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APC TH > Property Management > Flashcards

Property Management Flashcards

1
Q

Tell me about the RICS Professional Statement Real Estate Management 3rd Edition, October 2016

A

”- Aimed at both residential and commercial property managers
- Contains 12 principles such as acting in an honest, fair, transparent and professional manner
- Gives advice on ethics, securing instructions, managing real estate, portfolio and asset management etc”

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2
Q

RICS Guidance Note Commercial Property Management for England and Wales, 2nd edition October 2011 - tell me some principles from this note? What is good practice for landlord and tenant co-operation?

A

”- Guide to best practice for commercial property managers
- Focuses how a property manager can be efficient, effective and accountable to the client
- Primary duty of care to landlord ‘the client’
- Contains useful summary of all relevant statue law”

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3
Q

What is contained within a dilapidations report? List of repairs and reinstatement - Seaton

A
  1. Who it’s been prepared for and why
  2. Address of the subject property
  3. Preamble containing instructions, inspection details, intention, deleterious materials
  4. Basis of claim and outline of dilapidation protocols
  5. Lease and licence details
    Appendix A - Schedule of Dilapidations (item, relevant lease clause, remedy, reinstatement, repair & redecoration cost)
    Appendix B summary of claim
    - Fees
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4
Q

What does the Code of Practice for Commercial Property Relationships during the Covid 19 pandemic cover?

A

”- Gov published this code in June 2020
- Designed to support businesses to come together to negotiate affordable rental agreements during the pandemic
- 4 Main principles:
Transparency & collaboration
A unified approach
Government support for businesses
Landlord and tenants to work together to resolve issues such as rent arrears
“

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5
Q

What’s the difference between assignment and sub leases and what’s the impact upon investment value?

A

“ALWAYS READ THE LEASE BEFORE ADVISING CLIENT
Assignment
- New tenant has a direct relationship (privity of contract) with the landlord
Subletting
- Direct relationship with the tenant “

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6
Q

Why would you sublet not assign (3)?

A

”- Market rent is higher than passing rent than profit rent
- Tenant wants to reoccupy
- New party is of a lesser covenant strength”

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7
Q

What would you need to consider when dealing with an application for consent to assign or sublet?

A

“1. Read the lease
2. Will Tenant give undertaking
3. What’s the proposed rent? Market?
4. What’s the impact on investment value
5. What do the lease terms say
6. Covenant strength of tenant - accounts and references?
7. Rent deposit? AGA?
8. Obtain client’s approval
9. Licence will be required”

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8
Q

What is the purpose of the Landlord and Tenant Act 1988?

A

Statutory duty exists on the landlord to deal with consents diligently and to not unreasonably withhold or delay consent

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9
Q

What is the purpose of the Landlord and Tenant Covenants Act 1995?

A

”- Relates to assignments of lease
- Came into force 1st January 1996 - anything after is a ‘new lease’
- Abolished privity of contract
- Introduced AGAs (Authorised Guarantee Agreements) for most recent former tenant to guarantee the lease obligations of the immediate assignee
- Section 17 notice must be served upon guarantor within 6 months of the tenant defaulting to require former tenant to pay arrears
- Can only be one AGA in place
- Code for leasing business premises advises tenants not to enter in to an AGA if new tenant is financially strong enough or pays rent deposit etc”

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10
Q

Whats the summary of current legal position in relationship to assignments and guarantors?

A

”- G1 guarantees T1s obligations in an AGA (indireclty guarantees T2s performance)
- G1 cannot directly guarantee the performance of T2’s obligations
- G1 cannot take an assignment from T1”

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11
Q

Tell me about your understanding of alterations

A

”- RTL
- Normall subject to reinstatement”

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12
Q

Two functions of Licence for Alterations

A

“Has two useful functions: protects parties at rent review and dilapidations
- Complete before works are undertaken”

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13
Q

How would you deal with a licence to alter application?

A

”- RTL
- Request full set of plans and spec
- Obtain undertaking
- Has all building regs and planning consent been acquired
- check long term impact on the property”

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14
Q

What does the 1927 Landlord and Tenant Act Section 19 say about consent to alterations?

A

NTBUW

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15
Q

What is your understanding of dilapidations?

A

”- Damages claim
- Repairs required during and at end of lease
- Claim for tenant failing to comply with lease terms
RTL
- Repairing clause/SoC
- LTAs?
- Tenant do works or pay a sum to LL
- Section 146 must be served in accordance with the 1925 Law of Property Act
- Claim limited to cost of works or diminution in reversionary interest, S18 valuation
- Interim schedule - during the lease, at least 3 years of the lease
- If agreement not reached then LL’s surveyor will prepare Scott Schedule for teh court/ADR - sets out summary of positions
- Terminal schedule - served normally in the last 3 years”

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16
Q

What’s the format of a dilapidation schedule?

A

”- Outline repairing obligations
- State remedy and cost of breach
- Loss of rent
- Fees + VAT for surveyor/legal fees
- Negotiations conducted on without prejudice until agreement reached”

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17
Q

Reasons why a dilaps settlement is not agreed ?

