Property Management Flashcards
1
Q
What is an assignment?
A
Tenant transfers its legal interest in a lease to another party. The incoming tenant takes over the tenant’s obligations under the lease
2
Q
What is a sub-letting?
A
A contract to lease commercial property from a tenant rather than a landlord
The tenant maintains their relationship with the landlord
Sub-tenant has a direct relationship with the tenant and pays them the rent, who then pays rent to the landlord
3
Q
What is the difference between an assignment and a sub-letting?
A
With an assignment the original tenant is no longer liable under the lease, the responsibility it legally transferred
With sub-letting, the original tenant maintains their responsibilities under the lease and creates a new relationship with a sub-tenant. The landlord has no direct relationship with the sub-tenant
4
Q
Why might a tenant sub-let rather than assigning?
A
Requirement of the lease
To sub-let part and not whole
There is a profit rent
Tenant wants to re-occupy in the future
New party is of a lesser covenant strength
5
Q
What is the typical alienation clause in commercial leases?
A
Permitted to assign or sub-let whole without landlord’s consent not be be unreasonably withheld or delayed
6
Q
What actions should be undertaken by a property manager when they receive an application to assign or sub-let?
A
Review provisions in the lease
Give tenant understanding of surveyor and legal costs
Is the proposed rent the market rent and/or the same as the passing rent?
What will be the effect on the investment value of the property?
What do the terms of the lease state regarding the grant of consent for assignment and sub-letting?
Are there reasonable grounds for withholding consent?
Has a rent deposit been agreed? Is there an AGA clause?
The client will need to be provided with a report setting out the surveyor’s recommendations
Obtain the client’s approval to proceed
Is consent if to be granted, a licence for assignment or sub-letting will be required
7
Q
What was the aim of the Landlord and Tenant Act 1988?
A
To ensure that a statutory duty exists on the landlord to deal with consents diligently and not be unreasonable withheld or delayed
Failure to do so can result in a claim for damages
8
Q
What is the benefit of a licence for alterations?
A
Provides protection for a landlord often requiring a tenant to reinstate any works done at the end of their lease
Provide protection for a tenant, by preventing the landlord from rentalising any alterations/improvements at rent review
9
Q
What is the key RICS publication in regard to alterations?
A
RICS Guidance Note: Licence for Alterations in Commercial Property, 2nd edition, 2012
10
Q
What does the RICS Guidance Note: Licence for Alterations in Commercial Property, 2nd edition, 2012 set out?
A
Advise for surveyor dealing with tenant applications to make alterations to office and industrial properties
Importance of dealing with the matter without unnecessary delay
Ensuring that a licence is completed to protect parties
Licence must clearly document the works agreed
11
Q
What is the process for completing processing a tenant’s application to make alterations according the RICS’ guidance note?
A
Tenant’s application
Factors to consider
Third party input
Response
Documenting
Final inspection
12
Q
What does a surveyor need to do upon receiving a tenant’s application to make alterations?
A
Request for application to be submitted in writing
Cost undertaking for handling the application should be sought at an early stage of the process
Check lease provisions
13
Q
What factors need to be considered as part of a tenant’s alteration application?
A
- The nature of the works – govern the level of consideration required
- If works are likely to improve the rental value of the property the landlord should consider exercising the option inspection 3 of the Landlord and Tenant Act 1927
- Impact on building operations
- In cases of major works it may be appropriate for landlord to request that a financial bond be held until the works are completed – provides the landlord with protection if a tenant begins but fails to complete agreed works
- Considered whether a warranty should be requested from the tenant for the works to be carried out
- Landlord needs to be clear as to whether or not they will require reinstatement on expiry of the tenant’s lease
- If alterations are required to fulfil obligations under The Equality Act 2010 – in such case landlord cannot withhold consent unless it is reasonable to do so
- Request tenant’s H&S documents for works to ensure safe working practices are being adhered to
- Alterations to lessen environmental impact of a building should be encouraged
14
Q
Name some third parties whose input may be required as part of a tenant’s application to make alterations?
A
Planning
Building regulations
Specialist consultants
Insurers
15
Q
What remedies are available to the tenant is the landlord fails to responds to an application to make alterations, refuses consent, to attaches considered which the tenant considers unreasonable?
