed to complete) but would not include the day completion takes place, on these facts, as the buyer will be completing before 2pm. Unless 2pm has passed on the day the buyer completes, the buyer will not have been 'late' on that day.

Answer 268

The buyer will need to give the seller an indemnity covenant at completion if SCPC 6.6.4 is incorporated into the contract. This question is on an indemnity covenant note in the Proprietorship Register of a registered freehold title. It is about the effect of an indemnity covenant note on the buyer. Correct. This entry on the Proprietorship Register indicates that there is a positive covenant in the Charges Register and states that the seller gave an indemnity covenant in respect of complying with it when they bought the Property. SCPC (Standard Commercial Property Conditions - incorporated into contracts for the sale of commercial property) 6.6.4 means that if the seller gave such an indemnity covenant (as here), the buyer will have to give an indemnity covenant to the seller when they purchase the Property (to continue the indemnity covenant chain). The buyer's indemnity covenant will be given in the Transfer at completion.

Answer 269

The client will be bound if the restrictive covenant was registered as a D(ii) land charge against the name of the original covenantor. This question is on a covenant in a conveyance in the epitome for unregistered land. It is about whether and how a restrictive covenant will bind the buyer of the unregistered land. Correct. If a restrictive covenant in unregistered land is registered at the Central Land Charges department as a D(ii) land charge against the name of the original covenantor, it will bind the purchaser of the land.

Answer 270

You need to ensure another trustee is appointed to pay the purchase money to, so the restriction will not apply. This question is on a tenant in common restriction in the Proprietorship Register. It is about what the buyer needs to do when one of the sellers has died (i.e. there is a sale by a sole surviving tenant in common). This is correct. This restriction tells us Mark and Philip are beneficial tenants in common and prevents a sale by a sole owner. This means a sale by Mark alone is not permitted and would not be registered by the Land Registry. A second trustee needs to be appointed in order to comply with the restriction. This will overreach Philip's beneficial interest, which will have passed under his estate because the right of survivorship will not have applied on his death.

Answer 271

Desktop environmental search, chancel repair search, highways search, waterways search and commons registration search. This question is on pre-contract searches and enquiries. It is about listing all the relevant searches to be undertaken when purchasing a commercial property which is situated by a river and where open agricultural land is part of the property being purchased. Correct. The environmental search should usually be carried out, but particularly here as it will give basic flooding information relevant in the proximity of a river. The waterways search is necessary here to give information on responsibility for the maintenance of the river bank. The commons search is necessary for the open land.

Answer 272

A restriction against dealings in the proprietorship register the Bank’s charge in the charges register. This question is on entries in the official copies of a registered freehold title. It is about the correct entries that will be made for the buyer's charge and which registers these appear in. This is correct. Charges such as mortgages are recorded in the charges and any entries restricting the current proprietor's ability to deal with the property are recorded in the proprietorship register.

Answer 273

Licence to underlet. This PLP question assesses your knowledge of alienation, specifically the procedure on an underletting. The landlord and undertenant, along with the tenant, will enter into this document. It grants formal permission to the underletting and will contain a covenant from the undertenant to comply with the tenant covenants in the lease.

Answer 274

To vacate the premises on or before the Contractual Expiry Date. This PLP question assesses your knowledge and understanding of ending a tenancy that has security of tenure. If a tenant does not want a new tenancy of the same premises and the contractual expiry date of the lease (CED) has not yet passed the best advice is that the tenant should vacate the premises on or before the CED to terminate on the CED.

Answer 275

The landlord can refuse consent and does not have to act reasonably in withholding consent. This PLP question assesses your understanding of types of covenant and the impact of statute on qualified user covenants. This is a qualified user covenant on the facts - 'The Tenant shall not do [ ] without the Landlord’s consent'. Section 19(3) of the LTA 1927 applies to qualified use covenants. Section 19(3) does NOT upgrade a qualified use covenant to a fully qualified use covenant. Therefore there is no obligation on the landlord to act reasonably. What s 19(3) does do is to stop the landlord demanding that the tenant pay a fine or sum of money in the nature of a fine, by way of increased rent or otherwise, to the landlord for their consent to a change of use unless the change of use involves structural alterations to the premises.

Answer 276

A does not have a right to forfeit without first obtaining the leave of the court This PLP question assesses your knowledge and understanding of the procedure to forfeit a lease. This is correct. The Leasehold Property (Repairs) Act 1938 applies to covenants to repair in any lease when the lease is granted for over 7 years and there are at least 3 years still to run. This provides additional protection to tenants in the event the landlord seeks to forfeit a lease for breach of a repair covenant, which the landlord (A) is seeking to do on the facts here. On the facts, the lease contains an express right to forfeit in the event of tenant breach and this right has not been waived on the facts. The landlord must serve s 146 notice and give the tenant the chance to remedy the breach within a reasonable time, which it has done. The notice must also inform the tenant of their right under the 1938 Act to serve a counter notice within 28 days. We are told that the tenant has served a counter-notice, therefore the landlord cannot proceed to claim forfeiture without first obtaining the lease of the court. It does not matter that the tenant has failed to remedy the breach in the circumstances.

Answer 277

Official copy entries of the registered freehold title, replies to CPSE.1 and CPSE.3 enquiries, a draft agreement for lease, a draft lease and written consent from their lender to the letting. This correctly describes the documents that the landlord's solicitor should provide. The tenant's solicitor will need to investigate the landlord's registered title in the same way a buyer's solicitor would in a freehold transaction. CPSE 1 enquiries should be provided, as with a freehold purchase. CPSE 3 are additional enquiries in respect of a new letting. As the parties have agreed that the landlord will complete works before completion of the lease, an agreement for lease is appropriate to document this agreement. The draft lease is required as this is a new letting. Written consent from the lender is required giving the landlord permission to grant the lease. We are told the property has a registered charge over it. Without this consent, the tenant would not be able to register their lease at the Land Registry and the landlord would be in breach of the terms and conditions of its mortgage. A DS1 is not required as there is no expectation that the landlord will be discharging their mortgage on completion of the letting. Written consent from the lender is just required.

Answer 278

The lease will contain one rent review date and the tenant will be responsible for the repair of its unit. This PLP question assesses your understanding of lease content and structure and how a FRI lease works. This is the best option. A commercial lease will often contain a rent review provision triggering the process every 5 years. As this will be an FRI lease, the tenant should expect to be responsible for the repair of the premises i.e the unit.

Answer 279

The landlord will become the subtenant’s landlord on the terms of the sublease. This PLP question assesses your understanding of lease termination. If the tenant surrenders its lease, this will not affect the subtenant's interest as the underletting was with consent. The landlord will become the immediate landlord of the subtenant under the terms of the sublease.

Answer 280

The landlord cannot unreasonably withhold consent if the tenant considers the works amount to an improvement to the property. This PLP questions assesses your understanding of alteration covenants in a lease. The covenant against internal non-structural alterations is qualified. s 19(2) LTA 1927 therefore applies to this covenant and implies into it in relation to improvements a proviso that the landlord’s consent is not to be unreasonably withheld. It therefore converts a qualified covenant against alterations that amount to improvements into a fully qualified one. Lambert v FW Woolworth & Co Limited [1938] held that 'improvements' are to be construed widely as works which improve the premises from the tenant’s perspective, not the landlord's.

Answer 281

The travel company and the health shop. This PLP questions assesses your knowledge and understanding of liability of former tenants under a lease when it is assigned. The travel company is the current tenant in occupation of the premises and currently in breach of the repair covenant. It has the burden of all the tenant covenants and is liable. The health shop is liable under the AGA it gave as a condition of assignment. It will be liable under this AGA unless and until the travel company lawfully assign the lease.

Answer 282

Your client has to serve a notice on the tenant in which the tenant agrees to accept a lease without security of tenure; if completion is to take place in the suggested timetable, the tenant will have to sign a statutory declaration. This PLP question assesses your knowledge and understanding of the process to contract out of security of tenure. Given the deadline that completion is due to take place, this answer is the most appropriate. It also correctly describes the parties who would serve the notice / sign the declaration.

Answer 283

The landlord should exercise its right to enter the premises and remedy the breach before then recovering the costs from the tenant as a debt. The PLP question assesses your knowledge and understanding of a landlord's remedies in the event of tenant breach of covenant. The lease contains a self help clause (also called a Jervis v Harris clause) which means this is the best remedy in the circumstances. Describing the sums which the landlord can recover from the tenant as a debt rather than damages means that the statutory restrictions in relation to claiming damages for breach of a repair covenant do not apply to this self-help remedy.

Answer 284

Goods can only be seized to satisfy the principal rent debt, not the insurance premium payment debt. This PLP question assesses your understanding of a landlord's remedies in the event of tenant default, particularily Commercial Rent Arrears Recovery (CRAR). CRAR can only be used to recover principal rent plus VAT and interest owed on principal rent which is outstanding under the lease. The insurance premium is not not classes as principal rent.

Answer 285

TR1 and Licence to assign. This PLP questions assesses your understanding of the procedure to assign a lease. The TR1 will be entered into by the tenant and assignee and it will transfer the lease to the assignee. The Licence to assign is entered into by all the parties and grants permission to assign. The assignee will enter into a direct covenant with the landlord to comply with the tenant covenants in the lease.

Answer 286

The ‘54 Act notice to terminate the lease should be served today with a date of termination of 1 July this year. This PLP question assesses your understanding of the procedure on termination of a protected business tenancy. The s 25 notice can be served by the landlord 12 months before the CED, at the earliest, or at any time after the CED, whilst the tenant is holding over and the terms of its current lease are continuing, (provided another notice has not already been served under the 1954 Act). The date of termination must be at least 6 months but not more than 12 months after the date the s 25 notice is served (s 25(2)). On the facts, as we are assuming today's date is 1 January, there is less than 6 months to the CED - 19 May - so the lease cannot be terminated on the CED. At least 6 months notice must be given. As the landlord wants to end the lease as soon as possible, it should just give this minimum amount of notice.

Answer 287

14 days from the date the undertenant went into occupation of the warehouse. This PLP question assesses your knowledge of the post-completion steps on the grant of a lease. SDLT must be paid within 124 days of "the effective date". This is usually completion, but will be earlier if the tenant goes into occupation as it has done here.

Answer 288

The landlord must act reasonably in considering the request and should respond to the request within 28 days by written notice. This PLP question assesses your knowledge and understanding of alienation covenants. This is a qualified covenant against alienation. s 19(1)(a) upgraded this covenant so that is the 'fully qualified' and the landlord must act reasonably. s 1 of the LTA 1988 also applies so that the landlord is under a statutory duty to respond to the written request in writing within 28 days (a reasonable time according to Dong Bang Minerva v Davina)

Answer 289

Section 27 notice. This PLP question assesses your knowledge and understanding of termination of a protected tenancy. As the contractual expiry date (CED) has passed and the tenant is 'holding over' the only way the tenant can terminate the tenancy is to serve at least 3 months notice under s 27 of the '54 Act.

Answer 290

An Official Search on form OS2, which gives a 30 working day priority period. This PLP question assesses your understanding of the procedure on grant of a lease. As this is the grant of a lease of part of the landlord's freehold title, an OS2 - rather than OS1 - is appropriate. This gives a 30 working day priority period.

Answer 291

To serve a request on the landlord pursuant to s.26 Landlord and Tenant Act 1954 asking for new lease to start as soon as possible. This PLP questions assesses your understanding of business tenancies. A tenant's request for a new tenancy must be made by a s 25 notice setting out the tenant's proposals for a new tenancy. This is the best option in the circumstances.

Answer 292

Notify the landlord that the underlease has completed. This PLP question assesses your understanding of the steps taken in an underletting. Correct. The landlord is not a party to the underlease and the lease and licence to underlet will usually provide that the landlord is notified when the underlease completes.

Answer 293

To check for any problems with a shortfall or timing of the funds earlier rather than later, and to find out if they intend for you to act for their mortgage lender This is a PLP question which assesses your understanding of a freehold transaction and the different issues that arise at the initial instructions stage. A solicitor should identify any issues with funding. For example, a client may not have considered Stamp Duty Land Tax or Land Transaction Tax. If the solicitor is to act for the mortgage lender then they will need to know this; for example, to check that they are on that lender’s panel. A solicitor will not generally be authorised to give financial advice in respect of interest rates. Finding issues with the property that would enable a reduction in the purchase price is not likely to happen in most cases and is not the main reason that a solicitor needs to discuss funding. It is also not accurate to say that a first-time buyer will be paying in cash. Finally, residential lenders will issue standard forms of legal charge and certificate of title, and there is no scope for these to be negotiated.

Answer 294

You cannot act for the friend, because their solicitor will need to advise on the financial transaction and negotiate the documentation This is a PLP question. It assesses your understanding of professional conduct in the context of a property transaction, specifically conflicts of interest. Correct – unlike with a high street lender, there is scope for conflict in negotiating the financial side of the transaction and the documentation.

