Property 2 Flashcards
1
Q
Describe the impact of the Landlord and Tenant (Covenants) Act 1995 on lease assignments.
A
The Act changed the liability of the assignor and assignee to better reflect commercial realities, releasing the original tenant from liability when a new lease is assigned.
2
Q
Explain the liabilities of the assignee in a lease assignment.
A
The assignee is only liable for certain covenants that automatically pass under privity of estate and must covenant directly with the landlord to observe all tenant covenants in the lease.
3
Q
Discuss the implications of assignment on privity of contract.
A
Assignment allows a new party (assignee) to take over the obligations of the original contract, but the original parties still retain the ability to enforce their obligations against each other.
4
Q
What limitations exist under privity of estate?
A
Not all obligations are enforceable under privity of estate, meaning some lease provisions may not be enforceable between the landlord and tenant.
5
Q
Define privity of contract.
A
Privity of contract is the ability of the original parties to a contract to enforce the obligations against each other, even after the contract has been assigned.
6
Q
Explain the significance of a guarantor in the context of lease assignment.
A
A guarantor is significant in lease assignment as the assignee may be required to provide one to ensure the payment of rent and fulfillment of other obligations.
7
Q
What does the term ‘alienation’ mean in relation to leasehold interests?
A
Alienation refers to the disposal of all or part of a tenant’s interest in a lease, with assignment being one form of alienation.
8
Q
Describe the circumstances under which a landlord can withhold consent from a prospective tenant.
A
A landlord can withhold consent if the proposed use of the premises does not align with their policies, such as in a shopping center where mixing different types of shops is a concern. Additionally, if the landlord has justifiable concerns about the assignee’s ability to pay rent, such as lack of satisfactory references or if the assignee is newly incorporated without accounts, it may also be reasonable to withhold consent.
9
Q
Define ‘reasonable time’ in the context of landlord consent for assignment.
A
Case law suggests that ‘reasonable time’ should be measured in days or weeks, not months, depending on the circumstances.
10
Q
What does s1 of the Landlord and Tenant Act 1988 require from landlords regarding consent?
A
It requires landlords to give their decision on consent within a reasonable time.
11
Q
How does s19(1)(a) of the Landlord and Tenant Act 1927 affect qualified covenants?
A
It converts a qualified covenant into a fully qualified covenant, requiring the landlord to act reasonably when deciding to withhold consent.
12
Q
How does the silence of a lease regarding assignment affect a tenant’s ability to assign?
A
If the lease is silent on the matter of assignment, the tenant is generally free to assign the lease without needing consent.
13
Q
Why might a landlord include an absolute covenant against assignment of part of the premises?
A
A landlord may include an absolute covenant against assignment of part of the premises to prevent complications that arise from splitting the lease into parts.
14
Q
What rights and obligations does the new tenant (assignee) have after assignment?
A
The new tenant is entitled to exclusive possession of the premises and is obliged to pay the rent and perform the other tenant covenants.
15
Q
Describe the relationship between the landlord and the assignee after assignment.
A
Following assignment, the landlord becomes the landlord of the assignee.
16
Q
Differentiate between assignment and other forms of alienation.
A
Assignment specifically involves transferring a leasehold interest to another tenant, while other forms of alienation may include subletting or other methods of transferring rights.
17
Q
What obligation typically exists regarding landlord notification during lease assignments?
A
Although landlord consent may not be required for lease assignments, there is usually an obligation to notify them of the assignment.
18
Q
Describe the role of the landlord’s solicitor in the assignment process.
A
The landlord’s solicitor takes instructions, confirms receipt of the application, sets out any requirements, drafts the licence to assign if the client wishes to proceed, and forwards the licence to the assignee’s solicitor.
19
Q
How does the tenant’s solicitor assist in the assignment process?
A
The tenant’s solicitor takes instructions, applies for consent, assists the landlord’s solicitor if anything is needed for consent, and raises pre-contract enquiries and searches.
20
Q
Define the responsibilities of the assignee’s solicitor during the assignment process.
A
The assignee’s solicitor takes instructions, reviews the draft contract and the lease, investigates title, and arranges for the assignee to sign the contract.
21
Q
What steps are involved in drafting the licence to assign?
A
If the client wishes to proceed in principle, the landlord’s solicitor drafts the licence to assign and sends it to the tenant’s solicitor.
22
Q
Explain the process of engrossing the contract after agreement.
A
Once the contract is agreed, the landlord’s solicitor engrosses the contract, obtains the tenant’s signature, and sends the engrossment to the assignee’s solicitor.
23
Q
Describe the role of the tenant’s solicitor in the consent application process.
A
The tenant’s solicitor applies to the landlord for consent early in the transaction, as the success of the entire transaction depends on this consent.
24
Q
What is an undertaking for costs in the context of a landlord-tenant transaction?
A
An undertaking for costs is a promise by a solicitor to pay the costs associated with the consent application.
25
Define the typical cap on costs covered by the undertaking in a landlord-tenant transaction.
The undertaking typically caps the landlord's solicitor's and surveyor's costs at a certain amount, often up to £850 plus VAT for each.
26
What happens after the undertaking has been provided by the tenant's solicitor?
Once the undertaking is provided, the landlord's solicitor drafts a licence to assign, which may require amendments from the tenant's and assignee's solicitors.
27
Describe the role of the tenant's solicitor in the assignment process.
The tenant's solicitor drafts a contract to bind the parties to the assignment, provides official copies for the leasehold title, or the landlord's title if the interest is not registered.
28
Define the difference between a new tenant and an assignee in terms of lease negotiation.
A new tenant has the opportunity to negotiate the lease, while an assignee generally takes the lease as it is without negotiation.
29
What is required for a landlord to agree to vary the lease for an assignee?
A deed of variation is required for the landlord to agree to vary the lease.
30
What happens if the interest is not a registered interest in the assignment process?
If the interest is not registered (i.e., a term of 7 years or less), the landlord's title must be provided.
31
What should the assignee's solicitor do if the lease is unregistered?
The assignee's solicitor should investigate the landlord's title.
32
How does the process differ for registered leases compared to unregistered leases?
For registered leases, the assignee's solicitor can rely on the leasehold official copies instead of investigating the landlord's title.
33
What types of enquiries does the assignee's solicitor raise during the lease assignment process?
The assignee's solicitor raises CPSE1 enquiries and CPSE4 enquiries specific to the assignment of a lease.