A
Issue court proceedings for a declaration that the landlord is being unreasonable and that the works may proceed
Can carry on with the works in any event – although this an bring risks and problems, including the tenant being in breach of the lease which can give a right to forfeit
16
Q
What are the different ways in which consent to make alterations can be granted?
A
Automatically by way of lease terms
Formal licence deed
Simple letter licence
Most appropriate form will depend on the client’s preference and circumstances
17
Q
Why should an inspection be carried out after the completion of a tenant’s agreed works?
A
So that the surveyor can be satisfied that the works have been carried out to the required standard in line with plans and specifications provided and agreed
Following which it may be necessary for the tenant to rectify any snagging issues
18
Q
What is the implication of the Landlord and Tenant Act 1927?
A
If lease prohibits being made to a property without landlord’s consent, s.19 of the act imposes a proviso that such consent cannot be unreasonably withheld
If s.19 procedures have been followed, the landlord may be obliged to pay compensation for alterations that may constitute improvements
19
Q
What are a property manager’s responsibilities for managing empty buildings?
A
Building insurance – tell insurers its empty and comply with requirements
Maintain the fabric of the building
Obtain an EPC
Clear the building to remove any combustible material
Undertake and record regular inspections (for insurance purposes_
Undertake a health and safety and fire risk assessment of a building
Inform the local rating authority for payment of empty rates
Arrange security and decommission services and isolate power supplies
Seal up letterbox to help prevent arson and secure the property
Planned maintenance programme including serving of plant
Set frost controls and drain down water
Agreement of a disposal strategy and marketing initiatives
Maintain the asbestos register
Landscaping
20
Q
What was the implication of the Insurance Act 2016?
A
Key law which introduced more accountability for insurers, new responsibilities to policyholders to provide all relevant information and aim to reduce claims
21
Q
What is the tax levied on insurance premiums?
A
Insurance Premium Tax (IPT)
22
Q
What are the two fundamental principles of rent collection?
A
Accuracy of information
Timing
23
Q
What is the difference between a standing order and a direct debit?
A
Standing order is a regular payment set up by the payer. The payer has control of payments
Direct debit is when the payer authorises the payee to take payments
24
Q
What are the warning signs of future tenant default on rent or rent arrears?
A
Persistent late payments
Bounced cheques
25
What are the typical lease terms regarding interest on late rent?
2-4% above the base, 7-14 days after due date
26
What is the first step that should be made when seeking to recover rent arrears?
Read the lease to establish what procedures are in place for the landlord to recover the arrears
27
What are the remedies for rent default?
Negotiate a payment plan or another mutually acceptable arrangement
Use a rent deposit
Pursue guarantor
CRAR
Serve a statutory demand
Forfeit the lease
Court proceedings
28
What should be considered before drawing down on a rent deposit to cover arrears?
Will the tenant be able to top up the deposit?
If the tenant is in financial difficulty keeping the deposit for future debts should be considered – for example, for dilapidations
29
Does the landlord need to give the tenant notice before drawing down on a rent deposit?
Depends on the working of the rent deposit deed
30
In the event of arrears, is the landlord obliged to use the rent deposit?
No, the landlord can use he deposit at their discretion
31
What is the benefit of drawing down on the rent deposit over other remedies?
If the tenant’s inability to pay is considered to be a short term issue and the landlord wants to keep the tenant in possession
Drawing down on the rent deposit will provide some relief for the tenant to focus on recovering business
Can top up the deposit when business has recovered
32
How can court proceedings be used to recover tenant arrears?
Landlord can obtain a court judgement and then secure payment of the arrears by way of a charge over other property
Proceedings can also be issued to recover arrears after possession
33
What is the benefit of using court proceedings to recover tenant arrears?
Can be a useful remedy when the tenant is still solvent as just the threat of court action may prompt payment
34
What is the disadvantage of using court proceedings to recover tenant arrears?
Can be a slow process
More costly than other forms
Even when court judgement is achieved, landlords often have to take steps to enforce a judgement
35
When can a former tenant be pursued for tenant arrears?