Answer 295

The charges register of the official copies for the third party’s land This is a PLP question. It assesses your understanding of title investigation of a registered property, specifically the contents of a registered title. A right of way is an easement. It should be registered in the charges register of the burdened land. The benefit would appear in the property register of the land that has the benefit. The proprietorship register contains the class of title and the details of the registered owner and any restrictions on their ability to deal with the property. It does not contain the details of any rights that benefit or burden the land. A SIMR search confirms if a property is registered or not and gives the registered title number for a piece of land. It does not give details of any rights that benefit or burden the land. If the burdened land was unregistered, the right of way should be protected by a CLC search against the name of the seller. Although the benefit of the right of way will show on the property register of the property, it is also important to check that the burden of the right of way is shown on the charges register for the third party’s land.

Answer 296

They will only be able to obtain a qualified title at the Land Registry, which may make the property less attractive as security to a lender if needed in the future This is a PLP question, which assesses your understanding of title investigation of unregistered title and first registration of a property at the Land Registry. Correct – missing covenants will lead to the Land Registry registering only a qualified title. This may cause issues with secured lenders. Although the indemnity policy may cover the buyer’s financial loss if these covenants are later enforced, they may conflict with the buyer’s use of the property. -- Possessory title is given where title is claimed on the basis of adverse possession or there are no title deeds. The original covenantee may not be the person with benefit, this may prejudice attempts to obtain indemnity insurance, and it is likely to be impractical. Even if the person with benefit can be contacted, there is no guarantee that they will agree. The title guarantee in the transfer deed is a contractual obligation between the parties and is not relevant to the Land Registry. The indemnity policy is irrelevant to the Land Registry and has no effect on the class of title awarded.

Answer 297

Listed building consent will likely be needed in addition to planning consent for the proposed alterations to the building This is a PLP question. It assesses your understanding of planning permission and the impact of a property being listed. Correct – for alterations to a listed building, specific listed building consent will be required in addition to standard planning permission -- Listed building consent may be needed for changes to the interior of the property as well Changes can be made, but they are subject to a stricter regime. It is usually in the interests of preserving the building’s appearance to find a commercially viable use for it as this makes it more likely that funds will be available to look after it. Of course, the client may withdraw if its proposals are unlikely to be acceptable, but in some cases they will be. Listed building consent is needed in addition to, not in place of, planning permission A number of categories of permitted development listed in the GPDO do not apply to listed buildings.

Answer 298

To register the land at the seller’s expense before proceeding further because of the rules on compulsory first registration This is a PLP question, which assesses your understanding of title investigation of unregistered land and compulsory first registration of land. Correct – the seller’s title should have been registered, and the seller should attend to this -- Although it is correct to ask the seller’s solicitor to register the land at the seller’s expense, once done, the buyer’s solicitor will have no need to see the missing plan and grant of probate. The buyer’s solicitor should not be required to investigate unregistered title, as the title should have been registered by the seller. Although the land should be registered at the seller’s expense, the fundamental reason is that the seller should have registered the title under the rules of compulsory first registration.

Answer 299

The client should apply for a certificate of lawfulness and building regulations consent This is a PLP question, which assesses your understanding of planning and building regulation enforcement. The certificate of lawfulness will deal with the doubt that the work falls within the GPDO, and the question states that building regulations consent is needed for the work. -- As there is doubt whether the work falls within the GPDO, it would be best to obtain a certificate of lawfulness. The question indicates that building regulations consent is required If the work falls within the GPDO, then a certificate of lawfulness will be sufficient. It is better to obtain the proper consents, especially considering that the client is planning to sell the property on in a few months’ time. It will be much easier if they have the correct paperwork.

Answer 300

Desktop environmental search This is a PLP question, which assesses your understanding pre-contract searches and enquiries. Correct – a desktop environmental search will identify both flooding risk and risk of contamination. Further investigations may be necessary depending on the results of the desktop search, but this is the correct place to start. -- Incorrect – a Phase II environmental survey is only concerned with contamination, but is premature at this stage – a desktop environmental search is more appropriate. A waterways search is concerned with responsibility for maintaining waterway banks, etc, not flooding.

Answer 301

The seller’s solicitor has misrepresented to the buyer’s solicitor that the seller’s solicitor held a signed contract and has breached the undertaking to hold that contract to the other solicitor’s order This is a PLP question. It assesses your understanding of professional conduct in the context of a property transaction, specifically professional undertakings. Correct – the seller’s solicitor should have checked that they were holding the signed contract before proceeding to exchange

Answer 302

The draft contract should be based on the latest edition of the Standard Conditions of Sale with only such additional clauses as are absolutely necessary for the purposes of the transaction This is a PLP question. It assesses your understanding of the property contract and the Law Society Conveyancing Protocol. Correct – this is an accurate statement of the requirements of the Conveyancing Protocol (see section 13)

Answer 303

An OS1 search against the registered title and a bankruptcy search against the buyer This is a PLP question. It assesses your understanding of the pre-completion searches that must be carried out in a property transaction. Correct – an OS1 search is the correct search for a registered whole title and a bankruptcy search against the buyer is to protect the mortgage lender’s advance.

Answer 304

Capital Gains Tax only This is a PLP question which assesses your understanding of taxation in a freehold property transaction. In a property transaction, you need to be aware of three different taxes that could be payable. These are SDLT/LTT, Capital Gains tax (CGT) and VAT. SDLT / LTT and VAT are payable by a buyer. You are advising a seller on the facts so none of these taxes would be payable by the client. CGT is a tax on the profit when you sell certain assets that have increased in value. It is not payable on most residential sales because the Private Residence Relief (PRR) exemption would apply. However, this exemption would not apply on the facts because it is a holiday home i.e. a second home, that is being sold.

Answer 305

The landlord can withhold consent to the alterations because there is an absolute prohibition against structural alterations This is a PLP question which assesses your understanding of different types of covenant and the impact of legislation on them. The covenant is an absolute covenant on the facts – the tenant ‘must not’ do something. This means the landlord has absolute discretion whether to consent to the change. The Landlord and Tenant Act 1927, s 19(2) does not apply to this covenant, it has no impact. It would only apply to a qualified covenant against alterations and would convert a qualified covenant against alterations that amount to improvements into a fully qualified one. Improvements are to be construed widely as works which improve the premises from the tenant’s perspective. LTA 1927, s 19(2) does allow the landlord to require, as a condition of giving consent, the payment of a reasonable sum for any damage to or drop in value of the premises, but this would not permit the landlord to withhold consent if the covenant were qualified.

Answer 306

The market rising This is a PLP question which assesses your understanding of leases, specifically the mechanics of rent review. It is usual for FRI leases with a term of 10 years or more to contain a rent review clause. The investor landlord will want to ensure that they always receive the maximum possible rent for the premises (i.e. a rent which increases as the market rises) and that they are not bound for the full term of the lease by the amount of rent which was set at the start of the term. Without rent review provisions in the lease, the landlord would not be able to alter the rent set out in the lease during the term of the lease. The most common type of rent review in commercial FRI leases is open market rent review. This is where the rent is reviewed by reference to the market rent (at the time of the rent review) for leases of comparable properties in the same locality as the premises. The purpose of the rent review is to keep the rent in line with the local market for similar premises by adjusting it regularly. It is usual for rent review provisions to be drafted as ‘upwards only’ which means that rent can stay the same or go up but cannot go down. If the market was falling this would be unlikely to affect the rent payable. Work that the tenant has carried out to improve the premises, work that the tenant has carried that would limit the appeal of the premises on the open market, and damage to the premises caused by a break in are all likely to be factors which are disregarded on rent review so that they do not unfairly affect the rent payable for either the landlord or tenant.

Answer 307

Stamp Duty Land Tax on the premium of £550,000 only This is a PLP question which assesses your understanding of taxation in a leasehold property transaction. SDLT/ LTT and VAT are the taxes that could be payable by a tenant of lease. Capital Gains Tax would not be payable on the facts as it is paid by a seller, not buyer, so it not relevant. You are told that the property is in England, so it is SDLT, rather than LTT, that would be payable. SDLT is payable on either the premium payable on lease transfer or, in respect of shorter leases which pay a market rent, the net present value of the rent. SDLT would not be payable on a ground rent, it would be payable on the premium only. There is nothing on the facts to indicate that VAT would be payable.

Answer 308

Underlease This is a PLP question which assesses your understanding of alienation, specifically underletting. An AGA, Licence to Assign and transfer deed would not therefore be entered into as all of these documents relate to assignment, rather than underletting. The lease has already been entered into by the landlord and the tenant, not the tenant and undertenant. The tenant and the company will enter into an underlease (and, together with the landlord, the licence to underlet).

Answer 309

The tenant should serve a s 26 notice under the 1954 Act This is a PLP question which assesses your understanding of the rights granted to certain business tenants, specifically the ways in which a protected tenancy can be terminated. You are told it is the tenant that will be serving the notice and that it wants a new lease. A tenant’s s 26 notice is a notice in the statutory prescribed form given to the landlord setting out the tenant’s proposals as to the property to be comprised in the new tenancy, the rent to be payable under the new tenancy and the other terms of the new tenancy. If the tenant wants to terminate the tenancy rather than request a new tenancy, the tenant can either simply vacate the premises by the contractual expiry date (the date, set out in the lease, on which the term of the lease is due to end) or the tenant can serve a s 27 notice (there is no requirement for this to be in statutory prescribed form) on the immediate landlord stating the tenant does not want to continue the tenancy. The s 27 notice has a three-month notice period and must expire on or after the contractual expiry date. If the contractual expiry date has already passed, and the protected lease is simply continuing, the tenant must serve a s 27 notice on the immediate landlord if they want to terminate the continuing tenancy. Simply vacating the premises will not terminate a protected tenancy which is continuing as its contractual expiry date has passed. A s 25 notice can only be served by the landlord. It is either friendly or hostile depending on whether the landlord opposes the grant of a new tenancy. If the tenant does nothing, the lease will simply continue on the same lease terms after the CED of the lease until terminated in one of the ways specified by the 1954 Act. It does not automatically renew.

Answer 310

The landlord would not be awarded damages because the value of their freehold reversion has been unaffected This is a PLP question which assesses your knowledge of a landlord’s remedies in the event of tenant breach of covenant. The remedy sought is for breach of a non-rent covenant, the repair clause. You are asked about the best advice regarding a landlord’s claim for damages, rather than which remedy is best sought. For breaches of the tenant’s repair covenant, as is the case here, the level of damages that can be awarded is subject to a statutory cap. The damages cannot exceed the amount by which the value of the reversion (i.e. the landlord’s freehold interest) has been diminished by the breach. So whatever drop in value of their freehold interest the landlord has suffered, because of the tenant’s breach of their covenant(s), is the maximum level of damages that could be awarded (even if the cost of remedying the tenant’s breach(es) is more than that amount). On the facts, the value of the reversion has not been affected. Therefore, the landlord would not be awarded damages, even though the damage will cost £5,000 to remedy. For breaches other than of the tenant’s repair covenant, common law damages are likely to be the most appropriate remedy. Under contract law, the landlord is entitled to claim damages to put the landlord back into the position they would have been in if the tenant had complied with their covenants. It is wrong to say that that the landlord must use the self-help remedy, it is the landlord’s choice. However, if you were advising the landlord which remedy it should use; this would be the best one in the circumstances, assuming there is a right of re-entry in the lease. It is also wrong to say this landlord must serve a s 146 notice; it should only serve this if it wishes to forfeit the lease. Finally, the fact the landlord is planning on carrying out alterations to the premises when the tenant’s lease ends has no impact on the damages it can claim.

Answer 311

The Company’s lease falls outside of the LTA as the Company is not occupying the premises. The Company has no right to be granted a new lease This is a land law / property practice question. It assesses your understanding of leases, specifically the rights granted to business tenants under the LTA 1954. If the Company’s lease is a qualifying tenancy under the LTA, it will be entitled to remain in the premises at the end of the term and to the grant of a new lease. A qualifying tenancy is one in which the tenant is in occupation for the purposes of a business. Business is widely defined by the LTA as a 'trade, profession or employment' and operating a charity falls within this. The lease has not been contracted out of the LTA 1954 and is not an excluded tenancy. However, the tenant is not ‘in occupation’. It has underlet the whole of the premises to the Subtenant. The lease therefore falls outside of the LTA and the Company therefore has no right to a new lease.

Answer 312

A TR1 will be executed as a deed by (1) the woman selling and a second trustee and (2) the buyer.

Answer 313

An OS1 against the property, a K16 against the buyer and a company search against the seller. Correct. An OS1 is the relevant priority search for the whole of registered land (OS2 is for sale of part but this is a sale of whole). A K16 needs to be carried out against the buyer because this is the relevant solvency search against the buyer when the buyer is an individual and the buyer’s solicitor should carry it out as they are acting for the buyer’s lender. A company search needs to be carried out against the seller as this is the relevant solvency search when the seller is a company. As this search does not give a priority period it must be carried out at the pre-completion stage even if it was also carried out earlier in the transaction.