34
Do tenants usually pay a deposit when assigning a rack rental lease (open market value)?
No deposit is usually payable for the assignment of a rack rental lease.
35
What is the usual deposit for the assignment of a long residential lease?
A 10% deposit is usually required for the assignment of a long residential lease, similar to a freehold.
36
How does the tenant's solicitor contribute to the pre-completion process?
The tenant's solicitor arranges for the tenant to execute one copy of the licence to assign, raises requisitions on title, and drafts the deed of assignment.
37
What steps are involved in the execution of the licence to assign?
The steps include engrossing the licence in triplicate, arranging for the landlord, tenant, and assignee to execute their respective copies.
38
How does the assignee's solicitor participate in the contract review process?
The assignee's solicitor reviews the draft contract and may amend it to protect the assignee's interests.
39
How are requisitions on title handled in the pre-completion process?
Requisitions on title are raised by the tenant's solicitor and responded to by the landlord's solicitor to clarify any issues related to the property title.
40
Define the purpose of the OS1 search in lease assignments.
The OS1 search is conducted to check the tenant's leasehold title, regardless of whether it is a lease of part or whole, as it does not involve searching the landlord's title.
41
What happens if the tenant's solicitor approves the draft deed of assignment?
If the tenant's solicitor is satisfied with the draft, they will arrange for the tenant to execute it, without the landlord's involvement.
42
Describe the process that occurs upon completion of the assignment.
Upon completion of the assignment, the assignee’s solicitor sends the completion monies to the tenant’s solicitor. The landlord’s solicitor, tenant’s solicitor, and assignee’s solicitor agree over the telephone to complete and date the licence to assign. Additionally, the tenant’s solicitor and assignee’s solicitor agree over the telephone to complete and date the deed of assignment.
43
What is the final step in the process after the assignment is completed?
The final step in the process after the assignment is completed is the post-completion actions, which include sending a formal notice of assignment to the landlord’s solicitor.
44
Define underletting in the context of lease agreements.
Underletting is a form of alienation where the tenant grants an underlease to an undertenant, retaining their leasehold interest rather than passing it entirely.
45
Describe the relationship of privity of contract between landlord and tenant.
Privity of contract exists between the landlord and the tenant, allowing them to enforce obligations against each other.
46
Define the typical conditions under which a lease may prevent underletting.
A lease may prevent underletting if it involves property not owned by the landlord, payment of a lump sum, or a rent-free period beyond what is normal.
47
What role does the tenant have in enforcing covenants in an underletting situation?
The tenant can enforce the undertenant’s covenants to ensure compliance with their own covenants to the landlord.
48
What is the primary difference between assignment and underletting?
The primary difference is that in assignment, the tenant transfers their entire leasehold interest, while in underletting, the tenant retains their interest and grants a shorter-term lease.
49
Define underletting in the context of commercial leases.
Underletting refers to the practice where a tenant leases out part or all of their rented premises to another party, known as an undertenant, while retaining their original lease with the landlord.
50
Explain the practical considerations for underletting part of a premises.
Underlettings of part may be permitted if it is practical to separate the premises, allowing the tenant to lease out only the unused portions.
51
Describe the difference between assignment and lease covenants regarding underletting.
Lease covenants regulating underletting do not specify conditions under which consent may be reasonably withheld, unlike assignment.
52
What happens if a tenant underlets without the landlord's consent?
Underletting without consent may violate the lease terms, potentially leading to legal consequences.
53
Describe the relationship between the tenant and the undertenant in an underletting scenario.
In an underletting scenario, the tenant remains responsible to the landlord while granting a shorter-term lease to the undertenant.
54
How does the duration of an underlease compare to the original lease in underletting?
The underlease must be for a shorter term than the original lease, even if only by one day.
55
What obligations does the tenant retain after underletting?
After underletting, the tenant remains responsible for paying rent and fulfilling other obligations to the landlord.
56
Describe a qualified covenant against underletting.
A qualified covenant against underletting allows underletting only with the landlord's consent.
57
How does a qualified covenant against underletting change over time?
It is automatically converted to a fully qualified covenant, and the landlord's decision must be made within a reasonable time.
58
What restrictions might a landlord impose on underletting in a commercial lease?
A landlord may restrict underletting by preventing the tenant from underletting with property not belonging to the landlord, on payment of a lump sum, or with an excessive rent-free period.
59
How does the requirement for rent in an underlease affect tenants in a falling market?
The requirement that the underlease rent is no lower than that in the tenant's lease makes it difficult for tenants to underlet in a falling market.
60
What covenants are typically required in an underlease compared to the tenant's lease?
An underlease typically must contain covenants that are no less onerous than those in the tenant's lease.
61
Identify the parties involved in a lease and their privity of contract relationships.
In a lease, privity of contract exists between the landlord and tenant, and between the tenant and undertenant, but not between the landlord and undertenant.
62
Define privity of estate.
Privity of estate is the ability of the landlord and tenant to enforce the provisions of a lease against each other.
63
How does privity of estate differ between landlord and undertenant?
Privity of estate does not exist between the landlord and the undertenant.
64
Describe the relationship between the landlord and the undertenant regarding liabilities.
There is neither privity of contract nor privity of estate between the landlord and the undertenant, meaning the landlord cannot enforce covenants against the undertenant.
65
How can an undertenant provide a direct covenant to the landlord?
An undertenant can give a direct covenant to the landlord through the licence to underlet.
66
Identify the limitation of an authorised guarantee agreement in the context of underletting.
There is no equivalent of an authorised guarantee agreement for underletting, as the tenant remains liable to the landlord in any case.
67
What are the pre-exchange and pre-completion steps in underletting?
Pre-exchange and pre-completion steps in underletting are the necessary actions taken before finalizing the lease agreement, which may occur simultaneously if the exchange is skipped.
68
Describe the role of the landlord's solicitor in the underletting process.
The landlord's solicitor takes instructions, considers the application to underlet, requests an undertaking for costs if the landlord is happy in principle, and issues a draft licence to underlet to the tenant's solicitor.
69
Describe the role of the tenant's solicitor in the underlease process.
The tenant's solicitor is responsible for drafting the underlease.
70
What is a common example of underletting?
A common example of underletting is when the owner of a leasehold flat (e.g., 99 years) lets it on an assured shorthold tenancy (e.g., 6 months).