Leases that started before 1st January 1996
Privity of contract was abolished by the Landlord and Tenant (Covenants) Act 1995
Before this a tenant who is the original tenant under a commercial lease was responsible for the rent and other covenants throughout the lease term even if it has transferred to someone else
36
What is a statutory demand?
Preliminary step to pursuing bankruptcy of winding-up proceedings
Can be used to put pressure on a tenant to pay arrears
37
When can a stat demand be used?
Can only be used on genuine and undisputed rent
Arrears must be over £750 for a company and £5,000 for an individual
Rent deposit should already have been used
38
What is the process of serving a stat demand to recover arrears?
Served on individual or at registered office of company
Tenant has 21 days to pay their arrears
After this time, landlord can present bankruptcy (individual) or winding up (company) petition to the court
39
What is CRAR?
Commercial rent arrears recovery scheme
40
What was CRAR introduced to replace?
Ancient law of distress for rent
41
When was CRAR introduced?
2014 by The Tribunals, Courts and Enforcement Act 2007
42
Who is the CRAR scheme available to?
Commercial landlords
43
What is the minimum amount of arrears for CRAR to be used?
There is no minimum
44
What can CRAR be used to recover?
Basic rent demands, plus VAT and interest payable
No service charge or other payments
45
What is the required timeline under CRAR?
Minimum 7 days unpaid rent
Minimum 7 clear days warning notice
Enforcement agents visit
2 day clear days to follow
Re-entry by enforcement agent to seize goods
Allow 7 clear days before sale of goods
Fees must be specific on the entry notice
46
What goods can’t be seized under CRAR?
Perishable goods
Work tools
47
What are the tenant’s rights under CRAR?
Tenant has the right to apply to the court for an order that no further steps may be taken under CRAR without further permission from the court
48
What is forfeiture?
A clause in the lease that allows the landlord to re-enter the property and gain possession for a breach of the lease (by peaceful re-entry or begin court action) – when the landlord enters the property the lease immediately ends
Procedures must be followed and relief offered to the tenant
49
When can forfeiture be used?
When there is a forfeiture clause in the lease
50
What are the tenant’s rights under forfeiture?
Tenant has the right of relief from forfeiture from the court within 6 months
51
What is relief from forfeiture?
An application by the tenant to court to overturn the forfeiture
The result is that the lease will be restored as if the forfeiture never happened
52
Is the landlord required to give notice of intent to forfeit?
No
53
How can the landlord’s right to forfeit be waived?
By formally demanding the rent or agreeing a payment plan with the tenant for outstanding arrears;
By exercising Commercial Rent Arrears Recovery;
Serving a notice to quit or s.25 Notice under the Landlord and Tenant Act 1954;
Bringing court proceedings for rent arrears, where those proceedings are not part of forfeiture proceedings;
Any negotiations regarding the breach (for example discussing a payment plan) unless they are without prejudice;
Any action which might be construed as treating the lease as continuing.
54
How can a lease be terminated under forfeiture?
By the landlord re-entering the property
Either by physical peaceable re-entry or by commencing County Court proceedings to recover possession
The lease is terminated immediately
55
What was the effect of Landlord and Tenant (Covenants) Act 1995?
Abolished privity of contract for all new leases
Introduced Authorised Guarantee Agreements (AGAs) for the most recent former tenant only to guarantee the lease obligations of the immediate assignee as a voluntary arrangement to be agreed between the landlord and tenant
A Section 17 Notice must be served upon a guarantor within 6 months of the tenant defaulting to require the former tenant who has entered an AGA to pay the arrears
56
What is an AGA?
Authorised Guarantee Agreement
Agreement for assignor to guarantee the assignee’s obligations under the lease
Only one AGA can be in place at one time
57
According to the RICS’ Code of Leasing Business Premises when should AGAs be used?
If the assignee is financially strong enough or pays an appropriate rent deposit and/or provides a suitable guarantor then the landlord should not require an AGA
58
When did the Landlord and Tenant (Covenants) Act 1995 come into effect?
1st January 1996
59
What is the key consideration that needs to be made by the landlord when reviewing rent arrear recovery methods?
Whether or not they wish to let possession of the property in light of the passing rent and current market condition
Consider the chances for re-letting the property
Compare the vacant possession value of the property with the value as let and costs of vacant
60
What was the impact of the Legal Aid, Sentencing and Punishment of Offenders Act 2012?