Answer 314

The buyer’s solicitor should have sent Form SDLT1 to HM Revenue and Customs within 14 days of the date of completion together with the sum of £3,250 in respect of the SDLT payable. Correct. The SDLT1 needed to be sent to HMRC within 14 days of the completion date together with the correct SDLT payable. Applying the rates that were given: · 0% on the first £150,000 = £0 · 2% on the next £100,000 = £2,000 · 5% on the remaining amount (the portion above £250,000) i.e. the final £25,000 = £1,250 · Total SDLT = £3,250

Answer 315

Claim three days' interest from the buyer in accordance with the contract. Correct. When the contractual completion time is missed, completion is deemed to take place the next working day. This interest should compensate the seller for the additional interest that the seller will have to pay on the mortgage over the weekend. incorrect Claim one working day's interest from the buyer under the contract. Incorrect Incorrect. Interest is calculated in calendar days, not working days. Don't confuse this with the period of a notice to complete, which is expressed in working days. Advise your client that there is nothing that can be done as the money was received before you had a chance to serve notice to complete. Incorrect. Interest is payable due to a delay in completion whether or not a notice to complete has been served. It is important to do this as your client will have to pay additional interest on the mortgage over the weekend through no fault of theirs.

Answer 316

You will provide a final form certificate of title and undertakings relating to the mortgage money to the lender's solicitor. Correct Correct. The final form of certificate of title will be in the form of a draft which should have been approved by the lender/their solicitor before exchange. The lender's solicitor will require undertakings to ensure that you can only use the mortgage money for the appropriate purpose.

Answer 317

x3 Basic valuation — essential minimum if a mortgage is being taken. It will identify any major obvious defects that would cause concern to a lender, but does not provide detail. Homebuyer report — much more detailed, and suitable for most properties in reasonable condition aged less than 150 years. Full structural survey — suitable for any property, but especially suitable where the property is listed, has had extensive renovations or where extensive alterations are planned. It is the most expensive option. !!! A buyer’s solicitor should always read the survey: standard homebuyer report has a section that is designed to bring certain issues to the solicitor’s attention for legal investigation.

Answer 318

The taxes most relevant to property transactions are Stamp Duty Land Tax (Land Transaction Tax in Wales) (SDLT & LTT) Capital Gains Tax (CGT) Value Added Tax (VAT) CGT by individuals (not companies) who make a profit on sale of an asset: not main homes, but for second properties or properties that are let out

Answer 319

It is for the buyer to identify any problems before exchange of contracts Limited exceptions to this principle eg misrepresentation In common law, if the seller (or its agent) has made a false statement that has induced the buyer to enter the contract, the buyer has an action in misrepresentation. In practice, a buyer would be more likely to rely on the standard conditions usually incorporated into the contract. These do not require that the buyer to prove that they have relied on the statement to enter into the contract, and focus more on the difference in value.

Answer 320

Pre-exchange process: most work Once solicitors have agreed to act, seller’s solicitor gives buyer’s solicitor title/draft contract and replies to standard enquiries If seller has not yet completed replies to enquiries, then they may be sent later Buyer’s solicitor then investigates the title undertakes searches reviews the standard replies to enquiries raises additional enquiries as necessary Buyer’s solicitor completed investigations: report on title to buyer who decides if to proceed

Answer 321

Assuming all is well, seller/buyer exchange contracts through solicitors = Both legally obliged to complete sale/purchase of property The contract sets out the completion date Completion is the date on which the property and money changes hands But legally title in property does not pass until new owner is registered at Land Registry The post-completion stage is therefore an important part of the transaction

Answer 322

The seller’s solicitor deduces title: responsible for providing proof of title. The buyer’s solicitor investigates title.

Answer 323

A registered title is much easier to deal with than an unregistered title On first registration, Land Registry’s has investigated unregistered documents and the registered title is presented in a clear, comprehensive and concise manner. Investigating title means: - checking that the seller is able to sell the property; - identifying the extent of the property; and - any rights that benefit or burden the property. These may affect buyer’s intended use of property and/or value of property on open market. Often registered title comprises only official copies and title plan -If covenants/easements, abstracted to official copies = no need to refer to external docs - But if many rights in an external doc/complicated plan Land Registry refers separate doc -- Eg would be an old conveyance, a deed of covenant or a deed of easement --If Land Registry refer an external doc, keep copy of doc and a copy can be ordered

Answer 324

The official copies are divided into x3: the property register the proprietorship register the charges register

Answer 325

States whether property x5 is freehold or leasehold gives postal address or a description of property refers to title plan (usually land edged red) sets out rights benefitting property exclusions to properly For a house, often no rights appear but no cause for concern — many self-contained: access from road/pavement = adopted highway (ie, maintained by local authority/usable by public) If searches/enquiries reveal otherwise, should be an appropriate right of way in property register, and if not, this could be a problem. Similar for connections to public water supplies/drains: if no benefit (apparent from a water/drainage search), should be a right to private pipes/drains connect with public services

Answer 326

If a right is shown on property register, then buyer’s solicitor needs to have in mind the following 4 issues: 1. Adequacy — eg if you intend to build a house, then you might think that a right of way for a car will be sufficient. But what about building the house? You will need heavy vehicles such as cement mixers to be able to access the site. 2. Maintenance — owner of land subject to a private right can demand a contribution to maintenance of subject of that right, whether that be a road or an underground pipe or cable. Replies to standard enquiries will help, but additional enquiries may be needed. 3. Burden registered — if the land affected by the right is registered, and the right does not appear on the charges register of that land, then it will not affect the land. An index map search will show whether the owner’s land is registered, and then official copies can be ordered to see if the right is entered on the charges register. If the affected land isn’t registered, then a caution against first registration should be lodged so that the burden can be registered at the time of first registration. 4. Adoption – with private roads, ensure to investigate/advise client on risk that local authority adopts road as required to contribute to bringing road up to adoptable standard

Answer 327

Exclusions from the property Eg the rights to minerals beneath the property may belong to someone else. Other rights may be hunting or fishing rights. Such rights must always be reported to the buyer but may not be an issue in many cases.

Answer 328

The proprietorship register contains the class of title registered proprietor and if applicable, restrictions and the indemnity covenant. Class of title: Ideally, this will be title absolute as it is the best class of title available. The class of title is decided by the Land Registry. It depends on how good the owner’s evidence of title is at first registration. Registered proprietor: The owner’s full name and address is shown. If the registered proprietor is a company, then the registered company number should also be shown. This is important, as a company’s name can change, but the number remains the same during the lifetime of the company. If there is more than one registered proprietor, as is the case here, then there is no issue as long as all the registered proprietors sign the contract and execute the transfer. However, if one of them has died, then the buyer’s solicitor needs to know whether they held as beneficial joint tenants or tenants in common.

Answer 329

Here we can see the tenancy in common restriction, so we can assume that Dean Fisher and Tanya Fisher hold the property as beneficial tenants in common. No problem if both of them execute the transfer, but if one of them has died, then a second trustee will need to be appointed on the transfer so that the beneficial interest can be overreached, and the restriction removed and death certificate of the deceased person to know legal title has passed by survivorship to registered proprietor who is executing transfer. If this restriction were not present, then we can assume that they hold as beneficial joint tenants = just the death certificate and we do not need to have a second trustee appointed.

Answer 330

Note that this is a different restriction. This has nothing to do with co-ownership, but is a restriction against the owner dealing with the land without the consent of the mortgage lender (here Redminster Building Society). This is separate from the registration of the charge.

Answer 331

Indemnity covenant: If the current owner of the land gave an indemnity covenant when they bought the property, this will be noted on the proprietorship register. If the buyer’s solicitor sees this, they will know that under the standard conditions their client will be required to give a similar indemnity covenant to the seller. It also means that their client will be bound by the positive covenants that the original covenator gave (whether the seller or an owner further back in time).

Answer 332

On the charges register you may find - charges - restrictive and positive covenants that burden the property - registered leases - and easements over the property Although there will always be entries on the other two registers (property and proprietorship), occasionally you will come across official copies where the charges register is empty. This is not a mistake, but means that it is not affected by any of these rights or interests. Charges or mortgages are registered on the charges register, although as we have already seen, usually this is accompanied by a restriction on the proprietorship register.

Answer 333

This is a typical entry for a legal charge on the charges register. As a legal charge is a property interest, the chargee is described as a proprietor of the charge. The point to remember with legal charges is to ensure that the seller is agreeing to release it on completion. This should be covered in both the contract and pre-completion undertakings. With both restrictive covenants and positive covenants, it is those that burden the property that are registered in the charges register. If the property has the benefit of restrictive or positive covenants, then they appear in the property register. This is an example of an entry where restrictive covenants are contained in the charges register.

Answer 334

In this case, the Land Registry has not extracted the covenants to the register, but instead referred to the transfer that is filed under the title number shown. The seller’s solicitor should provide this copy when deducing title.

Answer 335

First identify whether it is positive or restrictive. As you will have seen, the hand in pocket test is a good start. If you were to comply with the covenant would you need to spend time, money or energy? If the answer is yes, then it is likely a positive covenant. If a restrictive covenant is registered in the charges register then you should assume that it binds the property. If it is a positive covenant, then look for the indemnity covenant in the proprietorship register. If there is no indemnity covenant, you can ignore the positive covenant. If there is an indemnity covenant, you should assume that it binds the property.

Answer 336

already breached? if so, seller gives indemnity policy at their expenses affect value/buyer's use? if no, proceed if yes, insurance (>risk + publicised planning permission) if no insurance, person with benefit consent if no consent, Lands Tribunal (Upper Chamber) only for RESTRICTIVE covenants - expensive/time consuming - alternative: reduction in price or withdraw

Answer 337

Leases of more than seven years granted out of the property will be registered in the charges register against the property. Whether or not these will come as a surprise will depend on the nature of the property, but they should always be reported. The freehold of a block of flats, may be subject to numerous long leases and these will be set out as a schedule of leases in the charges register. You may also find non-residential leases, such as for a mobile telecoms antenna, electrical substation or advertising hoarding.

Answer 338

Easements burdening the property appear in the charges register, and should be reported. A right of way over the property, for example, may restrict the development of the property. For a house, most buyers want privacy, and will definitely want to know if the neighbours can, for example, wheel their bins across the end of the garden.

Answer 339

Unlike a registered title, where it is clear that the title is comprised in the official copies, title plan, and any documents referred to by the official copies, an unregistered title is not so tidy. The deeds for an unregistered property may go back many years, but much of what is contained in the deeds packet will not be needed. The seller’s solicitor’s job is to sift through this and decide what is relevant. Once this is done, the seller’s solicitor prepares the epitome of title, which is a schedule of these deeds and documents accompanied by copies of them.

Answer 340

The first document to identify is the root of title. This is the particular conveyance that will be used to show good title to the property. The buyer’s solicitor checks that the root of title meets the requirements: The requirements are set out in s 44 of the Law of Property Act 1925: ABCD 1) Adequately describes the land being conveyed This will usually be a scale plan, but sometimes just the postal address will be sufficient (for example, a street of houses all of identical footprint, most of which have been registered). 2) Be dated more than 15 years ago This should always be the case now, as compulsory registration has existed for more than 15 years. Ideally it will be a transfer for value (ie, a purchase) rather than a gift. This is because on a transfer for value, the buyer’s solicitor can be assumed to have investigated title a further 15 years at that point. This means that the root of title is effectively a guarantee of 30 years of title. 3) Casts no doubt on the seller’s title An example would be where a conveyance is executed under a power of attorney, and it is not clear whether there was a valid power of attorney. The buyer’s solicitor would need to see the power of attorney. 4) Deals with both the legal and beneficial title to the property This sounds daunting, but in practice it is usually simple. If the deed does not expressly deal with legal title only or beneficial title only, then it is assumed to cover both.

Answer 341

A good root of title will satisfy the requirements of s 44 of LPA 1925, but if the person to whom the property was transferred in the conveyance is not the most recent owner, it is not sufficient. A chain of title will be needed, with each subsequent conveyance to establish title to the current owner (the seller).

Answer 342

Any document under which a seller was empowered to sign a conveyance. For example, if the seller was an executor, we would need to see the grant of representation. If the seller was an attorney, we would need to see the power of attorney. If a property has passed to a surviving co-owner by survivorship, then we would need to see the deceased owner’s death certificate. If any owner mortgaged the property following the date of the root of title, then these mortgage deeds should be included. Hopefully they will have been discharged. This will be clear if the relevant mortgage deed has a vacating receipt attached. This confirms that the lender has been repaid in full.

Answer 343

· Documents that only affect the beneficial interest (such as declarations of trust) · Expired leases · Old land charges searches are not required, but the seller’s solicitor will often provide them as they will be helpful to the buyer’s solicitor. · There are various documents such as planning permissions, old searches, correspondence, etc that are not needed. These may, however, be relevant to replies to enquiries.

Answer 344

The buyer’s solicitor investigates unregistered title by checking the epitome of title and its copy documents. The buyer’s solicitor will want to ensure that the seller is entitled to sell the property, and identify any issues that could affect the value of the property or the buyer’s use of the property. These are the same issues that the buyer’s solicitor will want to investigate for registered property, but the difference is that the buyer’s solicitor needs to analyse the documents rather than relying on official copies.

Answer 345

It is worth checking that the land is actually unregistered, or that neighbouring registered titles do not encroach on its boundaries. It will also reveal a caution against first registration, which may indicate that someone believes they have a claim in the property.