71
How does the tenant's solicitor contribute to the underletting process?
The tenant's solicitor takes instructions, applies for consent to underlet, reviews the draft licence to underlet, and prepares the draft lease and agreement for underlease if necessary.
72
What steps does the undertenant's solicitor take during the underletting process?
The undertenant's solicitor takes instructions, reviews the draft licence to underlet, and arranges for the undertenant to sign the counterpart lease.
73
Define the purpose of the draft licence to underlet.
The draft licence to underlet serves as a formal document that outlines the terms under which the tenant is allowed to sublet the property, pending the landlord's consent.
74
How is the agreement for underlease finalized?
Once agreed, the agreement for underlease is engrossed, the tenant's signature is obtained, and a counterpart is sent to the undertenant's solicitor.
75
What does the landlord's solicitor need to review in the draft underlease?
The landlord's solicitor will want to see the draft underlease to ensure that it complies with the tenant's obligations under the lease.
76
Who is responsible for drafting the underlease?
Tenant's solicitors
77
How can a tenant and underlessee commit to an underletting while waiting for landlord consent?
They may exchange an agreement for underlease that is conditional upon the landlord’s consent, allowing them to complete as soon as the landlord is ready.
78
What is a potential scenario that might lead to an exchange of an agreement for underlease?
A scenario could involve a tenant applying to the landlord for consent to underlet, where the consent application is delayed, prompting both tenant and underlessee to exchange an agreement conditional on that consent.
79
What documentation is required from the tenant if the lease is 7 years or under?
The tenant must provide an official copy of the landlord’s freehold title along with a copy of the lease.
80
What is usually the payment requirement during the exchange of an agreement for underlease?
No deposit is usually payable during the exchange.
81
Explain the relationship between the tenant’s solicitor and the undertenant’s solicitor during the exchange.
Both solicitors work together to exchange documents in a manner similar to that of a freehold contract.
82
Define the steps involved in obtaining funds for completion.
Funds needed to complete as per the completion statement must be obtained from the client.
83
What documents are prepared by the landlord's solicitor during the underletting process?
The landlord's solicitor prepares the original and counterpart underlease and the licence to underlet.
84
Identify the type of rent that is payable under an underlease.
The rent payable is under the underlease, not the rent under the tenant’s lease.
85
What type of search is conducted for an underletting of the whole of the tenant’s interest?
An OS1 search is carried out against the tenant’s registered leasehold title.
86
How does the search process differ for an underletting of part of the tenant’s interest?
An OS2 search is conducted against the appropriate part of the tenant’s registered leasehold title.
87
What is the purpose of an OS3 search in the context of an underlease?
An OS3 search checks for any adverse entries against the tenant’s interest since the last copy of the tenant’s title register.
88
Why is it inappropriate to carry out a search against the landlord’s freehold interest in an underlease?
It is inappropriate because the underlease is not granted out of the freehold.
89
How is consent for assignment or underletting formalized in a commercial lease?
Consent is formalized through a deed known as a licence for assignment or licence for underletting.
90
What is the potential consequence of not having a time limit on the consent for assignment or underletting?
Without a time limit, the process could go on indefinitely, creating uncertainty for the landlord.
91
Describe the necessity of a direct covenant to the landlord in lease assignments.
A direct covenant to the landlord is not strictly necessary with the assignment of a new lease, but the landlord may still desire it.
92
What distinguishes a licence for alterations from a licence to assign or underlet?
A licence for alterations contains numerous obligations about the work to be carried out, while a licence to assign or underlet has comparatively few obligations.
93
How should one assess liability of parties to the landlord after an underletting or assignment?
It is important to be clear on the liability of the parties to the landlord after an underletting, an assignment of an old lease, or an assignment of a new lease.
94
What are the typical annexures included in a Licence to assign?
Typically, there are no annexures in a Licence to assign, but an AGA may be included if appropriate.
95
Identify the key provisions that may be included in licences to assign and underlet.
Key provisions may include the tenant's agreement to pay costs, covenants by the assignee, and the inclusion of an AGA if applicable.
96
Describe the notice requirement following an assignment or underletting in a lease agreement.
The assignee or tenant must give the landlord formal notice within a month that the transaction has been completed.
97
What is typically required from the landlord's solicitors after receiving notice of an assignment or underletting?
There is usually a fee for the landlord’s solicitors to receipt this notice.
98
Define the conditions under which a long residential lease may be assigned or underlet.
A long residential lease may often be freely assigned or underlet on short tenancies without the landlord’s consent.
99
Describe the concept of charging a lease.
Charging a lease involves a tenant creating a charge over their lease, similar to how a freeholder charges their interest to a mortgage lender. This can be done by commercial tenants as part of a floating charge over their business.
100
Explain the landlord's perspective on sharing occupation with group companies.
From the landlord's perspective, sharing occupation with group companies is beneficial as they can treat the tenant and its group companies as a single entity, allowing them to enforce covenants against the tenant.
101
Identify a key difference between commercial and residential leaseholders regarding charges.
A key difference is that commercial leaseholders may create floating charges over their business, while residential leaseholders typically create charges when obtaining a mortgage.
102
Describe the requirements regarding alienation in leases according to the 2020 Code for Leasing Business Premises.
Leases should allow tenants to assign or underlet the whole of the premises with the landlord’s consent, which cannot be unreasonably withheld or delayed. Additionally, leases should permit tenants to share with group companies without consent and allow tenants to charge the lease to a bank or reputable lending institution without consent, with a limited exception.
103
What is the stance of the Code on tenants charging their lease to financial institutions?
The Code allows tenants to charge the lease to a bank or reputable lending institution without needing consent, with a limited exception.
104
Explain the concept of security of tenure in relation to tenancies.
Security of tenure refers to the legal right of tenants to remain in their rented property under certain conditions, which is only applicable to recognized tenancies.
105
Describe the importance of distinguishing leases from other arrangements.
Distinguishing leases from other arrangements is important because security of tenure provisions only apply to tenancies, and landlords may attempt to avoid these provisions.
106
Describe the concept of contracting out in tenancy agreements.
Contracting out refers to the ability of landlords to exclude certain tenancies from the security of tenure provisions, allowing them to offer fixed term leases without the usual protections.
107
Describe a fixed term tenancy.
A fixed term tenancy creates exclusive possession and a proprietary interest, binding successors in title to the landlord, allowing the tenant to use the property as if they were the owner, and it can benefit from security of tenure.