Made residential squatting a criminal offence that can be subject to police action
Commercial landlords must rely on common law powers to use ‘reasonable force’ to remove trespassers from land usually with the use of a certified bailiff or use civil legal proceeding in the County Court
61
What are the four main options open to a landlord to consider to deal with a tenant who is not fulfilling their repairing obligations?
Serve a repair notice
Forfeit the lease
Serve and interim schedule of dilapidations
Do the works and charge the tenant
62
What is a notice to repair?
Served under S.146 of the Law of Property Act 1925
Served by the landlord during the lease, subject to terms of the repairs works required of the lease
Notice must be served in writing and comply with the terms of the lease
63
What must be included in a notice to repair?
Details of the repairing breach which has occurred
The timescale allowed to remedy the breach
Course of action proposed if the tenant fails to remedy the breach
64
How can a landlord forfeit the lease?
Must be a forfeiture clause is the lease
Landlord must serve a S.146 notice on the tenant
Should state why the tenant is in breach of the repair covenant and outline what must be done to remedy the breach
Tenant must be given reasonable time frame to undertaken the works
65
What is the leading case law with regard to the landlord’s right to re-enter the property to undertake the repairs?
Jervis v Harris (1996)
66
What is the precedent of Jervis v Harris (1996)?
The case gives the landlord a right to pursue an effective remedy against defaulting tenants, to ensure that the premises are kept in good repair for the duration of the term of the lease
67
In what circumstances can a Jervis v Harris clause be used when repairs are required?
When tenant is solvent
Where landlord wants the lease to continue and continue receiving rent
The landlord wants to retain control to carry out repair works
Where the threat to entry may compel the tenant to do the work
68
What are the three possible stages of a planned maintenance programme?
Cyclical maintenance – regular activities carried out irrespective of the condition of the building – e.g. servicing plant
Preventative maintenance – dependent on a condition survey prepared by a building surveyor which forecasts future repair needs and plans a timetable for undertaking work
Responsive maintenance – initiatives by the building occupier such a repairing a leak or unblocking drains
69
What is the RICS’ key publication in regard to service charges? And when was it effective from?
RICS Professional Statement: Service Charges in Commercial Property, 1st Edition, 2018
Effective April 2019
70
What are the aims of the RICS Service Charge Professional Statement?
Improve general standards and promote best practice, fairness and transparency in the management and administration of service charges
Ensure timely issue of budgets and year-end certificates
Reduce causes of disputes and provide guidance on the resolution of disputes if these arise
Provide guidance to solicitors, their client and managers of services charges in negotiation, drafting, interpretation and operation of leases
71
What are the 9 mandatory requirements set out in the RICS Service Charge Professional Statement?
1. Seek to recover expenditure in accordance with the lease terms
2. Must recover no more than 100% of proper and actual costs
3. Annually provide service charge budgets, including appropriate explanatory commentary is issues to tenants
4. Approved set of service charge accounts showing actual service charge are annually provided to the tenants
5. Service charge apportionment matrix is provided annually to all tenants
6. Service charge monies must in held in discrete bank accounts
7. Interest earned on service charge account must be credited to the service charge account
8. Where acting for a tenant, tenants must be advised where a dispute exists and any service charge payment withheld should reflect only the actual sums in dispute
9. When acting for a tenant, tenants must be advised that following a resolution of a dispute, any service charge that has been raised incorrectly should be adjusted to reflect the error with undue delay
72
What are the 11 sub sections of core principles of the RICS Service Charge Professional Statement?
The service costs
Allocation and apportionments
Communication and consultation
Duty of care
Financial competence
Occupier responsibilities
Right to challenge and alternative dispute resolution (ADR)
Timeliness
Transparency
Value for money
Exclusions
73
What are the core principles of the RICS Service Charge Professional Statement relating to the service costs?
Costs should be transparent and management fees should be on a fixed basis
Best practice for all services to be procured with multiple quotes to ensure value for money
Owners should not profit from the provision or supply of services (save for reasonable management fee)
74
What are the core principles of the RICS Service Charge Professional Statement relating to allocation and apportionments?