Answer 346

Each deed will need to have been validly executed. This is complicated a little by the fact that the execution needs to comply with the law as it was then. As most unregistered deeds will be dated before 1 July 1990, when the Law of Property (Miscellaneous Provisions) Act 1989 came into effect, this means the following: · Clear on its face that it is a deed · Signed as a deed and witnessed · Sealed · Delivered as a deed – this usually takes place by inserting the date

Answer 347

The deed should also be correctly stamped. This indicates that the correct Stamp Duty was paid on the deed. Deeds after 1931 should have a “Particulars Delivered” stamp which confirms that they have been properly stamped. If there is any doubt, the buyer’s solicitor may need to check the Stamp Duty rates that were in force at the particular time.

Answer 348

Similar issues may arise with unregistered land as with registered land. The principles of co-ownership, and the passing of beneficial title by survivorship, apply equally to unregistered land. Instead of looking for a Form A restriction (registered land only), however, you would need to look through the deeds to see if it states whether co-owners hold as beneficial joint tenants or tenants in common. It is also possible that there is a notice of severance or declaration of trust that changes the beneficial title. Having established, however, that you are dealing with a surviving sole owner, the principles are similar. For a surviving beneficial joint tenant, you will need to see the death certificate of the deceased joint tenant. For a surviving tenant in common, you will additionally need a trustee to be appointed, just as you would with a registered title.

Answer 349

With unregistered land, certain rights against a property will be registered at the Land Charges Department of the Land Registry. This is a separate register and does not apply to registered land. The land charges registers are searchable by individual or company name, rather than the property address. It is therefore a case of searching against previous owners for the period of their ownership, and identifying whether any charges have been registered against them. If so, then further investigation may be required. As searches are for a period of ownership, a search against a previous owner will not need updating. If the seller’s solicitor provides a search, say, for the person who owned the property between 1980 and 1985, you can rely on that.

Answer 350

As with registered title, mortgages are not usually a matter of concern, but the buyer’s solicitor will need to check that they will be discharged on completion. If the mortgage has already been repaid in full, there should be a vacating receipt attached to it. If this is the case, then the mortgage need not concern the buyer. However, if not, then as with registered title, the buyer’s solicitor should elicit from enquiries that the seller intends to repay it, and make sure that this is covered by both the contract and replies to requisitions on title. Note that a first mortgage is not registered at the land charges registry. This is because a first mortgagee of unregistered land will hold the deeds. This gives them protection that the property cannot be sold without their knowledge. A lender on a second or third mortgage, ie, ranking below the first mortgage, will not have this advantage, as only one lender can hold the deeds! Instead, they would register their mortgage with the land charges register. It is important therefore to check both the deeds and the land charges register for mortgages.

Answer 351

Unlike in a registered title, where rights are neatly set out in the register, or in documents that are referred to, in an unregistered land, a variety of rights can appear in different deeds at different times. The root of title should refer to any documents that contain covenants or easements. However, if there is any pre-root document that is not referred to in the root of title, then the seller’s solicitor is not required to provide that document, even if it may contain covenants or easements. This may seem an odd rule, but in practice, the root of title will cover the major issues.

Answer 352

Covenants present similar issues for unregistered land. Restrictive covenants will only bind the property if they are registered as a d(ii) land charge. Positive covenants are not registrable as land charges, and instead the buyer’s solicitor must check the deeds for positive covenants. However, as with registered land, if the chain of indemnity covenants has been broken, then the positive covenant can be ignored by the buyer’s solicitor.

Answer 353

If a deed is known to have contained covenants and is missing, then this is a title issue. It should be raised with the seller, and if necessary, indemnity insurance will be needed. It is always a matter to be reported to the buyer and possibly the lender.

Answer 354

There are other interests, such as easements and leases, and these should be apparent from the deeds.

Answer 355

The principle of caveat emptor (buyer beware) means that it is incumbent on the buyer (and therefore their solicitor) to inform themselves of any issues affecting the property. Searches and enquiries are an essential part of this. The buyer’s solicitor carries out pre-contract searches and enquiries. In contrast to title investigation, which is generally limited to the title that is provided, there is almost no limit to the searches and enquiries that can be raised. Although there are standard searches and enquiries that should be raised in every transaction, when it comes to additional searches and enquiries, this is a matter for the buyer’s solicitor’s judgment. We will look at the standard searches first and then the optional searches.

Answer 356

Drainage and water search Desktop environmental search Chancel repair search Title searches the local search comprises two parts a search of the local land charges register LLC1; and · the local authority’s replies to enquiries CON29. It is possible to order the component parts of the search separately, but usually you will need both anyway. Knowing which matters are covered by the LLC1 and CON29 is good to know for multiple choice questions (less critical in real life, where you would read the whole search).

Answer 357

LLC1 shows matters that have been entered on the local land charges register affecting the property. These include: · debts against the property for work that the local authority has carried out – for example, to repair or demolish dangerous buildings or clean properties that are a risk to public health; · planning permissions that have been granted (but not planning applications that have been refused); · planning enforcement notices; · Article 4 directions (which you will remember disapply or modify the General Permitted Development Order); · conservation areas and listed building designations; and · tree preservation orders and other miscellaneous charges that you can research if and when they come up in practice.

Answer 358

There is some overlap between the LLC1 and the CON29 replies to enquiries. The CON29 replies show planning consents granted, but also show applications which are pending or refused and building regulations approvals. The CON29 replies include many matters but some important ones are: · details of adopted roads and pavements and public rights of way; · land that is required for public purposes – this means that it may be compulsorily acquired by the local authority in future; · information about contaminated land insofar as the local authority are aware, but this is limited and does not replace an environmental search.

Answer 359

The drainage and water search checks whether the property is connected to a public sewer and water supply. Form CON29DW for residential property Form CommercialDW for commercial property

Answer 360

Land contamination should be considered a potential issue in all property transactions. This is because an owner may have to pay the costs of cleaning up contaminated land, whether or not they were responsible for the contamination. The CON29 replies will indicate if the local authority has served a notice requiring such remediation, but will not confirm that the property is free from contamination. The desktop environmental search is so-called because it is computer generated from existing records, and nobody actually gets up to visit the site. A desktop environmental search will advise if the property is likely or not to be contaminated based on historic maps and records. It would therefore not pick up contamination which would not be recorded, such as illegal dumping of waste. The desktop environmental search result also identifies the risk of flooding. Note that the drainage and water search does not contain information about flooding.

Answer 361

Chancel repair is the historic right of a parish church to claim contributions to the cost to the repair of the church chancel, which is the area near the altar. If the search reveals a risk of chancel repair liability, it is usually possible to insure against it. The parish church should register its interest, and if a sale for value takes place without it being registered, then they can no longer claim. However, there are some twists to this rule, and so the search remains a standard search and is likely to do so for some time to come.

Answer 362

index map search + land charges search There are also searches that relate to the title, and so are a bit different from the other pre-contract searches. One is the index map search. This is not needed if only a single registered title is being acquired, as the register can be taken as conclusive. However, an index map search will be needed for unregistered title, or a number of titles, or where there is an exception of mineral rights. In these cases, the index map search is used to check all of the registered titles within the boundaries searched. The other is the land charges search (don’t confuse this with the local land charges LLC1 search), which again forms part of the investigation of title, and should be carried out against the seller and previous owners in the chain of title. However, often the seller will provide previous land charges searches, and these can be relied upon as to previous owners, meaning that only the current owner needs to be included in the buyer’s solicitor’s search.

Answer 363

There are further optional enquiries that can be raised in the local search (CON29O). These are usually not necessary for residential properties, but are often relevant in a commercial context. For example, if there is open land, it is important to raise enquiry 22, which asks about commons and village greens. These are land over which the public has rights, and may not be developed. This search can be carried out as an optional enquiry to the local search, but search providers also offer standalone commons registration searches. Either is fine. There are various other optional enquiries, but we do not need to look at them in detail for the purposes of this course.

Answer 364

optional search Another search related to the local search is the highways search (CON29R). The local search (CON29) will identify that the roads listed are adopted. This is usually fine for residential purposes, where it will usually be clear that the house abuts the public highway. However, for land for development and other commercial property, it is important to get a highways search. This provides a plan that can be used to check that the public highway abuts the boundary of the property. If there is a gap, then further investigation will be needed to ascertain what private rights are in place.

Answer 365

optional search A coal mining search should be carried out if the property falls within a coal mining area. There is a gazetteer of areas that are affected, and with online search providers, they will indicate at the time of ordering whether the coal mining search is required. This search is important to ascertain the risk of subsidence from coal mining. Other areas of the country are affected by specific types of mining: · a brine subsidence search is needed in certain areas of Cheshire; · a tin mining search may be needed in Cornwall or Devon.

Answer 366

optional search If the property has a river or other waterway running through it or next to it, then a waterways search with the Canal and River Trust should be carried out to enquire about any obligation to maintain the banks of the river or waterway. Note that a waterways search does not provide information about flooding.

Answer 367

option search The desktop environmental search provides flooding information, but if this is an issue, then a specific flood search can be carried out, which gives more detailed information on the risk of flooding.

Answer 368

optional search As we have seen, the desktop environmental search is limited in its scope, as it examines historic records and maps. Where contamination is likely to be an issue, whether revealed by the desktop search or by other information (such as replies to enquiries), then environmental surveys should be undertaken. There are two categories: · a Phase 1 survey involves a site inspection, and if this indicates possible contamination, then: · a Phase 2 survey is carried out, which involves taking soil and water samples to test for actual contamination.

Answer 369

optional search There is no standard railway search with NetWork Rail. Searches can be made with Transport for London (TfL) about Crossrail and other TfL transport schemes

Answer 370

optional search For development sites, or newly built property, further utilities searches, such as electricity, gas and telecommunications may be needed.

Answer 371

The buyer’s solicitor should consider if there have been any: · building works or alterations at the property; or · a change of use. This may be apparent from the seller’s replies to enquiries or the buyer’s survey. The buyer’s solicitor should check the searches for any necessary consents, and if they haven’t been obtained, then consider whether enforcement action is still a risk. If works or alterations have been carried out by the seller, the two types of consents the buyer’s solicitor needs to think about are planning permission and buildings regulations approval.

Answer 372

Planning permission is needed for development. This includes building works and demolition, but excludes works which only affect the interior of the building.

Answer 373

Some development will be permitted under a General Permitted Development Order. When considering historic development, refer to the GPDO that was in force at that time, not now. If the work falls within that GPDO then planning permission would not have been needed, provided that the GPDO was not disapplied.

Answer 374

Building regulations ensure that building work complies with standards of structural soundness, safety, environmental protection, etc. External or internal building works require building regulations approval, whether or not planning permission is needed. Building regulations approval is a two step process: 1. Full plans and specifications must be submitted to the building control department of the local authority for approval. 2. After completing the works, building control inspect the work and issue a certificate of compliance.

Answer 375

If replies to enquiries or the survey indicate that the property has been subject to a change of use, then the buyer’s solicitor needs to think about planning permission. Property uses are classified under the Town and Country Planning (Use Classes) Order 1987, as amended in September 2020. However, again, looking at historic changes of use, you would need to refer to the Order as it stood at the relevant time. Use classes are grouped by capital letter, such as E, and then subdivided. This used to be by number, eg A1, A2, B1, etc, but confusingly the modern use classes adopt lettering, so E(a), E(b), etc. The main thing to remember is that changes within the same use class, ie, uses sharing the same capital letter, do not require planning permission. Note also, that there are sui generis uses, which do not fall into any use class. Any change to or from these sui generis uses will be considered development. The GPDO allows for certain changes of use between different use classes. Building regulations are not needed for a pure change of use. Usually, however, a change of use will also necessitate building works or alterations, in which case building regulations approval will be needed.

Answer 376

If looking at ‘permitted development’, then remember that local planning authorities can disapply parts of the GPDO by making an Article 4 Direction. The LLC1 part of the local search will show if there is an Article 4 Direction in place, and when it took effect, which could be important for historic development. If an Article 4 Direction had disapplied the GPDO as to the particular permitted development under consideration, then planning permission would have been needed. You are more likely to find an Article 4 direction has been made in a conservation area.

Answer 377

If the local planning authority consider an area of special architectural or historical interest, they can designate it a conservation area. This helps preserve the character and appearance of the area. The local search will identify if the property falls within a conservation area. (In most cases, this will be the LLC1 result, but before a certain date, it would appear on the CON29 result. All you need to know is that it will be somewhere in the local search.) It is likely that there will be extra planning controls in place in a conservation area, particularly an Article 4 Direction. It may also be that planning permissions that are granted will be subject to stricter conditions, such as the colour and type of bricks that are used to extend a property.

Answer 378

Having considered whether any development has taken place, and whether it would have necessitated planning permission or building regulations approval, the buyer’s solicitor next needs to check whether such consents have been obtained. For planning permissions, the LLC1 is the best place to check, as this shows planning permissions that have been obtained. The CON29 also shows planning permissions that have been refused. Building regulations approvals are not shown in the LLC1, so you will need to look in the CON29.

