Procedural steps for the grant of a lease / underlease Flashcards
Who drafts a lease?
The landlord’s solicitor
Why is the scope for negotiation in an underlease much more restricted?
Because likely that the headlease requires that the terms of the underlease mirror the terms of the headlease
Under the SC & SCPC, when must the landlord supply the tenant with the final agreed lease (‘engrossed lease’)?
At least 5 working days before completion date
What is an agreement for lease & when is it used?
Contract to enter into lease
Used where delay between agreeing & granting (eg. need to get consent, site being developed) but want parties to be bound
Who drafts the agreement for lease & what are the formalities requirements?
Drafted by landlord’s solicitor
Must be valid contract, ie.
1. In writing
2. Contain all expressly agreed terms
3. Signed by both parties
What must the landlord’s solicitor do if the property is subject to a mortgage?
Check if the consent of the lender is required before a lease can be granted
Who deduces & investigates title in a lease/underlease?
Landlord’s solicitor (as with freehold)
Why is deduction of freehold title important in the grant of a lease?
Tenant will want to know if there is anything on the freehold title which will bind the leasehold title
If landlord does not have freehold title, tenant cannot get absolute leasehold title on subsequent registration
Is the tenant entitled to call for deduction of freehold title in the grant of a lease?
Only if transaction is grant of lease of 7+ years
–> If 7+ years & there is going to be an agreement for lease, landlord must deduce such title as would enable tenant to get absolute leasehold title at Land Reg
Which title must be investigated in the grant of an underlease?
Immediate landlord’s title (headlease) & ultimate landlord’s title (freehold)
nb. if headlease registered with absolute leasehold title, no need to see freehold title, just headlease
If the headlease is registered with absolute leasehold title, does the the landlord need to deduce title to the freehold?
No - just need to review headlease itself & official copies of headlease
If the headlease is unregistered, what is the undertenant entitled to call for?
- Headlease & all subsequent assignments for the last 15 years
- Deduction of freehold title only where term is 7+ years
Who undertakes the pre-contract searches & enquiries in the grant of a lease/underlease?
Under/tenant’s solicitor
Does the same ones as for freehold (but will usually have extra qs re lease eg. details of landlord’s insurance policy)
What 5 documents must the landlord’s solicitor provide the under/tenant’s solicitor to enable them to carry out the pre-contract searches & enquiries?
- Draft agreement to lease (if applicable)
- Draft under/lease
- Evidence of freehold / headlease title
- Copies of any relevant planning consents
- Evidence of lender’s consent to grant (if applicable)
What are the formalities requirements for a lease?
Lease is transfer of legal estate in land, ie. must be valid deed
I. Clear it is a deed**
II. Signed & witnessed by grantor
III. Delivered
Execution
By individuals: signed in presence of attesting witness
By company
a. Affixing company seal in presence of 2 attesting directors
b. Signed by 2 directors
c. Signed by 1 director in presence of attesting witness
What is a licence to underlet?
A contract between the head-landlord, headtenant & undertenant in which head-landlord grants formal consent to underletting
Will also have
- Covenant by undertenant with landlord to perform covenants (privity!)
- Covenant by tenant to pay head-landlord’s costs
What are the covenants usually made by an undertenant and tenant with the landlord in a licence to underlet?
Undertenant: Direct covenant w/ landlord to perform covenants in sub-lease & headlease
(creates privity of contract between headlandlord & undertenant)
Tenant: to pay landlord’s costs incurred in giving consent (& maybe not to grant underlease until undertenant contracts out of LTA54 protections)
What is SDLT payable on for the grant of a lease/underlease?
The VAT-inclusive amount of any premium paid & on the rent (non-residential)
(SDLT calculated on Net Present Value of the rent: £0 - £150k: 0%; £150k - £5m: 1%; >£5m: 2%)
When must the SDLT1 be submitted?
Within 14 days of completion
(For LTT: within 30 days)
When must an under/lease be registered?
If it is for a term of more than 7 years
What documents need to be submitted for registration if the landlord’s title is registered? (6)
a. Lease
b. Fee
c. Consent of landlord’s lender / DS1 showing discharge of landlord’s mortgage (if applicable)
d. Mortgage deed (for new mortgage)
e. SDLT5 / WRA certificate
f. Death certificate of T.I.C. & Deed of Appt of 2nd trustee (if relevant)
Application must be made before expiry of 30 working day priority period conferred by OS1
What documents need to be submitted for registration if the landlord’s title is unregistered? (7)
a. Lease
b. Fee
c. Consent of landlord’s lender / DS1 showing discharge of landlord’s mortgage (if applicable)
d. Mortgage deed (for new mortgage)
e. SDLT5 / WRA certificate
f. Death certificate of T.I.C. & Deed of Appt of 2nd trustee (if relevant)
g. Epitome of title etc. If evidence of title to freehold not submitted, can only get good title
Application must be made within 2 months of completion?
When must the application to register the lease be made by?
Landlord’s title is registered: before expiry of 30 working day priority period conferred by OS1
Landlord’s title is unregistered: within 2 months of completion
