Procedural steps for the grant of a lease or underlease

Question 1

Step 1 - Drafting the lease/underlease

Answer 1

Landlord’s solicitor will draft the lease and submit it to the tenant’s solicitor for approval. The tenant’s solicitor will probably make amendments. The draft lease will go backwards and forwards between the solicitors until it is finally agreed. The terms of the underlease should mirror those of the headlease

Question 2

Step 2 - Purpose of an agreement for lease

Answer 2

Agreement for lease = a contract. Will be useful where this is going to be a delay between agreeing the lease/underlease and actually granting it but one or both of the parties requires the other to be bound into the transaction. Will be drafted the same as a contract for freehold property transaction

Question 3

Step 3 - Deduction of title

Answer 3

Landlord’s solicitor will need to investigate the client’s title to ensure that the client is entitled to grant it. If the property is subject to an existing mortgage the mortgage will frequently contain a prohibition or restriction on the borrower/landlord’s ability to grant a lease of the property so the lender myst be contacted and its permission obtained before the transaction proceeds. Tenant will want the landlord to deduce title to the freehold interest.

Question 4

Step 4 - Pre-contract enquiries and searches

Answer 4

Landlord’s solicitor should provide the tenant’s solicitor with the following documents:
- Draft agreement for lease
- Draft lease/underlease
- Evidence of the freehold/headlease title
- Copies of any relevant planning consents
- Evidence of the lender’s consent to the grant of the lease/underlease

Question 5

Step 5 - Pre-completion formalities

Answer 5

The lease is executed by the landlord and the counterpart by the tenant. On completion these are exchanged so that each party has a copy of the lease signed by the other.

Question 6

Step 6 - Completion and post-completion steps

Answer 6

On completion in addition to matters relevant to a freehold transaction the landlord will receive:
- The counterpart lease/underlease executed by the tenant/undertenant
- Any premium payable for the grant
- An apportioned sum representing rent payable in advance under the lease/underlease
The landlord should give the tenant:
- The lease/underlease executed by the landlord
- Certified copies of the freehold title deeds