108
What is the nature of a licence in property terms?
A licence is a personal permission to be on the land and is not a proprietary interest. It does not bind successors in title to the owner granting the licence and cannot benefit from security of tenure.
109
How does a periodic tenancy differ from a fixed term tenancy?
A periodic tenancy creates exclusive possession and a proprietary interest, binding successors in title to the landlord, but it can be brought to an end by notice and can benefit from security of tenure.
110
Define a tenancy at will.
A tenancy at will is similar to a licence as it is a personal permission, but unlike a licence, the tenant can have exclusive possession. However, either landlord or tenant can end the tenancy at any time, and it cannot benefit from security of tenure.
111
Identify the key feature that distinguishes a licence from a tenancy.
The key feature that distinguishes a licence from a tenancy is that a licence does not create a proprietary interest and does not bind successors in title.
112
Describe the impact of a tenant leaving the premises vacant on their security of tenure.
If a tenant leaves the premises vacant, they are not entitled to claim security of tenure.
113
Explain the consequences of a tenant underletting part of the premises.
If a tenant underlets the whole or part of the premises, they cannot be considered in occupation and will lose security of tenure over the whole or part of the premises.
114
Discuss the relationship between occupation and security of tenure for tenants.
Occupation is crucial for security of tenure; if a tenant is not in occupation, they lose their entitlement to security of tenure.
115
How does residential use relate to business purposes according to the Landlord and Tenant Act 1954?
Residential use can be considered a business purpose if it furthers the tenant's business, such as providing accommodation for students.
116
How do agricultural tenancies differ in terms of security of tenure?
Agricultural tenancies are excluded from security of tenure because they have their own statutory regime.
117
Define service tenancies and their relation to security of tenure.
Service tenancies are leases granted as part of a tenant’s employment, such as a security guard’s flat, and they do not have security of tenure.
118
What happens to fixed term tenancies of six months or less regarding security of tenure?
Fixed term tenancies of six months or less do not have security of tenure but can become protected if the tenant has been in occupation for twelve months or more.
119
How can a fixed term tenancy of six months or less become protected?
It can become protected if the tenant has been in occupation for twelve months or more, either through successive tenancies or if the tenancy is renewable beyond six months.
120
How does contracting out affect the appeal of premises for landlords?
Contracting out may limit the appeal of premises as it can discourage long-term tenants, which might be less attractive to landlords seeking stability.
121
Define the types of tenancies that are commonly contracted out.
Commonly contracted out tenancies include short term leases (5 years or less) and underleases, which are usually required by the tenant's lease.
122
What type of leases can be contracted out?.
Only fixed term leases can be contracted out; periodic tenancies that qualify for security of tenure cannot be contracted out.
123
Describe the procedure for contracting out a tenancy under the Landlord and Tenant Act 1954 since June 2004.
The procedure consists of a two-stage process that does not require a court order. The landlord must serve a warning notice on the tenant in a prescribed form before the lease is completed, detailing the consequences of contracting out the security of tenure provisions. The tenant must then provide a declaration in a prescribed form to the landlord before completing the lease.
124
What type of declaration must a tenant provide if lease completion is at least 14 days from the date of the warning notice?
If lease completion is at least 14 days away, the tenant can provide a simple signed declaration.
125
What type of declaration is required if lease completion is less than 14 days from the warning notice?
If lease completion is less than 14 days away, the tenant must provide a statutory declaration, which must be declared before an independent solicitor.
126
Define the consequences of a miscalculated contracting-out procedure by a solicitor.
If a solicitor miscalculates the dates and the tenant provides a simple signed declaration too close to lease completion, the lease may not be validly contracted-out, allowing the tenant to claim security of tenure.
127
Describe the rights of a tenant in a protected tenancy.
A tenant in a protected tenancy has the right to stay in occupation, known as holding over, and cannot be evicted by the landlord.
128
Define protected tenancy.
Protected tenancy is a type of tenancy where the tenant has the right to remain in the property and cannot be evicted without following specific legal procedures.
129
Describe the options available to a landlord for ending a tenancy.
The landlord can forfeit the lease if there has been a breach of the tenant's covenants and the lease allows it, or serve a section 25 notice indicating an intention to recover the premises or offer a renewal lease.
130
Define forfeiture in the context of tenancy.
Forfeiture refers to the landlord's right to terminate the lease due to a breach of the tenant's covenants, provided that the lease permits such action.
131
What conditions must be met for a landlord to forfeit a lease?
The landlord can forfeit the lease if there has been a breach of the tenant's covenants and the lease specifically allows for forfeiture.
132
Identify the implications of serving a section 25 notice.
Serving a section 25 notice indicates the landlord's intention regarding the future of the tenancy, either to recover the premises or to propose a renewal lease.
133
Define the term 'surrender' in the context of lease termination.
Surrender refers to the tenant voluntarily giving up their lease agreement with the landlord's consent.
134
What is the purpose of section 26 and section 27 notices?
Section 26 notices are used by tenants to request a new tenancy, while section 27 notices are used to formally notify the landlord of the tenant's intention to leave the premises.
135
List the methods a tenant can use to terminate a lease.
A tenant can vacate the premises, surrender the lease, serve notice to quit, serve a section 26 notice, or serve a section 27 notice.
136
What is a periodic tenancy and how can it be terminated?
A periodic tenancy is a lease that continues for successive periods until terminated, and it can be terminated by serving a notice to quit.
137
Explain the significance of persistent delay in paying rent as a ground for lease renewal opposition.
Persistent delay in paying rent is significant because it indicates a lack of reliability and financial responsibility on the part of the tenant, which can justify the landlord's decision to oppose lease renewal.
138
How does the landlord's intention to demolish or reconstruct premises affect compensation?
It is considered mandatory and compensatory.
139
Is the evidence for the landlord's intention to occupy the premises mandatory or discretionary?
It is mandatory.
140
Is the evidence for a breach of tenant repairing obligation mandatory or discretionary?
It is discretionary.
141
What evidence is necessary for a landlord intending to occupy the premises?
A firm and settled intention by the landlord, who has owned the reversion for at least 5 years before the date of termination, is required.
142
Define the evidence required for other substantial breaches of tenant obligations.
Evidence of serious and persistent breaches is needed.
143
What is the nature of the evidence needed for persistent delay in paying rent?
Length of delay and number of times is required.