A

”- Lease not on full repairing terms
- Reinstatement required by landlord
- SoC limits liability
- Building is to be demolished and refurbished”

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18
Q

Tell me about your understanding of insurance

A

”- Normally LL to arrange and recharge Tenant
- Cover for reinstatement of the building
- Insurance Act 2016 introduced more accountability for insurers
- Insurance premium tax (IPT) is levied on premiums”

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19
Q

What action must you take for empty buildings?

A

”- Let insurers know and note their requirements
- Maintain fabric of building
- Obtain EPC and consider MEEs
- Remove combustible materials
- Undertake regular inspections
- Inform rating authority
- Decommission services and isolate power supplies
- Seal letterbox and secure property
- Residential squatting is a criminal offence and commercial landlords must rely on common law powers to remove trespassers”

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20
Q

What are the fundamental principles of rent collection?

A

“1. Accuracy of information
2. Timing”

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21
Q

What are the usual quarter days?

A

25th March, 24th June, 29th September, 25th December

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22
Q

Tell me about rent collection

A

” Check lease for timings of payments and interest on arrears
- Is VAT to be levied
- Collection by bank direct debit is the easiest. Standing order is only for exact amount
- Client accounting systems must comply with current RICS regs
- Careful about accepting money from a tenant who’s lease has expired”

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23
Q

Tell me about rent arrears

A

”- RTL
- Recognise warnings (persistent late payment etc)
- Is there a rent deposit?
- What procedures for recovery does lease dictate ‘old lease’ privity of contract or AGA
- Do you want posession of an empty property? Rates? Market rent? Ability to relet?
- Seek client instructions
- Take legal advice
- Charge interest on late payments
- Consider payment plan “

24
Q

What are remedies rent default if amicable agreement not reached

A

”- Court proceedings
Court judgement
Proceedings issued
Costly
- Use rent deposit
- Pursue former tenants and guarantors
- Serve statutory demand
Preliminary step to pursuing bankruptcy or winding up procedings
21 days to pay arrears
- CRAR
- Forfeit lease
Forfeiture clause within the lease allows the landlord to re-enter the property and gain possession for a breach of the lease
If rent has been accepted after breach then is a patent form of waiver
Most leases have a separate entry clause if the rent is unpaid after a certain time period
If breach other than rent then LL required to serve a Section 146 notice
- Negotiate payment plan “

25
Q

What is CRAR?

A

“Commercial rent arrears recovery scheme, April 2014
- Commercial landlords
- No minimum amount of arrears
- basic rent plus VAT and interest (not s/c or other payments)
- Set of conditions need to be met before LL can exercise CRAR
- Minimum of 7 days unpaid rent
- Minimum of 7 clear days warning notice
- Enforcement agents visit
- 2 clear days to follow
- Reentry by enforcement agent to seize goods
- Allow 7 clear 7 days before sale of goods
- Fees must be specified “

26
Q

What were the Covid 19 restrictions on rent recovery and repossession?

A

”- Section 82 of the Coronavirus Act 2020 prohibited landlords from forfeiting a business tenancy for non-payment of rent or any other due sum between 25 March 2020 and 25 March 2022
- Taking Control of Goods and Certification of Enforcement Agents (coronavirus) regulations 2020 - prevented LL from using CRAR unless at least 90 day sof rent was due. 366 days from 25 December 2020 and 554 day from 24 June 2021”

27
Q

What case relates to key principles of repair?

A

Ravenseft Properties v Davstone (Holdings) Ltd (1978)

28
Q

Tell me about repair

A

”- Distinct from renewal
- Tenants may be responsible for inherent defects
- Repair is not an improvement
- Effective FRI lease - LL is repsonsible for repairs and recharges via service charge”

29
Q

What are the four main remedies for breaches of repair?

A

“1. Serve a repair notice
2. Forfeit the lease
3. Serve an interim schedule of dilapidations
4. Do the works and charge the tenant “

30
Q

Whats a Notice to Repair?

A

”- Served under s146 of Law of Property Act 1925
- Served during term of lease
- Specific breach
- Timescale to remedy the breach
- Course of action proposed if tenant fails to remedy the breach
“

31
Q

What is forfeiture?

A

”- Must be clause in lease
- Will have to serve a s146 for disrepair
- State why T is in breach of repair covenant and outlin what must be done to remedy
- T must have reasonable time to do the works”

32
Q

Tell me about landlords right to enter to do works

A

”- Jervis v Harris (1996)
- Right to enter and claim cost of repair for tenant not complying with their repairing responsibility
- Not a cost for damages but debt
- Used when tenant is solvent
- Where the landlord wants lease and rent to continue
- Landlord wants to retain control to carry out repair works “

33
Q

What 3 stage planned maintenance programme can be utilised?

A

“1. Cyclical maintenance
2. Preventative maintenance
3. Responsive maintenance”

34
Q

What is a schedule of condition?

