Procedure for granting a lease Flashcards
What are the main steps in the process of granting a lease?
Pre Completion
Post Completion
In pre exchange, what does the landlord’s solicitor do?
Take instructions
Prepare draft lease and, if relevant, agreement for lease (ie, if there is to be an exchange)
Deduce title (and check that lender will consent to letting) and respond to any queries on title
Answer pre-contract enquiries
Once agreed, engross the agreement for lease, obtain landlord’s signature, and send counterpart to tenant’s solicitor
What does it mean to engross?
Print a copy for signature on good quality paper and bound
What does the tenant’s solicitor do in pre exchange?
Take instructions
Review draft lease and agreement for lease and amend as required
Investigate title and raise any queries on title
Raise pre-contract enquiries and searches
Arrange for tenant to sign counterpart lease
Who executes what in the transaction?
The original lease or an agreement for the lease is executed by the landlord
The counterpart is executed by the tenant
What are the pre exchange steps for drafting a lease?
Landlord’s solicitor will draft it based on heads of terms
Can use generic precedent or past leases to tailor if there have been past lettings
The tenant’s solicitor will go through the lease and amend anything that is onerous or unfair to the tenant or simply try to balance it more in favour of the tenant
What is the agreement for lease?
If not needed the parties will simply complete once tenant’s solicitor is happy with their title investigations and the form of the lease is agreed.
Agreement is needed when the parties want to commit to completing the lease but either are not yet ready or there are conditions that need to be satisfied
Example: where you want to take a retail lease in a shopping centre which is due to be built in 2 years time
What happens at the pre exchange with investigation of title, searches and enquiries?
Landlord’s solicitor will deduce the freehold and tenant’s solicitor should investigate it
T’s solicitor should ensure L has the right to grant the lease and will need to consider any freehold covenants as they will also bind the tenant
T’s S will raise CPSE1 enquires specific to the grant of the lease
T’s S should raise the same searches they would if they were buying the freehold - but tenants may agree with their solicitor that costs of a full investigation are not necessary for short leases with limited repair obligations. T should be advised of this risk by S.
What happens at exchange?
Landlord’s solicitor and tenant’s solicitor exchange in similar manner to a freehold contract - usually Law Society Formula B
No deposit is usually payable
agreement for lease may set a fixed completion date but more likely will set out what conditions need to be satisfied and when for the completion to take place
What are the pre completion steps that landlord’s solicitor takes?
prepare the original and counterpart lease, obtain landlord’s signature to original and send counterpart for tenant’s signature
prepare and send completion statement detailing the money due on completion
prepare
What are the pre completion steps that tenat’s solicitor takes?
arrange for tenant to sign the counterpart lease
obtain funds from client needed to complete as per completion statement
raise pre completion searches:
- OS1 search for a lease whole
- OS2 search for a lease of part
- OS3 search of the lease is not registrable
What happens on completion?
Tenants solicitor sends the landlord’s solicitor the completion monues
Landlord’s S and tenant’s S agree over the phone to complete and date the executed leases that they are holding
The landlord’s solicitor and tenant’s solicitor send the completed and original counterpart to eachother
What happens post completion
Landlord’s solicitor will send summary of main provisions of lease to client
Tenant’s solicitor will arrange to submit SDLT or LLT return and pay appropriate SDLT or LTT if necessary and register the lease if necessary