Costs should be allocated to the relevant expenditure category with separate schedules where appropriate
Method of apportionment should be fair and reasonable so that occupier bear an appropriate proportion of the total service charge expenditure
75
What are the core principles of the RICS Service Charge Professional Statement relating to communication and consultation?
Owner has right to set standards of management, managers should consult with occupier regarding the standard and quality of the service charge provision required
Manages should communicate effectively with occupier to ensure services are delivered effectively for the benefit of all
Managers claiming compliance with these principles should be transparent in demonstrating compliance
76
What are the core principles of the RICS Service Charge Professional Statement relating to duty of care?
Those certifying account should recognise duty of care to act with professional care, diligence, integrity and objectivity
Manager has duty of case to the occupier and owner
Should be clear polices to show how service charge is managed
77
What are the core principles of the RICS Service Charge Professional Statement relating to financial competence?
Managers should issue service charge account sin a non-partisan spirit, acting as experts
Annual statements of expenditure should be supported by an independent review of the service charge accounts in line with the ICAEW Technical Release
Industry Standards Cost Classifications should be used in reporting budget and actual expenditure
78
What are the core principles of the RICS Service Charge Professional Statement relating to occupier responsibilities
Ensure prompt payment of service charge
Recognise that a lease provision has legal effect
Recognise that value for money and maintenance quality standards will be enhance through partnership, occupiers should be proactive in assisting owners in operation of service charges
79
What are the core principles of the RICS Service Charge Professional Statement relating to the right to challenge/alternative dispute resolution (ADR)?
All new leases should make provision for either part to require the resolution of disagreements through ADR
Is parties cannot agree a mediator or independent expert this shall be appointed by the President of the RICS. Parties can use ADR even if there is not a provision in the lease
80
What are the core principles of the RICS Service Charge Professional Statement relating to timeliness?
Communication and consultation between managers and occupiers should be timely and regular to encourage and provide good working relationships and help avoid disputes
Issues budgets to occupiers, including explanatory commentary and apportionment matric at least 1 month before the start of the service charge year
81
What are the core principles of the RICS Service Charge Professional Statement relating to transparency?
Essential for good communication, being transparent in all areas of SC will help avoid disputes
82
What are the core principles of the RICS Service Charge Professional Statement relating to value for money?
Should be appropriate to the location, use and character of the property. Aim is to achieve value for money and not just the lowest price
83
What are the core principles of the RICS Service Charge Professional Statement relating to exclusions?
Service charge costs should not include any of the following:
• Any initial costs relating to original design and construction of fabric, plant or equipment
• Any setting up costs that are considered part of the original development cost of the property
• Improvement costs above costs of normal maintenance, repair or replacement
• Future redevelopment costs
• Costs and fees relating to the owner’s investment interest e.g. rent collection and letting costs
• Costs attributable to void premises and owner’s use of the property
• Any costs arising out of negligence of the manager or owner
84
What are the responsibilities of a manager in relation to service charges?
Ensuring the standard of services provided are monitored
Ensuring quality and cost of services provided are regularly reviewed
Demonstrating that service charge standards are being delivered and value for money is being achieved
85
What is a sinking fund?
Fund formed by periodically setting aside money for the replacement of a wasting asset
86
What is a reserve fund?
Fund formed to meet anticipated future costs f maintenance and upkeep to avoid fluctuations in the amount of service charge payable each year
87
What is a depreciation charge?
A measure of the wearing out, consumption or other reduction in the life of an asset
An amount would be included in the service charge to reflect the cost to the landlord based on the initial
88
What are the four usual methods of service charge apportionment?
Floor area
Fixed percentages
Rateable value – no longer recommended
Weighted floor area – typical in shopping centres
89
What are the different types of insolvency?
Administration
Receivership
Liquidation
Company Voluntary Arrangements
90
What are the implications for a landlord when a tenant is put into administration?
Period of protection (a moratorium) restricts the actions which can be taken against the company
During this, options to the landlord are limited
If rent is still being paid, the equivalent amount can be claimed from the administrator
The administrator may seek the landlord’s consent to assign the lease
91
What are the implications for a landlord when a tenant goes into liquidation?