144
How is compensation calculated for tenants based on the duration of occupancy?
Compensation is calculated at 1x the rateable value if the business has occupied the premises for less than 14 years, and at 2x the rateable value if the business has occupied the premises for 14 years or more.
145
Describe non-compensatory ground in tenancy.
A non-compensatory ground occurs when the tenant is at fault, such as a breach of covenant, and therefore is not entitled to compensation.
146
Define compensatory ground in the context of tenancy.
A compensatory ground is when the tenant may be entitled to compensation due to circumstances that do not involve any fault of their own, such as the landlord needing to carry out work.
147
Provide an example of a discretionary ground for possession.
An example of a discretionary ground is when a landlord shows that a tenant has been in persistent and serious breach of the repairing obligation.
148
How must a landlord substantiate their grounds for possession?
A landlord must be able to provide evidence supporting the ground on which they are relying, such as planning permission or a construction contract for redevelopment.
149
Describe discretionary grounds in landlord possession cases.
Discretionary grounds are those where, even if the landlord shows the ground, it is up to the court's discretion whether to grant possession.
150
Define mandatory grounds in the context of landlord possession.
Mandatory grounds are those where, if the landlord establishes the ground, the court must grant possession to the landlord.
151
How long before the date of termination must a section 25 notice be served?
A section 25 notice must be served no less than 6 months and no more than 12 months before the date of termination.
152
Identify a rarely used ground for opposing lease renewal.
One rarely used ground for opposing lease renewal is not specified in detail, but it is mentioned that it is unlikely to come up in assessments.
153
What are the implications of a landlord intending to occupy the premises for itself?
If a landlord intends to occupy the premises for itself, it serves as a legitimate reason to oppose the renewal of a tenant's lease, as the landlord needs the space for personal use.
154
Define the term 'hostile section 25 notice' in the context of lease renewal.
A hostile section 25 notice is a formal notification from a landlord to a tenant indicating the landlord's intention to oppose the renewal of the tenant's lease based on specific legal grounds.
155
How can a landlord demonstrate a tenant's persistent breach of repairing obligations?
A landlord can demonstrate a tenant's persistent breach of repairing obligations by providing evidence of repeated failures to maintain the property as required by the lease agreement.
156
Describe the grounds on which a landlord can oppose the renewal of a tenant's lease.
The landlord can oppose renewal on the following grounds: persistent and serious breach of repairing obligations by the tenant, persistent delay in paying rent, serious and persistent breaches of covenants, offering suitable alternative accommodation, intention to demolish or reconstruct the premises, or intention to occupy the premises for itself.
157
Provide an example of how a friendly section 25 notice affects rent during holding over.
For instance, if a protected tenant is paying £20,000 per year and the rent is reviewed to £22,000 just before the lease expires, the tenant will pay £22,000 while holding over, but no further rent increases will occur until the lease is renewed.
158
Explain the limitation of rent reviews during the holding over period.
Even if a rent review occurs, the rent will remain the same during the holding over period until the lease is renewed, making it a limited solution.
159
What is the significance of a rent review on the last day of a contractual term?
A rent review on the last day of a contractual term ensures that the tenant pays a market rent during the holding over period.
160
How does a friendly section 25 notice benefit a landlord in a rising market?
In a rising market, a friendly section 25 notice allows the landlord to fix a market rent for the renewal tenancy.
161
When must the date of termination be in relation to the contractual term?
The date of termination must be on or after the date on which the contractual term ends.
162
What must a landlord specify in a hostile section 25 notice?
In a hostile section 25 notice, the landlord must specify the statutory ground or grounds on which they intend to rely to oppose the renewal of the lease.
163
What does a 'hostile' section 25 notice indicate?
A 'hostile' section 25 notice indicates that the landlord intends to oppose the renewal of the lease.
164
Define a 'friendly' section 25 notice.
A 'friendly' section 25 notice indicates that the landlord is willing to renew the lease to start the day after the date of termination and will propose the rent and principal terms of the new tenancy.
165
Describe the process a tenant may follow at the end of a contractual lease term.
A tenant may choose to vacate the premises at the end of the contractual term, which ends the tenancy on that date. It is advisable for the tenant to notify the landlord of their intention to vacate.
166
What are the implications of serving different types of notices regarding lease termination?
The different notices (section 25, section 26, and section 27) are mutually exclusive; once one notice is served, the other party cannot serve a different type of notice.
167
Explain the purpose of a section 26 notice.
A section 26 notice is used by a tenant who wishes to renew the lease after a period of holding over.
168
What happens if a tenant serves a section 27 notice?
A section 27 notice is served by a tenant who wants to end the lease after a period of holding over.
169
How does a falling market influence a tenant's decision to renew a lease?
In a falling market, a tenant may be stuck on a higher than market rent while holding over and will want a renewal lease at a market rent.
170
How can a tenant benefit from a renewal lease in a declining rental market?
A tenant can benefit from a renewal lease by securing a lower market rent, thus reducing their rental expenses compared to holding over at a higher fixed rent.
171
Describe the requirements for a tenant to issue a section 26 notice.
The tenant must have a protected tenancy and a lease that originally granted a contractual term of more than one year.
172
How does the renewal process differ for tenancies of one year or less compared to longer tenancies?
For tenancies of one year or less, the tenant cannot start the renewal process, but the landlord can initiate it with a friendly section 25 notice.
173
What is the minimum and maximum notice period for a section 26 notice?
The minimum notice period is six months, and the maximum notice period is twelve months.
174
Explain the difference in expiration dates between section 25 and section 26 notices.
Unlike the section 25 notice, the section 26 notice does not expire on the date of termination but on the proposed commencement date of the renewal lease.
175
What is the timeframe for a landlord to serve a counter-notice after receiving a section 26 notice?
A landlord has two months from the section 26 notice to serve a counter-notice opposing the grant of a renewal lease.
176
How much notice must a tenant give if they choose to use a section 27 notice?
A tenant must serve a section 27 notice no less than three months before the end of the contractual term.
177
Define the timing requirements for a section 27 notice.
A section 27 notice must provide three months of the intended termination date, which cannot be earlier than the end date of the contractual term.
178
Explain the scenario in which a tenant might serve a section 27 notice.
If a tenant wants to remain in the premises for two months after the end of the contractual term, they would need to serve a section 27 notice one month before the end of the lease.
179
What must the tenant demonstrate regarding contentious issues in lease negotiations?