Answer 379

Planning permission deadlines: 4/10 yrs v conceal 4 years for: · Building works carried out without planning permission; or · Change of use to a single dwelling house. 10 years for: · Any other change of use; or · A breach of a condition to a planning permission. NB The local authority can take enforcement action after these deadlines if the breach has been deliberately concealed. Building regulations deadlines: 2 yrs, 12 m, 6m There are time limits on the local authority’s statutory powers to take enforcement action: · 6 months after discovering a breach to prosecute a person responsible for the works for up to two years from the date of completion of the works · 12 months to serve an enforcement notice. There is no time limit on their seeking an injunction through the courts. It is likely that the local authority will only be inclined to pursue the most serious breaches of building regulations through the courts, but the risk should not be ignored. Case law has confirmed that a solicitor who does not take all reasonable steps to obtain copies of building regulations approvals and certificates may be found negligent.

Answer 380

If there is still a risk of enforcement action for planning issues then the options are: · An indemnity policy to cover the financial losses caused by enforcement — this should be provided at the cost of the seller · Retrospective planning permission · Compliance with a condition (if this is the breach) These may be made conditions of the contract. For building regulations breaches, the options are: · An indemnity policy to cover the financial losses by enforcement. · A regularisation certificate and remedying any non-compliant work. For minor or trivial breaches, an indemnity policy may be considered sufficient. However, it should always be borne in mind that work that does not comply with building regulations may not be safe. Indemnity policies do not cover the risk of a structure collapsing or personal injury or death.

Answer 381

There are various remedies available to the local authority for a breach of planning permission or a planning permission condition: · A planning enforcement notice requires that the land be restored to the condition it was in before the unauthorised development took place. · A stop notice can only be served with an enforcement notice and prohibits the carrying out of further activities in breach of planning control. · A breach of condition notice is similar to a planning enforcement notice but requires compliance with conditions imposed by a planning permission. · The local authority can also seek an injunction from the court if they consider it necessary.

Answer 382

majority of residential contracts: Standard Conditions of Sale commercial contracts: Standard Commercial Property Conditions. features x5 property address the parties the deposit - Both 10% deposit by default - If buyer is giving a 5% (= short deposit), standard conditions provide a full 10% deposit if buyer delays completion. title guarantee - full title guarantee: seller guarantees their right to sell the property, and that it is free of all encumbrances (rights against the property) other than those disclosed in the contract, or which the seller didn’t and couldn’t have known about. - Limited title guarantee is similar but just means that no such encumbrances have been created during the seller’s period of ownership. - No title guarantee means that the seller does not give any guarantee that the property is free of encumbrances or even that the seller has the right to sell the property. This is a risk for a buyer, although insurance is available. -Generally, most sellers will give full title guarantee, and this is the default of both sets of standard conditions. An executor selling a property that they are not familiar with will sell with limited guarantee. -An administrator or liquidator will offer no title guarantee. -Don’t confuse the title guarantee with the class of title in the Land Registry official copies. The title guarantee is a contractual guarantee given by the seller. The class of title (such as title absolute or possessory title) is the Land Registry’s guarantee as to the quality of title. Both are important. completion date and time - If the completion date is left blank, then both sets of standard conditions of sale provide for completion in 20 working days. It would be rare for this provision to be used in practice. - Related to the completion date is the completion time, which is 2 pm by default under both sets of standard conditions. If there are no related transactions, this can be left. However, if the money being used for the purchase is coming from a related sale, then the times must be staggered to allow for the money to be forwarded.

Answer 383

We have seen that for both sets of standard conditions, risk passes to the buyer at exchange. This seems strange, as if the property is damaged or destroyed before completion, the buyer must still pay the full purchase price and complete. Why? Think of a chain transaction. If the seller of that property is using the money to buy a property, and the seller of that property is buying a further property, etc, then imagine what would happen if the buyer could simply refuse to complete. It would mean that every transaction in the chain above the seller would also be unable to complete, and create a mess for all of the parties involved. By contrast, although it is inconvenient for the buyer to buy a property that is damaged or destroyed, provided the buyer has insurance (as they should have), then they will suffer inconvenience, but not financial loss. All the other parties in the chain are unaffected.

Answer 384

The standard templates for the residential and commercial contract provide proforma special conditions that can easily be amended as required. These cover the most common amendments. More complicated special conditions can be drafted for almost any situation. Examples might be if the seller has agreed to provide or pay for an indemnity policy, or the parties have agreed to keep the transaction confidential. In a commercial transaction, they may go into detail about such matters as rents payable by occupational tenants, the treatment of employees such as caretakers, transfer of service agreements for lifts and air conditioning.

Answer 385

There are different types of VAT treatment depending on the type of property. Residential: -- exempt (VAT on legal services) --unless new ----taxable but zero rated ---- seller does not charge VAT on sale price but can recover VAT incurred constructing property Commercial -- newly: standard-rated and VAT must be paid on the purchase price. -- over 3 years old: exempt unless owner opts tax. If owner opts, then VAT on sale price at 20%. Standard Conditions: purchase price inclusive of VAT. Option to tax affects all the owner’s dealings with the property. So, if they have occupational tenants, then they must charge VAT on the rent. Previous owners’ option to tax does not affect the buyer after completion. If the buyer wishes to continue to charge VAT on the occupational rents, they must submit a fresh option to tax.

Answer 386

Law Society Formula B is the most common method of telephone exchange, and involves the solicitors giving each other undertakings that allow the telephone conversation to be the point of exchange. Each solicitor confirms that they are holding their client’s signed contract, and then confirm to each other the key details inserted in the contract. Formula B provides that each will send the contract either in first class post or document exchange that evening. If either solicitor thinks that they will be unable to get their signed contract in that evening’s post, for example because of a secretarial backlog, they should tell the other solicitor.

Answer 387

The pre-completion stage is concerned with both seller and buyer’s solicitors ensuring that everything is in place for completion to take place smoothly. Whereas in the pre-exchange stage, the buyer’s solicitor may find serious problems that would prevent the transaction proceeding, generally the pre-completion stage is more procedural. However, it is no less important. The issues that need to be addressed are: · The transfer deed · Pre-completion searches · Replies to requisitions

Answer 388

The tradition of the buyer’s solicitor drafting the transfer persists in both sets of standard conditions, but these days sometimes the seller’s solicitor will draft the transfer, perhaps even at the same time as the contract. The seller’s solicitor will also want to draft the transfer if selling plots on a newly developed estate to ensure that they are consistent. Whether it is buyer’s solicitor or seller’s solicitor who drafts the transfer, the other of them will need to approve it. Once approved, the seller will always need to execute. The buyer will need to execute if: · There is an indemnity covenant to observe positive covenants · The buyer is giving covenants or easements over the property · The buyer is agreeing to any other obligations

Answer 389

Unlike pre-contract searches, where it is normal to expect some adverse entries, pre-completion searches are a check and in the vast majority of cases will come back clear. OS1 search Land charges search (K15) Bankruptcy search (K16) Company search

Answer 390

For registered land, an OS1 search is carried out at the Land Registry. This search is carried out from the date of the official copies provided by the seller’s solicitor, and confirms that there are no changes to those official copies. The search offers a priority period of 30 working days. Provided that the buyer’s application for registration is made within that window, it will take priority over any other application, even if it dates before the buyer’s application. OS1 searches cannot be extended. If the registration application is not submitted within the priority period, priority is lost. A new OS1 search can be obtained, but it will not take priority over applications made before it.

Answer 391

For unregistered land, a land charges search is carried out against the full name or names of the seller. This identifies any adverse matters against the seller that affect the property. If it is clear, then again, it offers priority to the buyer against any applications made within the priority window. However, the priority window is half that of the OS1 search, being 15 working days.

Answer 392

If the buyer’s solicitor also acts for the buyer’s mortgage lender, then the buyer’s solicitor will need to carry out a bankruptcy search against the buyer before completing. This protects the mortgage lender against the mortgage advance being claimed by a trustee in bankruptcy. Like the land charges search, this confers priority of 15 working days.

Answer 393

Requisitions on title traditionally were a document in which the buyer’s solicitor would raise any issues that arose from the investigation of title. However, they now contain procedural matters regarding completion, such as the location of keys and meter readings. Importantly, however, they contain the seller’s solicitor’s confirmation that they will adopt the Law Society Code for Completion by Post and undertake to discharge mortgages affecting the property. The replies to requisitions must therefore be checked to ensure that all appropriate undertakings have been given.

Answer 394

The Law Society Code for Completion by Post is usually adopted by the parties to govern the process of completion. The buyer’s solicitor is given guidance on what is required from them, and only the seller’s solicitor gives undertakings that are enforceable by the Solicitors Regulation Authority, and if necessary, by the courts. The seller’s solicitor’s undertakings allow the buyer’s solicitor to know that it is safe to send the money to them. On the morning of completion, the buyer’s solicitor sends the full completion monies to the seller’s solicitor. The seller’s solicitor calls the buyer’s solicitor to confirm that they have completed, and dates the signed transfer deed. The seller’s solicitor will then call the seller and the seller’s agent (if appropriate) to release the keys. The seller’s solicitor will send the money needed to clear any mortgage or charge (the redemption monies). If the seller has a related purchase, the necessary completion monies will be sent to the seller’s solicitor on that transaction. After deducting the seller’s fees and disbursements, any balance will be sent to the seller.

Answer 395

In most cases, completion is straightforward and happens on time. Some examples of reasons why the parties may be unable to complete on time: · The buyer has not been able to get the balance of purchase money to their solicitor on time · An administrative error, so that the mortgage lender has not sent the funds in time for completion – usually the funds are requested for the day before so that such problems do not appear at the last minute · A related transaction has not completed – in the case of a buyer, they do not have the money from their related sale, and in the case of a seller, they do not have a property to move into It is possible that either party may have simply changed their mind since exchange. However, given the serious financial consequences of failing to complete, this is rarely sufficient to lead to completion not taking place at all.

Answer 396

Once the completion time has been missed by the defaulting party, interest starts to accrue under either set of standard conditions. If completion takes place on the completion date, but later than the completion time, it is treated as having taken place on the next working day. Note, however, that interest is calculated for each calendar day. Let’s say that a buyer does not complete until 3.30 pm on a Friday, and the completion time was 2 pm. The completion is treated as not having taken place until the following Monday. There would be three days of interest payable – Saturday, Sunday and Monday. This may seem harsh, but if the seller has not received the money until 3.30, they may not have time to redeem their mortgage and will owe their mortgage lender interest on the loan over the weekend. Removers may also charge overtime for going beyond their booked slots. Note also, that interest accrues automatically. In the example above, the seller did not need to serve notice to complete. Under the Standard Conditions of Sale, then the non-defaulting party may claim for expenses. So a residential buyer who finds themselves homeless over the weekend may reclaim their reasonable expenses for accommodation. (A budget hotel would be considered reasonable, a luxury hotel would not.) Interest payable under the conditions of sale must be deducted from any such claim.

Answer 397

Whilst these remedies apply automatically under both sets of standard conditions, neither party is allowed to walk away from the contract unless time is of the essence. It is rare for a contract to make time of the essence. The non-defaulting party will therefore want to serve notice to complete to ensure that the failure to complete does not go on indefinitely. The notice to complete is a mechanism provided by both sets of standard conditions that makes time of the essence and gives ten working days to complete. The ten working days are counted from the first working day after the notice is given. The notice to complete is binding on both parties, so the person serving it should make sure that they will also remain ready to complete. Again, interest is calculated including non-working days.

Answer 398

If the buyer fails to comply with a notice to complete, then the seller may rescind (walk away from) the contract and under both sets of standard conditions: · Forfeit and keep the deposit and any accrued interest · Resell the property and any contents included in the contract · Claim damages

Answer 399

If the seller fails to comply with a notice to complete, then the buyer may rescind the contract and: · Require the return of the deposit with accrued interest As the standard conditions also say that for either party they retain other rights and remedies, the buyer could also make a claim for damages based on breach of contract. From a buyer’s point of view, they may be able to show they incurred a loss if, for example, they are only able to buy a similar property at a higher price due to a climbing market, but this might be tricky. It may be easier for a seller who has resold their property at a lower price in a falling market.

Answer 400

Stamp Duty Land Tax and Land Transaction Tax Companies House Land registration Closing the file

Answer 401

Stamp Duty Land Tax (SDLT) in England, and Land Transaction Tax (LTT) in Wales, are taxes charged on the purchase price of property. On completion the buyer’s solicitor submits the form (usually electronically) and pays the tax by bank transfer using a unique reference number. Both submission of the form and payment of the tax must be done within 14 days of completion for SDLT and 30 days of completion for LTT to avoid a penalty. To avoid delay, the buyer’s solicitor should have prepared the form for the buyer’s approval and arranged for the buyer to pay the necessary amount as part of the amount needed to complete before the completion date.

Answer 402

If the buyer is a company, and the company is taking a loan secured by legal charge, then that legal charge must be registered with Companies House within 21 calendar days of completion of the charge. This deadline is strict, and Companies House have no discretion to waive it. If the deadline is missed, then the charge can only be registered by court order. This application will involve significant time and expense. Note that if there is any issue with the application, Companies House may reject the application, and if they do this towards the end of the 21 day period, it may be necessary to get a courier to ensure that it is received by Companies House within the deadline.