Landlords are typically classed as an unsecured creditor – meaning preferential will receive funds first so landlords may only receive non or none of their unsecured debts
Landlords are entitled to:
• Deduct funds from any rent deposit
• Seek a court order for termination of the lease
• Forfeit the lease
• Consent to the assignment of the lease to a new party
92
What was the impact of the Coronavirus Act 2020 on landlords regarding rent recovery?
To protect business during the pandemic there were restrictions on:
* Landlord’s forfeiting business leases
* Using CRAR
* Presenting winding-up petitions
Measures expired March 2022
93
What is the Commercial Rent (Coronavirus) Act 2022?
Came into effect 24/03/2022
Ringfenced any outstanding unpaid rent built up whilst business were closed during lockdowns – known as Protected Rent Debts
Landlord had to make allowances for protected rent debts and share the financial impact with tenants and if unsuccessful use the legally binding arbitration process
This is available up to 24th September 2022
94
**What is the Occupiers Liability Act 1957?**
Enacted to regulate the duty of care which an occupier of premises owes to its visitors where reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there
95
What is the Occupiers Liability Act 1984?
Enacted to regulate the duty of care which an occupier of premises owes to unlawful visitors. This includes trespassers and those who have exceeded their permission as a lawful visitor
96
What is the difference between an absolute/qualified/fully qualified covenant?
* Absolute – cannot do anything.
* Qualified – can do something with landlord consent.
* Fully qualified – can do something with landlord consent, not be unreasonably withheld.
97
What is the statutory duty placed on landlords under the Landlord & Tenant Act 1927/1988?
* 1927 s.19 proviso that consent cannot be unreasonably withheld and it permits the landlord to recover his reasonable expenses.
* 1988 s.1 provides that landlords are liable for unreasonably withholding and /or delaying consent. The landlord must provide written reasons for refusing consent or conditions.
98
What remedies are available to landlords for breach of repairs?
* Serve repair notice
* Forfeiture
* Serve interim schedule of dilapidations
* Do works and charge tenant
99
What is your understanding of the Corporate Manslaughter and Corporate Homicide Act 2007?
Companies can be found guilty of corporate manslaughter as a result of serious management failure resulting a gross breach of a duty of care.
100
What are the offences and penalties under the Corporate Manslaughter and Corporate Homicide Act 2007?
An organisation guilty of the offence will be liable to an unlimited fine
101
How would you hand over a service charge account upon sale or change of manager?
Complete an interim service charge reconciliation
102
What protection does a licence to alter provide?
The alterations require reinstatement at the end of the lease term
103
What is a cost undertaking?
Undertaking by one person to pay the costs of another
104
What is a warranty?
Written guarantee, issued to purchaser of an article by manufacturer, promising to repair or replace it is necessary within a specified time period
105
What is TUPE?
Transfer of undertakings (protection of employment) regulations 2006.
106
What is the purpose of TUPE?
To protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law
107
How might TUPE relate to property management?
People employee to carry out a service at a property will be protected under TUPE should the contract of that service change hands - e.g. cleaner or receptionist
108
What is a duty of care deed?
A duty of care deed is a way for lenders to have greater protection for their loans when they are lending in relation to a property which is rented out and managed by an agent
109
What is the RICS publication regarding property management?
RICS Guidance Note: Commercial property management in England and Wales
110
According to the RICS Guidance Note: Commercial property management in England and Wales, what is the objective of a property manager?
The overall objective for a property manager is to act as an agent for the landlord to manage:
* some or all of the responsibilities the landlord has:
* under the property’s lease, if any, from a superior landlord and
* under the property’s occupational leases to occupiers and other occupiers
* some or all of the landlord’s responsibilities regarding laws in owning or operating a property; and support in:
* making a financial/economic success of the property; and
* the successful use and operation of the property
111
According to the RICS Guidance Note: Commercial property management in England and Wales, what are the three key principles of a property manager?
* Acting as agent of the landlord
* Managing third party suppliers
* Duty of care (to landlord, occupiers and parties providing finance)
112
What are some of the core duties of a property manager?
* Collection of rent, service charge and other sums owed by the tenant to the landlord.
* The management of the property.
113
What is public liability insurance?
Covers the cost of legal action and compensation claims made against your business if a third party is injured or their property suffers damage whilst at your business premises.