The tenant must show why the proposed change is reasonable.
180
Define the role of a court order in the context of lease renewal.
A court order can either grant a new lease or terminate an existing lease, affecting the rights of both tenant and landlord.
181
What happens to a tenant's right to occupy if the court grants a termination order?
The tenant has no right to remain in occupation after the existing lease is terminated.
182
What is the consequence if a tenant asks the court to revoke the order?
If the court agrees to revoke the order, the tenant will have no right to renew.
183
What can a tenant do if they are unhappy with the terms determined by the court?
The tenant has 14 days to ask the court to revoke the court order.
184
How long does a tenant have to appeal a court order regarding tenancy?
A tenant has 21 days from the date of the order to appeal.
185
Describe the timeline for ending a tenancy after a court order is issued.
The existing tenancy ends three months and 21 days after the date of the court order.
186
What is the significance of the section 25 and section 26 notices in determining interim rent?
These notices specify the earliest dates for termination or proposed commencement, which influence when interim rent becomes payable.
187
What happens if a tenant serves a section 26 notice with a proposed commencement date in 12 months?
If the landlord or tenant applies to fix an interim rent, it will be payable six months from the date of the tenant’s section 26 notice, not 12 months.
188
When is interim rent payable according to the landlord’s section 25 notice?
Interim rent is payable from the earliest date of termination specified in the landlord’s section 25 notice.
189
Explain the difference between interim rent and a rent review.
Unlike a rent review, which is upwards only, interim rent may be lower than the last reviewed rent.
190
Define interim rent in the context of lease negotiations.
Interim rent is the rent payable during the holding over period, which may be lower than the last reviewed rent in a falling market.
191
How can either party apply for an interim rent during the holding over period?
Either party may apply to the court to fix an interim rent based on the open market rent.
192
Describe the lease renewal process regarding court applications.
The lease renewal process allows either party to apply to the court to renew the lease or for the landlord to recover possession. Applications can be made after a section 25 notice is served, with deadlines based on the termination date specified in the notice.
193
Provide an example of a negotiation scenario involving a section 26 notice.
A tenant proposes a 5-year term at £25,000 rent with terms similar to the existing lease, except allowing underletting of part.
194
What type of rent is determined for a new lease by the court?
The rent will be set at open market rent.
195
Define the maximum term the court can grant for a new lease.
The court can grant a term of up to 15 years.
196
What happens if landlords and tenants cannot agree on lease terms?
They may ask the court to decide on the terms.
197
Describe the purpose of a section 25 notice and a section 26 notice.
Both notices propose the principal terms of the renewal lease.
198
Summarize the key differences between section 25 and section 26 notices in lease renewal.
Section 25 notices relate to the termination date for court applications, while section 26 notices require a counter-notice or a two-month wait before applications can be made, with deadlines based on the proposed commencement date.
199
What happens if a landlord does not serve a counter-notice after a section 26 notice?
If the landlord does not serve a counter-notice, two months must elapse from the section 26 notice before either party can apply to the court.
200
Explain the role of the court in the lease renewal process.
The court can be approached by either party to renew the lease and fix the terms of the new lease or, in the case of the landlord, to recover possession.
201
How can the deadlines for court applications be modified in the lease renewal process?
The deadlines for applying to the court can be extended if both parties agree in writing.
202
Define the deadlines for applying to the court under section 25 and section 26 notices.
For a section 25 notice, the deadline is the date of termination specified in the notice. For a section 26 notice, the deadline is the day before the proposed commencement date of the new lease.
203
What is the significance of a section 26 notice in the lease renewal process?
A section 26 notice requires that either the landlord serves a counter-notice or two months must elapse before either party can apply to the court. The application deadline is the day before the proposed commencement date of the new lease.
204
How does a section 25 notice affect the lease renewal application timeline?
A section 25 notice allows either party to apply to the court at any time after it is served, with the application deadline being the date of termination specified in the notice.
205
What should a landlord exercise care over regarding tenancies?
A landlord needs to be cautious about accepting rent from unprotected tenants, as it may change the nature of the tenancy.
206
What happens to a periodic tenancy when a landlord issues a notice to quit for a protected tenancy?
A landlord’s notice to quit will end the periodic tenancy, but the tenant can hold over.
207
Define merger in the context of leasehold and freehold interests.
Merger means either that the tenant acquires the landlord’s interest, or a third party acquires both interests, resulting in the freehold and leasehold being merged and coming to an end.
208
How can a tenancy at will be converted into a periodic tenancy?
If the landlord accepts rent from the tenant at will, the tenancy may be converted into a periodic tenancy.
209
What happens when a landlord exercises a break clause in a tenancy?
When a landlord exercises a break clause, it ends the contractual term, but the tenant may still hold over.
210
Explain the requirement for a landlord's break clause to be effective in a protected lease.
For a landlord's break clause to be effective, the lease must be contracted out of protection.
211
What is the notice period for a weekly residential tenancy and other weekly tenancies
4 weeks for residential
1 week for other tenancies
212
How long is the notice period for a monthly tenancy?
The notice period for a monthly tenancy is 1 month.
213
What is the notice period for a quarterly tenancy?
The notice period for a quarterly tenancy is 1 quarter.
214
What notice period is required for a yearly tenancy?
The notice period required for a yearly tenancy is 6 months.
215
Explain the significance of the first and last day of the tenancy period in a notice to quit.
The notice to quit must expire on either the first day or the last day of the tenancy period, which determines when the tenant must vacate.
216
Give an example of how a notice period works in a monthly tenancy.
If the tenancy runs from the 15th day of each month to the 14th day of the next month, the notice period may end on either the 14th or 15th.
217
Describe the implications of a landlord serving a notice to quit on a protected periodic tenancy.
The landlord may serve a notice to quit, which will only end the periodic tenancy itself, allowing the tenant to hold over.
218
What is the limitation placed on a tenant of a protected periodic tenancy regarding section 26 notices?
A tenant of a protected periodic tenancy cannot serve a section 26 notice.
219
How does a notice to quit relate to security of tenure for tenants?
Notice to quit is a formal way for a landlord to terminate a tenancy, but tenants in protected tenancies have security of tenure, allowing them to hold over.
220
Define reverse premium in the context of tenancy.
A reverse premium is a payment made by the tenant to the landlord when the tenant surrenders their leasehold interest, often occurring when the tenant no longer needs the premises.