Answer 403

For registered title, there is no deadline as such, and provided that no application has been lodged in the meantime, the buyer can lodge their application whenever they want after completion. However, until the buyer’s application is lodged, there is the risk that a third party will enter an application against the title. It is therefore important to lodge the application within the priority period given by the OS1 search, namely 30 working days. For unregistered title the application should be lodged within 15 working days of the land charges search. However, for unregistered title, there is a deadline of two months. The first application registration should be lodged within this time, or the transaction is treated as void. The Land Registrar has discretion to extend the deadline here, but it is best not to rely upon this. In any case, it is best to aim to lodge the application within the priority period of the land charges search.

Answer 404

When the Land Registry application comes back (usually within a couple of weeks for registered titles, but it may be several months for a first registration), the official copies should be sent to the client for their records. This usually marks the end of the transaction.

Answer 405

An FRI lease has the following features: · The tenant is responsible for keeping their demise in full repair – if they have a lease of part, then the landlord will recover the costs of repairing any common areas from the tenants collectively · The landlord will normally insure the property, but will recover the costs of doing so from the tenants in the form of insurance rent · If there are any services, then these will be paid for by the tenant by way of service charge. · Although the landlord will meet their own costs of finding a tenant and granting a lease, any costs during the lifetime of the lease (such as applying for consents) are met by the tenant. · It will tightly control alienation, whom the lease can be assigned or sublet to · It will contain upwards only rent reviews

Answer 406

In typical investment properties, such as shopping centres, industrial estates and office blocks, the landlord will want the leases to be in FRI form. The landlord’s solicitor will usually draft the lease heavily in favour of the landlord, with the expectation that the tenant’s solicitor will negotiate it back in the tenant’s favour. This negotiation will depend on the bargaining strength of the parties, and whether the market at the time favours landlords or tenants. If the landlord has struggled to fill a unit, then they are more likely to be amenable to letting some points go to the tenant. In shopping centres and retail parks, there will usually be a tenant who will bring customers to the site regardless of the other shops available; for example, M&S. If a landlord can sign a retailer like this up to an agreement for lease, then other retailers will have the confidence to follow. It is therefore very important for the landlord to secure such a tenant, which is known as the anchor tenant. An anchor tenant will be aware of this, and will have a stronger negotiating position than other tenants to negotiate their lease.

Answer 407

The FRI lease aims to maximise the income stream from investment property. However, the FRI lease will only achieve this if the tenant is in a position to pay the rent and comply with its obligations. This ability is referred to as the tenant’s covenant strength. In a similar way that a bank will do a credit check before offering you a loan or mortgage, a landlord will carry out checks on prospective tenants to ensure that they are good for the obligations they are undertaking. A well-established company with good references from the bank and other landlords is likely to be acceptable. A newly started company with no assets to its name will not. If the tenant’s covenant strength is not sufficient, then the landlord may nonetheless be prepared to accept the tenant with additional safeguards, which may be: · A rent deposit (documented by a rent deposit deed). This is usually between three and six months’ rent. If the tenant falls behind with rent or other obligations, the landlord can dip into the fund. · A guarantor. In the case of a company, this could be a personal guarantee from the directors or a guarantee from a parent company. In either case, the guarantor will then need to be assessed for their covenant strength.

Answer 408

Once the property agents have agreed the terms of the lease, then they will send heads of terms to the landlord’s and tenant’s solicitors. The landlord’s solicitor will draft the lease and send it to the tenant’s solicitor. There will likely be a precedent lease already prepared for other lettings on the property, and this will be used as the base, making the necessary changes.

Answer 409

Unlike in freehold transactions, where it is usual to have a contract, in the grant of a commercial lease, it is only usual to have an agreement for lease where there is a good reason to do so. Agreements for lease are used when the parties want to bind themselves to granting/taking the lease, but are not yet ready to do so. For example, if a retail park is being developed, then the landlord will find retailers early on, and they will enter into agreements for lease. The terms will be that the landlord will finish building the development, and the tenant will complete the lease once the retail park is ready for them to move into. There is not usually a deposit payable, because there is not usually a premium payable on a commercial lease. However, the agreement for lease will be exchanged in similar fashion to a contract for the sale of freehold land. The agreement for lease will contain a final form of the draft lease, so will only be exchanged once the lease negotiations have been finished.

Answer 410

It is fair to say that sometimes the tenant will not bother with legal representation at all, especially small businesses (whether an individual, partnership or company). However, there are risks involved in not engaging a solicitor: · The tenant is likely to sign up to a lease which is at best drafted heavily in favour of the landlord, and at worst may contain provisions that are unfair or excessively onerous to the tenant. · The tenant may not be fully aware of all their obligations under the lease. Small businesses can get into financial trouble, and may not realise, for example, that they cannot just give the keys back and walk away if things go wrong. They may also not realise that they will still remain liable for their covenants even if they assign or sublet the lease. · There may be issues which would be revealed by searches and enquiries that would affect the tenant’s use of the property. By contrast, if a solicitor is appointed, then they should: · Attempt to negotiate the lease to a more balanced form. How successful they are will depend on the bargaining strength of the parties, but also to a degree by the negotiating skill of the respective solicitors. · Investigate the landlord’s title and carry out searches and enquiries in similar way to acquiring the freehold. · Advise on Stamp Duty Land Tax or Land Transaction Tax and registration, and make sure that these are attended to (an unrepresented tenant will not necessarily know, which can cause problems)

Answer 411

The landlord’s solicitor will send a completion statement showing the rent, insurance rent and service charge (if appropriate) payable on completion. These figures may be apportioned if the tenant’s lease starts part way through a quarter. In other words, if the tenant is due to pay rent only for the third month of the quarter, then they would pay a third of the full quarter’s rent. The lease itself is usually prepared as an original (to be executed by the landlord) and a counterpart (to be executed by the tenant). The parties will need to return the executed leases to their respective solicitors. On completion, the landlord’s solicitor acknowledges receipt of the completion monies, and they agree to date and send each other the executed original and counterpart lease. The tenant therefore holds the original lease executed by the landlord, and the landlord holds the counterpart lease executed by the tenant.

Answer 412

The landlord’s solicitor will send the money to the landlord or their agents. Institutional investors will likely also want a standard summary or short form report setting out the important terms. Otherwise, the landlord’s solicitor can raise their bill, and their work is finished. The tenant’s solicitor, however, now has to attend to payment of Stamp Duty Land Tax and registration of the lease. This should not be complicated if the landlord’s title is registered, as it almost always would be.

Answer 413

Commercial leases are lengthy documents running to many pages of provisions. Other than Land Registry prescribed clauses, which are required for any lease that is registrable, there is no standard form of lease.

Answer 414

The demise is the extent of the property that is being let. A lease of whole is a lease of the whole of the property that the landlord holds. This is usually simpler than a lease of part. A lease of part is a lease of part of the landlord’s property; for example, a floor of an office block or a unit in a retail park. The demise of a lease of part has to be defined, so will include the inner surfaces of walls, ceilings, floors, etc, but will exclude the structure of the building. A property that is subject to a number of leases of parts will usually have common parts, which are the areas that all the tenants need to use. In an office building, this will be the entrance and lobby, the lifts, toilets etc. A tenant under a lease of part will be given rights to use the common parts but they will not be leased to any one tenant and will remain the responsibility of the landlord.

Answer 415

The term is how long the lease is for. Commercial tenancies are usually for a fixed term rather than periodic (eg monthly) tenancies. Lease terms are often multiples of 5 years, eg, 5 years, 10 years, 15 years, etc.

Answer 416

As most commercial leases are for a fixed term, sometimes the parties will negotiate a tenant’s break clause. From the tenant’s point of view, this is a useful escape mechanism if after, say five years, the business is not performing as anticipated. From the landlord’s point of view, they would rather sign up a tenant to a ten year lease with a break at five years rather than a five year lease. This is because not all tenants exercise their break, and the ten year lease with break is likely to be more valuable than the five year lease. Break clauses are strict. A tenant must typically give six months’ prior notice, and be up to date with rent. The landlord will often try to impose a condition that the tenant is not in breach of any of its covenants, but the tenant should resist this, as any trivial breach could be grounds to block the break.

Answer 417

The rent for a commercial lease will usually be the market rent (or rack rent) payable quarterly. There is usually no premium payable upfront, and the landlord may even offer a rent-free period (typically three months) as an inducement for a tenant to take the premises, which also allows the tenant time to fit out the premises for their purposes. With an FRI lease, the tenant will contribute towards the insurance and any service charge (either all in a lease of whole or a proportionate part in a lease of whole). These payments are usually classed as part of the rent. For a residential lease (say 99 years) of a house or flat, the buyer usually pays a premium (the price of the house or flat), and from then on there will be a relatively small ground rent (say £150) payable each year.

Answer 418

FRI lease: upwards assumptions: tenant complied (but not landlord) disregard tenant improvement FRI leases will include rent review provisions, which will be upwards only. This means that the rent will be increased if open market rents have increased, but will stay the same if open market rents have decreased. Typically for a 10 year lease, the rent review will be on the 5th anniversary of the start of the lease. The rent review clauses will usually provide that the landlord and tenant will try to agree the new rent in advance of the rent review date, but if they cannot, then it is referred to a valuer whom they agree. If they can’t agree on a valuer, then they are appointed by the president of the Royal Institute of Chartered Surveyors. The rent review clauses will set out in detail the basis on which the valuation is to be made. This is usually a hypothetical lease, which will be similar in some respects to the actual lease, but with a certain set of assumptions to counter the unfairness that could result from valuing the actual lease.

Answer 419

For example, if the tenant has not complied with the repairing covenant, the premises will not be in as good a state of repair as they should be. If the valuer took account of this, then it would decrease the amount of rent a hypothetical tenant would pay. In other words, the tenant would be rewarded for not complying with their obligations! For the hypothetical lease, it is therefore assumed that the tenant has complied with its obligations. Note, however, that the same does not apply to the landlord’s covenants. To take an example, a landlord owns an office block, and does not comply with its obligation to keep the lobby and lift areas in good repair. A tenant would not be prepared to pay as much rent. In this case, the hypothetical lease should not assume that the landlord has complied with its obligations, as it is unfair for the tenant to pay the landlord the full amount when the state of the lobby and lift areas do not justify this.

Answer 420

Closely related to assumptions on rent review are disregards. These are matters that disregarded for the purposes of reviewing the rent. One example would be where the tenant has spent money on alterations that make the premises more desirable to a prospective tenant. This should be disregarded, as otherwise the landlord will benefit and the tenant will suffer from a higher rent.

Answer 421

Once the reviewed rent has been agreed, it is backdated to the rent review date. This means that it is not in the interests of either party to delay unnecessarily. The tenant will have to pay interest on the backdated rent. The tenant will want this to be no more than base rate, as the landlord should not be rewarded for delay.

Answer 422

After the essential provisions of demise, term and rent, probably the next most important provision is the repairing obligation. This is the landlord’s assurance that the landlord’s income stream is not affected by having to repair the tenants’ individual demises. In a full repairing obligation, the tenant covenants ‘to keep the premises in repair. This is stricter than it sounds, as it means that if the premises are not in repair, the tenant is obliged to put the premises in repair. A tenant taking on a full repairing lease, therefore, would be advised to obtain a survey to identify whether there are any wants of repair at the beginning of the lease. The landlord may phrase it as “good and substantial repair”. It is unclear whether this adds anything, but a tenant may want to resist anything other than “in repair”. The obligation may also refer to “condition”, ie, “to keep the premises in good repair and condition”. This does go further than a simple repair obligation. For example, if there is condensation in the premises, this would need to be corrected if the tenant has covenanted to keep the premises in good condition, but not if just good repair. A tenant would prefer to have a qualified repairing obligation, which is not to put the premises in any better state of repair and condition than they were at the beginning of the lease. This is evidenced by a schedule of condition, being a photographic catalogue of the premises and any damage. A qualified repairing obligation, whilst appealing to a tenant, does not meet the standards of an FRI lease and is generally not acceptable to an institutional lender.

Answer 423

In an FRI lease, the landlord will insure the premises, and recover the cost from the tenant (if a lease of whole) or tenants (leases of part). The lease will usually set out insured risks, such as fire, explosion, lightning, earthquake etc. Most of these risks are standard. However, the tenant’s solicitor should check whether terrorism is included. The landlord will usually also have the right to insure against other risks as they choose. The insurance should provide for the full costs of reinstatement (ie, rebuilding) of the premises. As well as being responsible for the premium, the tenant under an FRI lease also bears any shortfall due to excesses, exclusions and conditions imposed by the insurer, and pays the cost of any valuation that the landlord needs to obtain for insurance purposes.