A

”- Limits tenant’s repairing obligation
in respect of agreed items of disrepair during lease
- Agreed between LL and T before lease
- Reinstatement will be limited by Schedule of Condition
- Carefully record with photos and plans”

35
Q

What is service charge?

A

Charges to tenants of multi tenanted properties or estates for costs incurred by a landlord for maintenance and management of a property

36
Q

Tell me about service charge

A

”- no legislation for commercial s/c only residential
- tenants negotiating service charge caps/fixed increases or RPI and CPI
- Service charge budget agreed for year with tenant
- Annual accounts prepared at the end of the year
- Balancing payment made at the end of the year
- Sweeper clause used for unexpected costs
- Payments are usually reserved as rents
- Benchmarked against indices to esnure operational performance standards are checked”

37
Q

What is the RICS professional statement on service charge?

A

“RICS Professional statement Service Charges in commercial property 2018, effective 1st April 2019
- Contains 9 principles for the management of service charge accounts “

38
Q

What are the four usual methods of apportionment?

A

“1. Floor area
2. Fixed percentages
3. Rateable value
4. Weighted floor area”

39
Q

What is a sinking fund?

A

“Fund formed by periodically setting aside money for the replacement of a wasting asset (eg lifts)
“

40
Q

What is a reserve fund?

A

“Formed to meet the anticipated future costs of maintenance and upkeep of anticipated large increases in service charge
“

41
Q

What’s the key case relating to keep open clauses?

A

Co-operative Insurance Society v Argyll Stores (1978) - Safeway closed store as they were making losses. Court ruled this was fine

42
Q

Tell me what you know about Insolvency

A

”- Administration
Administrator appointed by creditor to rescue insolvent company
- Receivership
Administrative receiver appointed by creditors to realise assets to repay debts
- Company Voluntary Arrangements (CVA)
Voluntary arrangement with creditors as to how the debts will be settled
Voluntary liquidation
Winding up company
Bankruptcy”

43
Q

Tell me about administration

A

”- Commenced by company, lenders, creditors
- Period of protection for company for the administrator to deal with assets in most appropriate way
- Period of protection is moratorium
- Directors continue in office but powers cease
- Administrators must send proposal to creditors within 8 weeks and then will implement a strategy
ie pre pack business sale, adminstration trading, close down and wind up
- Options to landlord are limited”

44
Q

What is receivership?

A

”- When a company defaults in payment to a lender who is secured by a fixed charge
- Only available when floating charge pre dates Sep 2003
- Receiver takes control of company and realises its assets often by selling the business as a going concern “

45
Q

Tell me about a CVA

A

“Company Voluntary Arrangement
- Contract between a compnay and it’s creditors appropriate when a company is insolvent but directors believe there is a future with financial restructuring
- Company appoints insolvency practitioner as a nominee to supervise and oversee the implementation of the proposed strategy
- Agrees terms for the repayments of accrused debts
- Will be binding on all creditors if it is approved by 75% of the creditors “

46
Q

Wha would you do if you tenant became insolvent

A

”- Inform client
- Consider legal action before moratorium is in place
- RTL - rent deposit, guarantor?
- Early contact with administrator or receivership
- Check arrears
- Ensure property is insured and tell insurers tha it’s vacant
- Submit a claim for arrears
- Schedule of dilapidations
- Empty rates
- Consider reletting”

47
Q

Tell me about the structure of the RICS Guidance Note Commercial Property Management for England and Wales 2nd Edition October 2011

A
  1. Introduction
  2. Purpose and Scope
  3. Overview - key principles (duty of care, acting as agent of the LL, managing third party suppliers)
  4. Property Manager’s core duties (collection of monies, client accounts, service charge, deposits)
  5. Additional responsibilities of the PM
  6. Landlords Responsibilities to the PM
  7. Employees and employment law
  8. Specialist issues
48
Q

Was it ethical for Boots to withhold rent during Covid?

A

…

49
Q

What is privity of contract?

A

First tenant can assign their interest in the property but not his relationship with the landlord

50
Q

What is the guidance note on dilapidations?

A

RICS Guidance Note on Dilapidations, 2016

51
Q

What would I have done at Camelford if the landlord refused or could not have attended the window?

A

…

52
Q

How would you advise a client if they received a schedule of dilapidation?

A
  • Direct them to a building surveyor
  • Look at the lease and the extent of demise, repairing obligations, reinstatement
  • Schedule of condition
  • Limited to cost of works in diminution in value of the diversionary interest
  • If Landlord has major works planned then there is no claim
  • S18 defence under Landlord and Tenant Act 1927
  • Look to the lease for fees
  • ## Has the Landlord served a s146 notice?
53
Q

What are the landlords remedies available to the landlord if they are in breach of their repairing covenant?

A
  • Forfeiture or damages
  • Jervis v Harris clause in the lease? Right to enter, carry out works and reclaim
  • Serve schedule of dilapidations
54
Q

What would you do if an item was not covered by either landlord or tenant to repair?

A

If the property was rendered unusable by the disrepair tenant then the tenant could impose a timescale on the landlord to carry out a repair

55
Q

What is SCRAR?

A

APC TH (18 decks)

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