221
Explain the significance of a deed in the surrender process.
An express surrender of a tenancy must be made by deed, which is a formal legal document that signifies the agreement between the landlord and tenant.
222
Illustrate a scenario where a tenant might pay a reverse premium.
For example, if a tenant has a ten-year lease with seven years left and wants to leave due to an unprofitable business, they may pay a reverse premium to the landlord to surrender the lease.
223
How can a protected tenant surrender their lease effectively?
A protected tenant can surrender their lease effectively either through an express surrender by deed or a surrender by operation of law.
224
What must be followed if there is an agreement to surrender a protected tenancy in advance of the deed?
A procedure similar to contracting out must be followed.
225
Explain the significance of accepting keys in the context of surrendering a tenancy.
Accepting the keys from the tenant can indicate that the landlord understands the tenant is leaving the premises permanently, which may lead to a surrender by operation of law.
226
What is required for an agreement to surrender a protected tenancy to be valid?
The agreement must follow a notice and declaration procedure similar to that of contracting out a new tenancy.
227
How does a tenant achieve a merger with the landlord's interest?
A tenant achieves a merger by acquiring the landlord’s superior interest.
228
What happens when a third party is involved in a merger?
When a third party is involved, they acquire both the tenant's and the landlord's interests.
229
Identify the minimum amount of rent that must be owed to utilize CRAR.
A minimum of seven days' principal rent must be owed to use CRAR.
230
What is the role of discretion in equitable remedies?
Equitable remedies are discretionary, meaning their application depends on the specific circumstances of each case rather than being automatically granted.
231
Explain the circumstances under which a landlord might obtain an injunction.
A landlord may obtain an injunction if they are aware that a tenant intends to unlawfully assign the lease, but not for assignments that have already occurred.
232
How is specific performance applied in tenant agreements?
Specific performance may be ordered for a tenant to fulfill obligations, such as repairing premises, but it is rarely granted, especially for repair breaches.
233
Define equitable remedies in the context of tenant breaches.
Equitable remedies are discretionary legal solutions that can be applied in cases of tenant breaches, such as injunctions and specific performance.
234
What additional notice is required if the landlord intends to sell seized goods?
The landlord must serve a further seven clear days' notice if it intends to sell any of the seized goods.
235
What happens if the notice expires without repayment of the debt?
If the notice expires without repayment, the enforcement agent can enter the premises and take control of goods belonging to the tenant up to the value of the debt owed.
236
How many days' notice must be given before entering a tenant's premises under CRAR?
Seven clear days' notice must be given, excluding Sundays and bank holidays.
237
Describe the role of the enforcement agent in CRAR.
The enforcement agent must either have a required certificate from the court or be exempt from this requirement, such as being a police officer.
238
Explain what types of charges cannot be recovered through CRAR.
CRAR cannot be used to recover service charges or any other sums reserved as 'rent' that are not principal rent, although it does include VAT and interest.
239
What can a landlord do if a tenant breaches their covenants?
The landlord can bring proceedings in court to claim for damages.
240
Define the conditions under which CRAR can be used.
CRAR can be used when the premises are purely commercial, a minimum of seven days' principal rent is owed, and the lease has not been forfeited.
241
Describe the purpose of Commercial Rent Arrears Recovery (CRAR).
CRAR is a self-help remedy used to recover unpaid commercial rent, providing a quicker and cheaper alternative to court proceedings.
242
How does a rent deposit function in a lease agreement?
A rent deposit serves as a financial cushion for the landlord, typically covering up to six months' rent. It can be drawn upon in case of arrears, and the tenant is required to replenish the deposit after any withdrawal.
243
What happens to earlier outstanding rent beyond the six-year limit?
Any earlier outstanding rent is irrecoverable.
244
How long is the action for debt limited to in terms of recoverable rent?
An action for debt is limited to rent due in the six years before the issue of proceedings.
245
What can a former tenant do if they are paying the current tenant's debts?
A former tenant who is paying the current tenant’s debts may apply to the landlord to be granted a lease.
246
Define the role of an assignee in the context of tenant debt recovery.
If the current tenant is an assignee, the landlord may pursue the former tenant if it is an old lease or if the former tenant provided an authorized guarantee agreement.
247
What are the disadvantages of court claims for recovering debts?
Court claims may be costly and time-consuming.
248
Define the measure of damages for breach of a repairing covenant.
The measure of damages is to put the landlord back into the position they would have been in were it not for the breach of covenant.
249
Explain the difference in cost and time between peaceable re-entry and court application for forfeiture.
Peaceable re-entry is generally quicker and less expensive than applying to the court for an order of forfeiture, which takes more time and incurs higher costs.
250
Explain the significance of a section 146 notice in the context of forfeiture.
A section 146 notice signifies the landlord's intention to forfeit the lease, allowing the tenant to apply for relief from forfeiture.
251
What is typically required for a tenant to obtain relief from forfeiture due to non-payment of rent?
The tenant will normally be able to get relief from forfeiture by settling all rent arrears and the landlord’s costs.
252
What may happen to an undertenant if relief from forfeiture is granted?
If relief from forfeiture is granted, the undertenant may become a direct tenant of the landlord.
253
Who else, besides the tenant, can seek relief from forfeiture?
Other parties who derive an interest from the tenant’s lease, such as a mortgagee or undertenant, can also seek relief from forfeiture.
254
Describe the process a tenant can take when a landlord serves a section 146 notice.
The tenant is entitled to apply for relief from forfeiture as soon as the landlord serves a section 146 notice or starts the process of forfeiture.
255
Explain the implications of a tenant allowing premises to fall into disrepair.
If a tenant allows the premises to fall into disrepair, it constitutes a continuing breach. The landlord can accept rent, but each day the disrepair continues, they regain the right of forfeiture.
256
Give examples of continuing breaches that affect a landlord's rights.
Examples of continuing breaches include failure to keep the premises in repair, breach of the user covenant, and failure to comply with an insurance obligation.
257
How does a landlord's acceptance of rent affect a continuing breach?
If a landlord accepts rent from a tenant who is in breach of their obligations, such as failing to keep the premises in repair, it does not eliminate the continuing breach. Each day the breach continues, the landlord retains a new right of forfeiture.
258
Define 'continuing breaches' in landlord-tenant agreements.
