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APC Session 2 > Property Management > Flashcards

Property Management Flashcards

1
Q
  1. What is the difference between administration, CVA and liquidation?
A

a. Administration is utilised when there is a chance of rescuing a business that is experiencing high levels of financial stress.
b. liquidation brings the end of a company by selling its assets before dissolving the company entirely.
c. In administration, the running of the company lies with the Administrator or Insolvency Practitioner whereas, in a CVA, the incumbent directors will retain control of the company, providing they abide fully by the terms of the CVA agreement. It allows the limited company to pay creditors over a fixed period of time.
d. 75% of creditors have to vote for the CVA to be approved

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2
Q
  1. What was the purpose of bringing in professional statement for service charges in commercial property?
A

a. Promote best practice, fairness and transparency
b. Implement timely issue of budgets and recs
c. Reduce disputes
d. To make mandatory unless specified.

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3
Q
  1. What are the SC statement principles?
A

a. Within terms of lease
b. Recover no more than 100%
c. Budgets issued 1 month
d. Recs issued 4 month
e. Include apportionment matrix
f. Held in discrete account
g. Interest goes back into SC
h. SC held is proportionate to complaint
i. Errors amended quickly

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4
Q
  1. What does alienation mean in a lease?
A

a. Alienation’ is the right granted in a lease for a tenant to assign, sublet, or share occupation of their property.

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5
Q
  1. How do you manage LL and T relationships
A

a. I ensure good communication between both parties. I ensure I am honest and transparent between both parties.

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6
Q
  1. What is the difference between a subletting and assignment?
A

a. The original tenant is no longer liable under the lease from the assignment date
b. Sub- letting, the original tenant allows a third party to occupy (with landlord consent) but no relationship is made between the landlord and the third party.

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7
Q
  1. What is the CRAR process?
A

a. Only for rent arrears
b. 7 days unpaid – contact tenant to check if any queries
c. Enforcement officer will issue a letter and allow 7 days
d. Instruct enforcement officer
e. They will value stock
f. Provide tenant 2 clear days to make payment
g. Enforcement officer would attend and seize stock
h. Wait 7 days before selling stock

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8
Q
  1. Can enforcement officers take anything from the store?
A

a. No not if it stops the tenant from being able to trade

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9
Q
  1. What was put in place during Covid to prevent action being taken via CRAR and why?
A

a. Corona Virus act 2020 prevented being able to forfeit lease for payment of rent, CRAR proceedings, winding up petitions or small claims in court. This was extended to 31/03/2021
b. Commercial Rent (Coronavirus) 2022 act introduced the moratorium that meant landlords remedies were restricted during the protected rent debts period from 21/03/2020 to 18/07/2021. An arbitration process was in place to assist with the debts but any payments made during March 2020 – July 2021 would need to be allocated against unprotected debt

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10
Q
  1. Were all tenants protected under the coronavirus virus act?
A

a. Only for those effected by the lockdowns. I.E essential trade such as the supermarkets were not protected as they continued to trade.

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11
Q
  1. If you set up a firm on your own how would you carry out a conflict of interest check?
A

a. I would start but creating a database which would list all clients and properties that have been dealt with and ensure this is kept up to date

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12
Q
  1. What are the RICS timescales for budgets and reconciliations?
A

a. 1 month before and 4 months after

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13
Q
  1. What was the period in days that you could not CRAR?
A

a. 485

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14
Q
  1. What other main clauses within the lease?
A

a. Lease term
b. Rent clause
c. Service charge clause
d. Turnover provisions
e. Repair obligations
f. Break clauses
g. Alienation clauses

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15
Q
  1. Why did you check tenant works plans with the FM ?
A

a. If they are minor works then the FM is capable of assessing this. If they are extensive then we would charge an additional fee for structural reviews/building surveyors advice.

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16
Q
  1. If the tenant works were very significant would you get a building surveyor involved?
A

a. Yes this would be at an additional fee

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17
Q
  1. How do you set your fee level for tenant works?
A

a. We have a rough fee matrix if I was set up on my own I would review the level of work and time required and benchmark against prior instructions

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18
Q
  1. Do you have experience of explaining to tenants the whole sale cost increases for electricity over the past couple of years?
A

a. No but at my current company we have an energy team who we can get advice from. If I was to start a firm then I would seek advice, firstly from the supplier and if needed research for a third party advisor.

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19
Q
  1. Are you aware of how much electricity and gas has gone up?
A

a. As a benchmark, energy bills increased by 54% April 2022 and a further 27% in Oct 2022. The prices fell by 17% in July and is due to fall by a further 7% in October.