Answer 424

The tenant’s solicitor should check what the lease provides if the premises are damaged or destroyed by an insured risk. The following are what would be considered normal: · Damage or destruction by an insured risk is excluded from the tenant’s repairing obligation (unless the insurance is not payable because of something the tenant has done or not done). · If the tenant is unable to occupy the premises, then the rent is suspended for a period (usually up to three years) until the damage has been repaired. · The landlord covenants to use the insurance monies to repair the premises. · If the landlord reasonably considers that it is impossible or impractical to reinstate the premises, then the landlord may give notice to end the lease. · If the premises have not been repaired by the end of the rent suspension period, then the tenant may give notice to end the lease. If the premises are damaged or destroyed by an uninsured risk (either because it is a risk that was not covered by the policy, or because the insurer has refused to pay out due to the tenant doing or not doing something), then the tenant will be responsible for repairing the premises under the repairing obligation, and there would not be a suspension of rent.

Answer 425

If the lease were silent, then the tenant would be free to alter the premises as they saw fit, provided that they do not do anything to reduce the value of the premises. However, the landlord will want to retain control over alterations, and therefore there will be a tenant’s covenant that restricts their power to alter. The landlord will be more concerned about alterations that affect the exterior or the structure of the premises, and they will often be treated differently. Covenants may be classified as absolute covenants, qualified or fully qualified covenants.

Answer 426

Absolute covenant An absolute covenant, for example against external and structural alterations, means that the tenant cannot carry out those alterations at all. Qualified covenant A qualified covenant means that the tenant can carry out alterations with consent. On the face of it, this means that alterations are at the complete discretion of the landlord. However, if the tenant’s proposed alterations amount to improvements, then it is implied ((under section 19(2) of the Landlord and Tenant Act 1927) that the landlord cannot unreasonably withhold consent. An improvement means that the premises become more useful or valuable to the tenant, even if the landlord’s interest is diminished in value. Fully qualified covenant However, rather than rely on this statutory provision, a tenant will prefer a fully qualified covenant. This will expressly state that the landlord’s consent cannot be unreasonably withheld. Therefore the tenant does not have to prove the alteration is an improvement. Note that if the tenant wants the landlord’s consent “not to be unreasonably delayed” then this wording must be included, as this is not implied by statute (as it is for alienation covenants).

Answer 427

Unlike alterations clauses, however, there is no statutory implication which converts a qualified covenant to a fully qualified covenant; that is, the Landlord does not have to act reasonably in giving or refusing consent to an alternative use. The only restriction on the landlord’s discretion is that they are not allowed to increase the rent or a sum of money for giving consent (s19(3) of the Landlord and Tenant Act 1927) unless the proposed change of use also involves structural alterations. Planning permission may be needed for a change of use. As this could prejudice future tenants, the tenant will usually covenant not to apply for planning permission without the landlord’s consent.

Answer 428

The Royal Institution for Chartered Surveyors (RICS) has released a code in 2020 which promotes transparency and fairness of negotiations. It is a similar idea to the Law Society Conveyancing Protocol that we saw for freehold transactions. However, unlike the protocol, it is aimed at the negotiation process rather than the legal process. It affects RICS members (which property agents will often be) rather than solicitors. Unlike the previous code that they released, this has principles that are mandatory on RICS members. Other principles are not mandatory and indicate good practice, but RICS members may be called upon to justify why they haven’t observed those principles.

Answer 429

Mandatory requirements include the following: · Lease negotiations must be approached in a constructive and collaborative manner. · A party not represented by an RICS member or other property professional must be advised by the other party or its agents about the existence of the code and must be recommended to obtain professional advice · The agreement as to the terms of the lease must be recorded in written heads of terms and set out a number of provisions; for example: · It must define the premises and any rights to be granted · The length of the term · Break rights · Requirements for a guarantor or rent deposit · How much the rent is and how often it is payable, and whether subject to VAT · Rent review provisions · Service charge and insurance · Repairing obligations · Rights to make alterations

Answer 430

Some principles of good practice relevant to this element include the following: · Unless the parties have agreed stricter conditions in the heads of terms, a tenant’s break should be conditional only upon the tenant paying all basic rent (ie, not insurance or service charge), giving up occupation, giving up occupation and leaving no-one in occupation. · Repairing obligations should be appropriate to the length of the term, the condition of the premises and the financial terms. · If the tenant’s repairing obligations are limited to the initial condition of the premises, a schedule of condition should be prepared. · The tenant’s repairing obligation should exclude inherent construction defects for newly built property. · In a lease of a whole building, the landlord should not normally prohibit or require consent for internal non-structural alterations. · The lease should provide that terrorism will be covered in the landlord’s insurance policy provided that it is available at reasonable rates.

Answer 431

A lease can be terminated by: x6 · Effluxion of time · Notice to quite · Break clause · Surrender · Merger · Forfeiture

Answer 432

At the end of the contractual term, the lease comes to an end, unless the tenant remains in occupation. With a protected tenancy, the tenant can hold over, and then the tenancy can only be brought to an end with one of the prescribed notices (s25, s26 or s27 notice). With other tenancies, if the tenant remains in occupation with the consent of the landlord, then the tenancy becomes a tenancy at will. However, if rent is paid periodically, then it may become an implied periodic tenancy.

Answer 433

For a periodic tenancy, the landlord may serve notice to quit on the tenant. The notice period depends on the period of the tenancy: Yearly tenancy – six months’ notice Quarterly tenancy – a quarter’s notice Monthly tenancy – a month’s notice Weekly tenancy – a week’s notice, but for a residential tenancy, it is four weeks’ notice Conversely tenant can serve notice on the landlord to bring the tenancy to an end – similar notice periods apply.

Answer 434

The landlord and tenant can bring the lease to an end if they both agree. If the landlord wants to end early, then they may need to pay a premium to the tenant to compensate for the loss of premises. The landlord is effectively paying to have the leasehold interest surrendered back to it. If the tenant wants to end early, then they may need to pay a reverse premium to the landlord to compensate for the loss of rent. It is called a reverse premium, because the tenant is giving up its leasehold interest and paying the landlord to do so. However, this makes sense because the tenant is also released from its obligations. If both parties want the lease to end early, then there may be no premium. The surrender releases both landlord and tenant from their ongoing obligations under the lease, but care needs to be taken not to release previous obligations unless they have been met in full (eg, the tenant has paid any rent and other sums owing up to the date of surrender).

Answer 435

If the leasehold and freehold interests are held by the same party (eg, if the tenant buys the freehold), then the interests are merged into the superior interest, and the lease is extinguished. This can also happen if a third party buys both the freehold and leasehold.

Answer 436

Remedies for non-payment of rent Commercial Rent Arrears Recovery (CRAR) Remedies for breach of repairing obligation Any breaches Forfeiture (also known as re-entry)

Answer 437

· Debt action in courts – can claim up to six years’ arrears · Claim debt from former tenant (either by privity of contract with an old lease or AGA for new lease) · Take money from the rent deposit · Commercial Rent Arrears Recovery

Answer 438

Can only be used to recover the rent itself (plus VAT and interest), not service charge or insurance premiums (even if labelled as additional rents) · Must be a minimum of 7 days’ rent owing · Maximum of 6 years’ arrears · Must serve 7 days’ clear notice of intention – can then seize goods up to value of rent · Cannot be used after the lease has been forfeited. Using CRAR waives the right to forfeit the lease.

Answer 439

· Normal damages are limited by a statutory cap to amount by which landlord’s reversion has been reduced in value. Therefore, if it costs £10,000 to repair the damage, but the landlord’s interest has only been reduced in value by £1,000, then the landlord can only recover £1,000 It is normal to have a self-help clause in the lease (also called a Jervis v Harris clause) · If the tenant breaches repairing obligation, then the landlord can serve notice requiring the tenant to repair, and if the tenant fails to do so by specified time, the landlord can enter the premises and make the repairs and recover the cost from the tenant as a debt · As it is a debt, not damages, the landlord can recover the full amount from the tenant (it is not restricted by the statutory cap)

Answer 440

Common law damages are available for any breaches Specific performance and injunctions may be available in limited circumstances, but these will be rare.

Answer 441

This must be included in the lease – the landlord has no right to forfeit if the lease does not provide for it. Typically, the landlord will have the right to forfeit the lease if payment of rent has been delayed for, say, 21 days. The landlord should have made a formal written demand, but the lease may specify that this is unnecessary. There may also other triggering events, such as a breach of the repairing covenant, or the insolvency of the tenant. When this provision is triggered, the landlord may re-enter the premises and bring the lease to an end immediately. This also ends the interests of anyone who derives an interest from the lease, such as undertenants or mortgagees. Any of the tenant, undertenants and mortgagees can apply to the court for relief from forfeiture. If the court grant relief, then the lease is brought back to life.

Answer 442

The landlord can forfeit the lease by peaceable re-entry or court order. Peaceable re-entry involves using a bailiff to change the locks and exclude the tenant from the premises. This cannot be used if the premises, or any part of them, are residential. This can be very effective against a commercial tenant, as it causes embarrassment and interruption to their business. However, there are risks if the tenant disputes that it has been done lawfully. The landlord can therefore also apply to the court for forfeiture. The advantage of this is that if the court grants the order, the legal validity of the forfeiture is already tested.

Answer 443

If the landlord continues to accept rent or otherwise behaves in a way that acknowledges the existence of a continuing tenancy, then they are taken to have waived the right to forfeit the lease. This does not apply to accepting rent arrears that form part of the breach the basis of forfeiture, only to continuing rent. There is a distinction between “once and for all” breaches and continuing breaches. For example, if the tenant has unlawfully underlet the property, and the landlord acts in a way to waive the breach, the landlord can no longer forfeit for that breach. However, if the breach is of the repairing obligation, then each day that the breach continues, the landlord can choose to forfeit – its behaviour on previous days cannot be treated as waiver of this type of breach.

Answer 444

Relief from forfeiture is an equitable remedy and is discretionary. The tenant (or person deriving interest from the tenant) must show the court why it would be equitable to grant relief. The effect of relief is to restore the lease and any underleases.

Answer 445

A lease grants an estate in land, and therefore a proprietary interest. It gives exclusive possession. A licence is a personal permission given by the landowner to allow you to use the land. However, it does not give exclusive possession. It is not a proprietary interest, and does not bind new owners of the land. An example of a licence is when you stay for a few nights in a hotel room. A tenancy at will falls somewhere between a licence and a lease. The words “at will” signify that the tenancy lasts only as long as landlord and tenant wish, and either can bring it to an end at any time. Like a licence, it does not bind third parties, but unlike a licence it does grant exclusive possession (although it is easily taken back). It is commonly used when landlord and tenant are still in the process of negotiating a formal lease, but it is in their mutual interests for the tenant to take occupation. Only a lease, not a licence or tenancy at will, is capable of obtaining security of tenure.

Answer 446

The Landlord and Tenant Act 1954 gives business tenants in certain situations security of tenure. Where they have acquired this protection, it means that: · They can continue in occupation past the contractual term of the lease (ie, what was agreed between the parties) · They can apply to the court for a new tenancy to be granted. Why is security of tenure important to some tenants? · They can invest in the property and their business knowing that the premises are likely a long term prospect. · They know that they will be able to continue to pay a market rent. Otherwise, a landlord might take advantage of their investment in the premises to demand a higher than market rent. · It gives tenants the confidence that they can reap the benefit of any goodwill they build up at their location.

Answer 447

Not all tenancies acquire security of tenure. It must meet the following conditions: · It must be a lease, not a licence or tenancy at will. · The tenant must occupy at least part of the premises. If the premises are left permanently empty, then they cannot acquire security of tenure. Note also that if the tenant has underlet the whole of the premises, then the tenant does not have security of tenure. · It must be used for the purposes of a business (a trade, profession or employment). Purposes of a business is interpreted quite widely. Sports clubs and charities can qualify. The following tenancies do not have security of tenure: · Tenancies of 6 months or under · Service tenancies · Mining tenancies

Answer 448

In some cases, a landlord may be happy for the tenant to obtain security of tenure. After all, for an institutional landlord, the main focus is the income stream. Having security of tenure may encourage a tenant to become a long term prospect. It may also benefit rent review – ie, the market rent may be higher for a lease with security of tenure. However, in other cases, the landlord will want to exclude security of tenure. For example: · If the landlord knows that they will want the premises back at the end of the contractual term to redevelop the property or for any other reason. · If the landlord and tenant agree a lease with a short contractual term (less than 10 years), then it is likely that the landlord will want to exclude the security of tenure provisions. · An undertenant’s lease will usually be excluded. It is not difficult to contract out, but the procedure must be followed strictly. A notice must given to the tenant in prescribed form, and then the tenant must give a declaration to the effect that they understand the implications of excluding the security of tenure provisions. If the notice is given more than 14 days in advance, then the tenant can sign an ordinary declaration. If, as is more common, the notice is given just before completion, the tenant must make a statutory declaration before a solicitor. The lease itself must state that the security of tenure provisions have been excluded, and refer to the notice and declaration or statutory declaration (as appropriate). A contracted-out lease will end on the contractual expiry date, and the tenant has no right to stay in the premises beyond that, nor to require a renewal lease.

Answer 449

The tenant may wish to leave the premises at the end of the contractual term, and they may do so. If they do, then the lease comes to an end. However, they do not have to leave, and if they stay, then they do so on the terms of the lease. This is called holding over. The lease will usually provide that if the tenant falls behind with rent (say over 21 days) or is in breach of its covenant or is made insolvent, then the landlord may forfeit the lease. This means that the landlord can re-enter the premises and bring the lease to an end. This applies equally whether or not the lease is protected.