Continuing breaches are violations that allow the landlord to regain the right of forfeiture each day the breach continues. Examples include failure to keep the premises in repair, breach of the user covenant, and failure to comply with an insurance obligation.
259
Describe a 'once and for all breach' in the context of landlord-tenant relationships.
A 'once and for all breach' refers to a situation where, once the landlord waives the right of forfeiture for a specific breach, they can never regain that right for that breach again. Examples include non-payment of rent, unlawful assignment or underletting, and insolvency events.
260
List the three conditions that must be met for an implied waiver of the right of forfeiture to occur.
1. The landlord must perform an unequivocal act recognizing the lease's existence. 2. The landlord must have knowledge of the breach. 3. The landlord must communicate that act to the tenant.
261
Provide an example of a situation where a landlord waives their right of forfeiture.
If a tenant unlawfully assigns the lease to a new tenant and the landlord, knowing about the assignment, accepts rent from the new tenant, the landlord has waived the right of forfeiture.
262
Define waiver of the right of forfeiture in the context of landlord-tenant relationships.
Waiver of the right of forfeiture occurs when a landlord takes actions that recognize the lease's existence despite a breach, thus losing the right to forfeit the lease.
263
Define forfeiture in the context of landlord-tenant relationships.
Forfeiture is the right of the landlord to re-enter the premises and take them back from the tenant, effectively ending the lease before the contractual term.
264
What typically happens during a forfeiture process in the morning?
During a forfeiture process, a bailiff usually attends the premises early in the morning to change the locks and post a notice on the door, preventing access to staff, customers, or tradespeople.
265
What are the potential risks associated with peaceable re-entry for landlords?
The risks include the possibility of the tenant legally challenging the re-entry if it was not conducted lawfully or if the tenant's belongings are lost, damaged, or stolen.
266
How can a landlord legally challenge a tenant's claim during forfeiture?
A landlord can apply to the court for an order of forfeiture, which provides a legal basis that makes it more difficult for the tenant to challenge the forfeiture on grounds of lawfulness.
267
Describe the process of peaceable re-entry for forfeiture.
Peaceable re-entry for forfeiture involves the landlord instructing a bailiff to re-enter the premises without the need for court intervention, allowing for a quicker resolution.
268
What is the role of a period of grace in lease forfeiture for non-payment of rent?
The period of grace allows the tenant a specified time to pay overdue rent before the landlord can initiate forfeiture.
269
Identify the legal framework governing lease forfeiture in the UK.
The legal framework governing lease forfeiture in the UK includes the Law of Property Act 1925, which outlines the requirements for serving a section 146 notice.
270
Explain the typical reasons a landlord may forfeit a commercial lease.
A landlord may forfeit a commercial lease for non-payment of rent, breaches of lease obligations, or if there is an insolvency event involving the tenant.
271
How does a landlord initiate forfeiture for a breach of lease obligations?
The landlord must serve a section 146 notice detailing the alleged breach and provide the tenant a reasonable opportunity to remedy it before forfeiture can occur.
272
Describe the conditions under which a landlord can forfeit a lease.
A landlord can forfeit a lease for non-payment of rent as soon as the lease allows, or for any other breach of the tenant's obligations after serving a section 146 notice.
273
Explain the potential dilemma landlords face in a difficult rental market regarding forfeiture.
In a difficult rental market, a tenant who breaches some obligations may be preferable to having no tenant at all, complicating the decision to enforce forfeiture.
274
How might the threat of forfeiture influence tenant behavior?
The threat of forfeiture may spur a tenant into compliance with its obligations.
275
Describe the effect of forfeiture on a lease agreement.
Forfeiture brings the lease to an end before the contractual term or during any period of holding over.
276
What is required for Forfeiture for breach of repairing obligation
the landlord must serve a section 146 notice of its intention to forfeit, detailing the remedy and giving the tenant reasonable time to remedy the breach.
277
Define the criteria for leases to which the Leasehold Property (Repairs) Act 1938 applies.
The criteria are that the lease must be for a term of seven years or more and there must be at least three years of the term left to run.
278
How long does a tenant have to serve a counter-notice under the Leasehold Property (Repairs) Act 1938?
The tenant has 28 days to serve a counter-notice.
279
What must a landlord do before proceeding with forfeiture for breach of repairing obligation?
The landlord must get leave from the court before proceeding.
280
Explain the importance of the section 146 notice for tenants.
The section 146 notice informs the tenant of the landlord's intention to forfeit and advises them of their rights, including the right to serve a counter-notice.
281
What is the significance of the 28-day period for tenants under the Leasehold Property (Repairs) Act 1938?
It allows tenants time to respond to the landlord's notice and potentially remedy the breach before forfeiture can proceed.
282
Describe the process a landlord must follow before issuing proceedings for damages related to a repairing obligation.
A landlord must serve a section 146 notice and give the tenant 28 days to serve a counter-notice before issuing proceedings for damages.
283
Define the limitations of damages and forfeiture as solutions for landlords.
Neither damages nor forfeiture provide a satisfactory solution for landlords due to procedural requirements and limitations on the measure of damages.
284
How does specific performance relate to repairing obligations in leases?
Specific performance is a possible remedy for repairing obligations but is rarely granted, except in exceptional circumstances where the lease lacks a remedy for repairing breaches.
285
Explain the measure of damages a landlord can claim for a breach of repairing obligation.
The measure of damages is based on the loss of value to the landlord’s reversion, not the cost of repairs.
286
Provide an example of how damages for breach of a repairing obligation are calculated.
If repairs cost £8,000 but the landlord's freehold is only £1,000 less valuable, the landlord's damages would be limited to £1,000.
287
Describe the rights granted to a landlord under a Jervis v Harris clause.
The landlord has the right to enter the property, carry out necessary repairs, and recover the costs of those repairs from the tenant.
288
How does a Jervis v Harris clause benefit a landlord in terms of cost recovery?
It allows the landlord to recover the full cost of repairs as a debt, rather than as damages, avoiding the need for court proceedings.
289
Define a self-help clause in the context of commercial leases.
A self-help clause, also known as a Jervis v Harris clause, allows landlords to perform repairs and recover costs without needing to serve a section 146 notice.
290
Explain the financial implications for a landlord when using a Jervis v Harris clause compared to seeking damages through the courts.
Using a Jervis v Harris clause allows the landlord to recover £8,000 for repairs directly from the tenant, rather than potentially receiving only £1,000 in damages through court.