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20
Q
  1. What is the process of what you would consider for a licence to alter?
A

a. Request an undertaking of fees
b. Request for works details including plans, materials, RAMs etc to be reviewed.
c. Review lease for LL consent.
d. If required, gain consent
e. Once all approved, document via a licence to alter either by a standard letter licence or through sols

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21
Q
  1. What is an undertaking?
A

a. an absolute, unconditional, final and non-refundable agreement to pay an amount due to the Payment Undertaking Issuer.

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22
Q
  1. What did the RICS introduce during COVID?
A

a. The RICS provided advise during the lockdown periods on their website. Following the lockdowns the provided a series of ‘Beyond-Covid’ guidance and advice including re-opening of commercial properties, inspecting and health and safety.

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23
Q
  1. Could you forfeit for pre-covid arrears?
A

a. Only if the landlord could demonstrate that the lease agreement was breached for reasons pre-dating or otherwise unconnected to the Covid-19 pandemic.

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24
Q
  1. What are the fees for LBA and CRAR?
A

a. Up to £1,000 - £40
b. Up to £10,000 - £70
c. £10,000 + £100

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25
Q
  1. What is the amount of goods the enforcement officers can take and the restrictions
A

a. The value of the judgement plus interest and fees (8% annual). Cannot take
i. Basic domestic essentials – clothes bedding etc
ii. Tools essential to trade
iii. Goods belonging to third party
iv. Hire purchase goods

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26
Q
  1. How can enforcement officers gain access to the unit?
A

a. They will allow reasonable notice but if no living accommodation can gain forceable entry which will be re-secured.

27
Q
  1. What is the process of an assignment?
A

a. Receive the tenants request with details of potential incoming tenant.
b. Review the lease and check if permitted
c. Check term left on lease
d. If a company, obtain a red flag/ Dun and Bradstreet rating
e. Provide the rating report with details and advise to the client for approval.
f. Once approved, pass to solicitors

28
Q
  1. Have you come across a tenant that required repairing obligations?
A

a. Refer to the lease
b. Initially request the tenant makes the repairs
c. If the works are not done within one month (depending on the lease) then the landlord has the right to enter, make repairs and re-charge to the tenant.

29
Q
  1. Is there legislation for repairing obligations
A

a. NOTICE TO REPAIR SERVED UNDER A SECTION 146 OF THE LAW AND PROPERTY ACT 1925
b. Sets out the obligations to carry out, provide enough time to carry them out and a STRICT TIME LIMIT of 7 days and if they do not do it we will do it and re-charge

30
Q
  1. LBA process
A

a. Send letter
b. 2 weeks
c. Small claims - solicitors
d. Court proceedings

31
Q
  1. Why do you apportion using RV?
A

a. We have a several long lease holds that specify the tenants SC is apportioned by RV. All new leases have a clause within it to allow the landlord to decide on the apportionment method.

32
Q
  1. How to you apportion using RV each year?
A

a. For each budget, I review the RVs on the VOA and ensure changes are amended to each unit. The lease stats the RV applicable at the time of the budget being issued will be applicable. The same goes for reconciliations, meaning if an RV is amended and back dated to a year that has been closed off, the rec cannot be reopened.

33
Q
  1. What does landlord consent not to be unreasonably withheld mean?
A

a. It requires landlords to respond to the tenant within a timely manner.

34
Q
  1. What would be a reasonable time frame to respond to the tenant?
A

a. 5-10 working days.

35
Q
  1. What should you request from the tenant when carrying out alterations?
A

a. Undertaking of fees
Scope of works
b. Measurements
c. Materials details
e. Plans
f. RAMS – Risk Assessment Method Statement

36
Q
  1. What is the purpose of the L&T covenants act 1995?
A

a. Relates to assignments
b. Act abolished privity of contract for new leases
c. Introduced Authorised Guarantee Agreements(AGA’s) current tenant becomes guarantee.
d. Section 17 notice must be served to guarantor within 6 months of tenant defaulting

37
Q
  1. Code of leasing business premises 2020
A

a. States AGA should not be entered if financially strong, provides suitable guarantor or an appropriate rent deposit.
b. Leases should allow assignment not to be unreasonably withheld or delayed
c. Leases should allow sublet to whole or part. Can be without security of tenure, at a market rent and in line with main tenant lease.

38
Q
  1. What is privity of contract?
A

a. Pre-1996 the original tenant will always be responsible for rent and covenants even after assignments.