114
Why is effective occupier liaison important?
Ensure good relationships with occupiers, make sure occupiers know who property manager is and how to contact them.
115
What is a BMS?
Building management system
116
As a property manager, what are your health and safety / fire safety obligations?
Ensure there is a general risk assessment and fire risk assessment carried out annually for the property and actions are completed
Compliance with H&S legislation for the property
Duty of care of occupiers and visitors
117
What insurance is a landlord typically required to hold under its leases?
Insurance against damage to the property, including loss of rent and public liability insurance
118
Tell me about third party supplier procurement in relation to your property management role.
* Workman approved supplier list
* Tendering of works and contracts (at least three suppliers)
* Safe Contractor
119
What is a ‘Safe Contractor’ Accreditation?
An accreditation scheme which recognises an organisation's capabilities for health and safety – all in one place
120
What is the difference between a sinking and a reserve fund?
* Reserve fund – provision allowing landlord to seek sums of money to set aside and pay for future major works.
* Sinking fund – provision allowing landlord to collect sums of money to set aside and pay for period maintenance.
121
What is death by negligence?
When a person is liable for the death of another due to their negligent conduct.
122
Why is rateable value not viewed as a suitable method of service charge apportionment?
Take into account a number of factors relating to value but do not generally reflect a reasonable assessment of the benefit and use of common services
123
What is the benefit of a PPM?
* Performed to preserve a property or asset’s condition and prevents problems from occurring
* It is a proactive approach to maintenance, designed to avoid failures, breakages and unexpected maintenance costs or unplanned disturbances from reactive works
124
How would you handle a rent deposit?
* Comply with rent deposit deed
* Set up interest bearing account
* Hold funds in sperate bank accounts not used for the landlord’s own moneys
* Bank account should be designated as tenant’s deposits to protect the funds in case the landlord become insolvent
* *Above as per RICS Code for Leasing Business Premises, 1st edition, 2020*
125
What legislation introduced CRAR
Tribunals, Courts and Enforcement Act 2007
126
What are the two key RICS publications in relation to property management?
RICS Professional Statement: Real Estate Management, 3rd edition, 2016
RICS Guidance Note: Commercial Property Management, 2nd edition, 2011
127
According to the RICS Guidance Note: Commercial Property Management, 2nd edition, 2011, what is the overall objective for a property manager?
To act as an agent for the landlord to manage:
* some or all of the responsibilities the landlord has:
* under the property’s lease, if any, from a superior landlord and
* under the property’s occupational leases to occupiers and other occupier
* some or all of the landlord’s responsibilities regarding laws in owning or operating a
property;
* and support in:
* making a financial/economic success of the property; and
* the successful use and operation of the property.
128
What are the 12 mandatory requirements for members set out in the RICS Professional Statement: Real Estate Management, 3rd edition, 2016?
1. Conduct business in an honest, fair, transparent and professional manner.
2. Carry out work with due skill, care and diligence, and ensure that any staff employed have the necessary skills to carry out their tasks.
3. Ensure that clients are provided with terms of engagement which are fair and clear. These should meet all legal requirements and relevant codes of practice including reference to complaints-handling procedures and, where it exists, an appropriate redress scheme.
4. Do the utmost to avoid conflicts of interest and, where they do arise, deal with them openly, fairly and promptly.
5. Not discriminate unfairly in any dealings.
6. In all dealings with clients, ensure that all communications (both financial and non-financial subject matters) are fair, clear, timely and transparent.
7. Ensure that all advertising and marketing material is honest, decent and truthful
8. Ensure that all client money is held separately from other monies in appropriately designated accounts and is covered by adequate insurance.
9. Have adequate and appropriate professional indemnity insurance or equivalent in place that complies with the RICS Rules of Conduct. Having proper cover is a key part of managing your risk.
10. Ensure that it is made clear to all parties with whom you are dealing the scope of your obligations to each party.
11. Where provided as part of the service, give a realistic assessment of the likely selling, buying or rental price, associated cost of occupancy or of the likely financial outcome of any issues, using best professional judgment.
12. Ensure that all meetings, inspections and viewings are carried out in accordance with the client’s lawful and reasonable wishes, having due regard for the security and personal safety of all parties.