Answer 450

Once a tenant has started holding over, then under the Landlord and Tenant Act 1954, other than forfeiture, the lease can only be brought to an end by one of three notices. These are a section 25 notice by the landlord, or a section 26 or 27 notice by the tenant.

Answer 451

A section 25 notice gives notice to the tenant that the current tenancy is to come to an end on a date specified in the notice (the Date of Termination or DOT). It must be in the prescribed form. A “friendly” section 25 notice indicates that the landlord is willing to grant a new tenancy. If so, the proposed terms of the tenancy will be set out in the notice. Once this notice has been served, either the landlord or the tenant can apply to the court for the new tenancy. However, they will generally try to agree the terms between themselves first to avoid unnecessary costs. They must make this application before the Date of Termination (DOT), but they can agree to extend the time limit between themselves, which means that they do not need to make a court application just because they are still negotiating.

Answer 452

This is similar to the friendly section 25 notice in that it gives notice to bring the tenancy to an end on the specified date (again the DOT). However, in this case, the landlord indicates that the landlord is opposing the grant of a new tenancy. The landlord may only oppose the grant of a new lease on specified grounds.

Answer 453

Landlord’s grounds for opposition There are seven grounds for opposing a new tenancy. Some of these are mandatory, meaning that if the ground is established, the court must allow them to oppose the tenancy. Others are discretionary, meaning that the court will be able to decide. The mandatory grounds are: · The landlord is making suitable alternative accommodation available to the tenant. This must be reasonable, having regard to the tenant’s business and goodwill. · The landlord intends to demolish or reconstruct the premises or a substantial part of it, and cannot do this without obtaining possession. · The landlord intends to occupy the premises for its own business or residence. They must show a firm and settled intention. This is subject to a five year rule, meaning that the landlord must have owned the reversion (usually the freehold) for more than five years before the date of termination. The discretionary grounds are: · A serious breach by the tenant of a repairing obligation · Persistent delay by the tenant in paying the rent – this must be serious and persistent · Other substantial breaches by the tenant of their obligations under the lease – again, they must be serious and persistent · In the case of an underlease of part, possession is required to let or dispose of the property as a whole If the landlord is successful in opposing the tenancy, then compensation is payable unless either the ground is based on the tenant’s fault (serious breach, etc) or the tenant has been offered suitable alternative accommodation. Compensation is a sum equal to the rateable value, or if the tenant has been in occupation for 14 years or more, twice the rateable value. The award of compensation cannot be excluded or reduced unless the tenant has only been in occupation for less than 5 years. The court can award further compensation if it later turns out that the landlord has obtained possession based on misrepresented or concealed facts.

Answer 454

This is different to the section 25 notice in that the tenant specifies a date for the proposed start of the new tenancy. The notice will set out the tenant’s proposals for the terms of the new tenancy. It is also needs to be in the prescribed form. The existing lease will terminate the day before the start of the new tenancy. Again, the parties need to apply to the court before the DOT if they cannot reach agreement, but again, they can agree to extend the deadline. If the landlord objects, they can serve a counter notice to the section 26 notice – similarly with a hostile section 25 notice, they must set out the grounds on which they are opposing a new tenancy.

Answer 455

This is used by the tenant when they just want to bring their lease to an end, and do not want a new tenancy. Unlike the other two notices, this is not in prescribed form, and could take the form of a letter. The tenant can, of course, leave the premises on the expiry of the contractual term under their existing lease, but as soon as they start holding over, they must serve a section 27 notice (unless a section 25 notice has been served).

Answer 456

Section 25 notice – must be served no less than 6 months and no more than 12 months before the proposed date of termination of the current tenancy. If the landlord intends for the existing tenancy to expire on its contractual expiry date, therefore, the landlord will need to serve the section 25 notice at least six months (but no more than 12 months) before the contractual expiry date. The proposed date of termination cannot fall before the contractual expiry date. -- Section 26 notice – similarly, this must be served no less than 6 months and no more than 12 months before the proposed commencement date of the new tenancy that the tenant is request. It may be served up to 12 months before the contractual expiry date if the tenant intends that the new tenancy starts the day after the contractual expiry date. Because this notice is concerned with the date of the new tenancy, the existing tenancy actually ends a day earlier than with the section 25 notice. In this case, the proposed commencement date therefore cannot fall earlier than the day after the contractual expiry of the lease. -- Section 27 notice – must be served at least three months before the tenant’s stated date for the termination of the current tenancy.

Answer 457

Where a new tenancy is to be granted, the landlord and tenant will usually try to negotiate it between themselves. This can take time, and either landlord or tenant can apply to the court to fix an interim rent. This reduces the likelihood that either of them will try to stall negotiations to keep a higher than market rent (landlord) or lower than market rent (tenant). Where the landlord is willing to grant a new lease, the interim rent is set at the market level. Where the landlord is opposed, the interim rent will be 10 to 15% lower than the market rent.

Answer 458

Terms of the new lease · Unsurprisingly, the premises are the same as those occupied by the Tenant for the business at the date of the court order. · The new term cannot exceed 15 years. · Rent is that reasonably expected in the open market. The Tenant’s goodwill and any voluntary improvements are disregarded. · Other terms are determined by the court with regard to the current tenancy and other circumstances. Although the current tenancy will be the starting point, it may need updating (eg, to take account of changes in statutory references, use classes, etc).

Answer 459

x2 assignment underletting

Answer 460

A tenant may decide that they no longer want the leased premises. If they are nearing the end of the tenancy or a break clause, then they can wait for the lease to expire or exercise the break accordingly. However, if they have some years left to run, they remain facing the liability of rent and repair obligations. The landlord may agree to bring the lease to an end early, but is likely to demand a substantial sum to do this. The other alternative is to find someone who is interested in taking over the lease. If they can do so, and provided the new tenant pays the rent and performs the obligations, the original tenant may be able to get out of a lease which they didn’t want with relatively little cost.

Answer 461

Underletting means the tenant granting a lease to a subtenant. There are various reasons why a tenant might want to do this. Say a tenant has a lease of three floors of an office block, and they decide that they only need two floors. If they can find a tenant interested in taking just one floor. If they can do this, then that tenant (the undertenant) will pay rent on that floor. The tenant can use this rent to offset the cost of the rent of three floors that they must pay to the landlord. Another possibility is that the tenant decides that they don’t need the premises for the next two years, and they find someone who is only interested in taking a two year lease. In this way, the tenant can keep hold of the premises until they need them, and receive a rental income to offset against the rent they will continue to pay the landlord.

Answer 462

Under an FRI lease, the landlord will want to keep strict control on alienation. This is because they need to maintain the covenant strengths of their tenants. Usually, the lease will allow assignment of the lease as to the whole premises, but not part. It will usually allow underletting of the whole, and may allow underletting of part (particularly if, as in our office example, the tenant has taken two or more floors or units which are capable of being let separately). Alienation covenants may be absolute, qualified or fully qualified. Absolute covenant There is usually an absolute covenant against assignment of part of the premises. This means that it is forbidden, and the landlord does not have to consider a request to do it. Qualified covenant A qualified covenant against assignment or underletting means that the tenant can only do it with landlord’s consent. Fully qualified covenant As to assignment or underletting, a qualified covenant is converted to a fully qualified covenant by section 19(1)(a) Landlord and Tenant Act 1927. This means that the landlord cannot unreasonably withhold consent. Section 1 of the Landlord and Tenant Act 1988 goes one step further and provides that the landlord cannot unreasonably delay consent either. Given that these statutes convert a qualified covenant into a fully qualified covenant with the additional provision on unreasonable delay, it is usual for the covenant to be drafted in this form in any case.

Answer 463

For either assignment or underletting, the tenant’s solicitors make a formal written application to the landlord or their solicitors requesting consent. The landlord’s solicitors will request an undertaking from the tenant’s solicitors to cover the landlord’s legal and surveyor’s costs. The surveyor will assess the covenant strength of the proposed assignee or undertenant.

Answer 464

· Assignee or undertenant is of unsatisfactory covenant strength. · The assignee or undertenant’s proposed use of the premises would be a breach of the lease. · The assignee or undertenant are in a business that competes with the landlord’s and would affect nearby business of the landlord. · Where the landlord has a policy on the different uses of different units (eg in a shopping centre) and the proposed assignee’s or undertenant’s use would conflict with that policy.

Answer 465

· The landlord has a personal grievance against the proposed assignee or undertenant. · The landlord is withholding consent as leverage for trying to get something out of the tenant. · The tenant has minor breaches of the repairing covenant.

Answer 466

In either case, if the landlord gives consent, they will want to do so within a formal licence deed. This is for two reasons: 1. It formalises the landlord’s consent. 2. It creates privity of contract between the landlord and the assignee or undertenant. Note that for the assignment of a new lease (on or after 1 January 1996), it is not necessary to create this privity of contract, as the Act automatically binds the incoming tenant to the terms of the lease. However, as a belt and braces approach, landlords will still want to see it. This does not apply to the case of a subletting, though, and the landlord will want to secure direct covenants from the undertenant in the licence.

Answer 467

They have the following common features: · The landlord gives formal consent to the proposed dealing · The assignment or underletting must take place within a prescribed time (usually 3 months) · The consent is specific to that particular dealing – it does not allow the tenant to assign or underlet to another party other than that mentioned, or in any terms other than those specified · The tenant covenants to pay the landlord’s professional costs (although this is not usually strictly necessary as there will be an undertaking to pay them anyway) Features specific to a licence to assign: · Unless the assignment is of an old lease (before 1 January 1996), it will usually require an authorised guarantee agreement from the outgoing tenant. This means that the outgoing tenant guarantees the obligations of the incoming tenant. This guarantee only lasts as long as the incoming tenant is the tenant. · The outgoing tenant is not released from any existing obligations, such as arrears of rent, breach of repairing obligations, etc. Features specific to a licence to underlet: · The underlease must be in the form of the agreed form (a draft is annexed to the licence) · The undertenant covenants directly with the landlord to observe and perform the covenants in the underlease and the headlease (except the covenant to pay the rent in the headlease as otherwise the undertenant would have to pay the rent twice!)

Answer 468

Get the basics! - Legal estate? Leasehold or freehold? - Title documentation/ the title The client (company or individual) details The building - Layout of the building eg how many floors + entry access + communal facilities eg lavatories - Request floor plans + building plans Agents details - If third party involved request their details and ask if client is happy for you to contact directly if need be The actual property to be let - Condition of the building - Parts of the building client wishes to retain? - Will client allow tenants to use the above? If so, service charge? - Areas outside the building eg parking facilities, storage area, bin area… The term - Ideal length of term (flexibility)? Suggest all to start not the same date for ease - Break clause/termination? A break clause is the right for the landlord/tenant (depending on drafting) to end the lease early - Fixed vs rolling - Fixed gives more certainty eg after 2 years… - Notice (eg 6 months) + conditions - Tenant must remove all alterations - Tenant must pay a break penalty - Tenant pays all the rent up to an including the break Security of tenure - What is it: ‘The Landlord and Tenant Act 1954 offers tenants who occupy a property for the purposes of their business a certain degree of security i.e. protection from eviction. Basically, a business tenant can continue to stay in a property after the end of their term, as long as certain conditions have been met.  The tenant can then ask (often compel) the landlord to grant a new lease. The landlord can refuse to renew, but only in limited circumstances - Would you like it to be excluded from the lease: YES Rent - How is it calculated - How often paid - Opt to VAT? Rent review - Not necessary if short term leases eg 5 years of less but can consider if extending beyond Service charge - Yes or no? - How often - How much Insurance - Usually landlord insures then charges back to tenant - What will be included? Permitted use Alienation: assignments and underlease - Assignment = selling - landlord would want to give prior consent + - AGA: authorised guarantee agreement - Any other conditions? - Underlease - Whole or part? Usually whole - Allowed to share? Usually not (= part) Repair and reinstatement - Who maintains the responsibility? Communal is usually the landlords - Usually divided between external and internal - External = landlord/management - Internal = tenant - Schedule of condition can be included if the tenant is able to negotiate it into the lease Schedule of conditions: it is a document which usually consists of photographs and wording documenting the state of the property at the time of the letting. During the term and at the end of the term of the lease, the tenant is responsible for keeping/returning the state of the property to the landlord as it was at the time of the letting - as evidenced in the Schedule of Conditions. This is usually a tenant friendly compromise. Alterations and signage Usually … - The tenant will be allowed to make internal, non-structural alterations to the Property, but only with the Landlord’s prior written consent.  - The tenant will NOT be allowed to make any structural changes at all. - The tenant will be allowed to display signage in the lobby area of the floor plus in the reception area. However, the style and size of the signage must be approved by the Company first in writing, - All alterations must be removed by the end of the term of the lease.

Answer 469

Latent and inherent defects are problems that emerge from a newly built building and are due to errors of design or workmanship. A tenant should not be obliged to repair these matters. The landlord should accept these risks as they would have a remedy against the relevant contractor (architect, builder, engineer etc) under their respective warranties.