39
Q
  1. What is the notice period for the 1954 act?
A

a. Section 25 – LL notice to end or renew – between 12 months to 6 months of termination date.
b. Section 26 – T notice to renew – start date between 12 to 6 months of request. Counter notice served within 2 months from LL if opposes.
c. Section 27 – T notice to end – anytime if wanting to leave with 3 months’ notice

40
Q
  1. What is section 23 of the L&T act 54
A

a. Section 23 – Protection under the act
i. A tenancy
ii. Used for business
iii. At least part occupied
iv. More than 6 months
v. Competent LL
vi. Must not be excluded

41
Q
  1. What is section 24 of the L&T act 54
A

b. Section 24 – lease only expires by serving a notice.
i. No notice = holding over

42
Q
  1. What is section 25 of the L&T act 54
A

c. Section 25 – LL notice to end or renew must be served
i. By competent LL
ii. Relate to whole of property
iii. Date of termination
iv. Inform tenant of rights
v. Proposed terms
vi. Max term 15 years
vii. Opposition if rejecting new lease

43
Q
  1. What is section 26 of the L&T act 54
A

d. Section 26 – T lease renewal
i. In prescribed form
ii. Tenants proposal

44
Q
  1. What is section 27 of the L&T act 54
A

e. Section 27 – T end lease
i. If T moves out before expiry no notice required because the business is not running a business there and therefore does not apply but the lease remains in force 3 month notice.

44
Q
  1. What is section 28 of the L&T act 54
A

f. Section 28 – Renewal of tenancy by agreement

45
Q
  1. What is section 29 of the L&T act 54
A

g. Section 29 – Order by court for a new tenancy

46
Q
  1. What is section 30 of the L&T act 54
A

h. Section 30 – LL grounds for opposition
i. Breach of repairing covenant
ii. Persistent delay in rent
iii. Other breach
iv. Provide suitable alternative accommodation
v. Uneconomic subdivision
vi. Demolition
vii. LL occupation

47
Q
  1. What type of dilapidations would you serve?
A

a. Interim dilaps survey – at least 3 year remaining. Served by LL or T
b. Terminal dilaps survey – within last 3 years
c. Final schedule – at or after lease end for LL to agree claims for damages.

47
Q
  1. What is the process of dilapidations?
A

a. Read the lease the check repairing responsibilities for both parties
b. Check for a schedule of condition and any licence for alterations agreed

48
Q
  1. What documents would you provide for dilapidations
A

a. Licence to alter
b. Schedule of condition
c. The lease and lease terms – summarise to them.

49
Q
  1. What is the timeframe for serving dilapidations?
A

a. 56 days of end of lease

50
Q
  1. What might you find in a dilapidations report?
A

a. Outline of repairing obligations
b. State remedy and cost of the breach
c. Loss of rent, if appropriate
d. Fees + VAT

51
Q
  1. Is VAT applicable on dilapidations?
A

a. No because it is not a service. VAT is only applied on services.

52
Q
  1. What is the overarching document for Service charge?
A

a. Professional statement service charges in commercial property 2018

53
Q
  1. What comes first lease or professional statement for service charge?
A

a. Lease

54
Q
  1. If a tenant has a dispute in their lease and say the RICS professional statement for service charge says XYZ, what would you do?
A

a. Explain that the tenant has signed and agreed to the lease and therefore this cannot be changed

55
Q
  1. What are timings for service charge reconciliation?
A

a. 4 months

56
Q
  1. What are the timings for service charge budget?
A

a. 1 month

57
Q
  1. Are the timings for SC budgets/recs mandatory
A

a. No best practice

58
Q
  1. What is the Jarvis vs Harris clause?
A

a. Grants the Landlord a right to first serve notice on a Tenant, specifying any breaches of covenants relating to the condition of a property.
b. If the Tenant then fails to proceed diligently with remedying the breaches and/or to remedy the breaches identified in the notice within a specified period, (as set out in the Jervis v Harris clause – usually within 2-3 months), the clause grants a right for the Landlord to enter the property to carry out the works and to then recover the costs in doing so from the tenant, as a ‘debt’.

59
Q
  1. What are the aims/objectives/purpose of Professional Standard service charges in commercial property 2018?
A

a. Improve standards
b. Promote best practice
c. Timely issuing of budges and recs
d. Reduce disputes
e. Provide guidance

60
Q

What is the purpose of the Practice statement Property Management in England and Wales 2011

A

best practice on how to act, manage, communicate and control income whilst minimising risk.

61
Q
  1. Why did the facilities manager review the refurb works and not a building surveyor?
A

a. The FM reviews the works and requests all documents required as per our handbook. If it looks to be of a structural nature then he will recommend building surveyor to review at an additional cost.

62
Q
  1. What invoices were allocated incorrectly?
A

a. Costs of cleaning and security was in a different category.

APC Session 2 (19 decks)

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