Property Management Flashcards
What RICS guidance is there for surveyors operating a service charge?
RICS PS on Service Charges in Commercial Property, effective April 2019
Is there any other guidance on service charges is there during COVID-19?
RICS released a guide: RICS advice on service charges during COVID-19
What are the aims and objectives of the RICS service charges in commercial property professional statement?
TRIP
Timely issuing of year-end budgets
Reduce the cause of disputes and to provide guidance where these do arise
Improve general standards and promote best practice, uniformity, fairness and transparency in the management of service charges
Provide advice to clients, managers and solicitors on the management of service charges
What is mandatory under the service charges in commercial property professional statement 2018?
BASIN MM
budgets are sent annually to each tenant
approved set of service charges accounts showing a true and accurate record constituting the expenditure is provided to all tenants
service charge apportionment matrix for their property is provided annually to all tenants
Interest must be credited into the account
not more than 100% of the proper and actual costs of the provision or supply of the services
MUST be under the terms of the lease
monies must be held in one or more discrete bank accounts
Can you tell me some of the core principles under the service charges in commercial property professional statement 2019?
SCCDRTV
The service costs - should be transparent so that everyone involved can clearly understand the costs
Costs and apportionment - costs should be allocated to the relevant expenditure category.
Communication and consultation - to provide the best service and ensure clarity around the work being done and the benefit.
Duty of care - those certifying accounts have a duty of care to act with professionalism and set clear policies on how this should be managed.
Right to challenge/ADR - should be available.
Timeliness - in communication and preparation of budgets/end-of-year reconciliation
Value for money - owners/ managers should seek to achieve best value
Can an owner profit from the provision of the service charge?
No, owners should not profit from the provision or supply of services. Save for a reasonable commercial management fee that reflects the actual costs of managing the services.
What is a dilapidation?
A breach of non-monetary obligation of the lease such as an obligation to repair, reinstate, redecorate or comply with a statute
What documents does a surveyor need before carrying out a dilapidation instruction?
The surveyor should obtain complete copies of the lease and other documents such as any licence for alterations, schedule of condition, plan, any back letters, assignations etc.
What is a Schedule of Dilapidations?
Schedules of Dilapidations record alleged breaches of covenant and therefore generally contain details of the contractual obligations alleged to have been breached.
What does a schedule of dilapidations normally contain?
Schedules of Dilapidations would normally contain:
- details of documents relied upon
- an itemised numbered reference
- the relevant clause of the lease or other document
- the alleged breach
- the remedy required (when relevant) and
- the cost of the remedy (when relevant).
What do fees typically contain?
- professional fees in connection with the preparation of the Schedule of Dilapidations
- legal fees in connection with the service of the Schedule of Dilapidations
- design and administration of the work envisaged by the Schedule of Dilapidations
- costs associated with compliance with the CDM Regulations
- any relevant statutory fees and
- an allowance for irrecoverable VAT.
What is Supersession?
The essence of supersession is that the landlord should only claim for the amount lost as a consequence of the tenant’s breaches.
A landlord should not be claiming for the cost of repair work where the property is due to be, or has been, pulled down
A landlord completes remedial work that is more expensive or wider in scope (‘grander remedial work’) than the most economic method by which the contractually required work could be completed (the ‘basic remedial works’
What is a surveyor endorsement?
When engaged by a landlord to prepare a Schedule of Dilapidations, surveyors are expected to endorse their client’s Schedules of Dilapidations.
What is Quantified Demand?
The Quantified Demand is intended to set out the landlord’s terminal dilapidations claim in sufficient detail and in particular on a quantified and substantiated basis (insofar as possible).
What is a Scott Schedule?
A Scott schedule is essentially a table with inputs from both the claimant and respondent. Typically the claimant will set out their argument first, then the schedule is passed to the respondent to set out their response. This requires a degree of collaboration between the parties.
What is a Diminution Valuation?
A ‘diminution valuation’ is a valuation prepared to assist the quantification of the landlord’s damages claim (i.e. the loss caused by the breaches alleged against
the tenant.
Diminution in the value of the landlord’s reversion is a loss of value in a landlord’s property as a result of a tenant’s failure to comply with covenants.
Diminution valuations in terminal claims are required for two purposes:
(a) to assess the statutory cap on damages for disrepair under section 18(1) of the Landlord and Tenant Act 1927 and
(b) to quantify damages for breach of non-disrepair covenants (e.g. decorate and reinstatement covenants) where diminution in value is the appropriate measure of loss.
What document has RICS issued in relation to asbestos?
RICS guidance note on Asbestos: legal requirements and best practice for property professionals and clients 4th edition, 2021
What is the purpose of the RICS GN on Asbestos 2021?
to assist members in the normal course of their duties
It is not intended to assist specifically in the undertaking of asbestos surveys.
Guidance on such surveys is set out in HSG264 Asbestos: The survey guide, an HSE publication.
What is the primary regualtion for Asbestos management?
The Control of Asbestos Regulations 2012. For further details, please refer to the HSE Approved Code of Practice and guidance Managing and working with asbestos (L143).
What is the duty of a RICS member to manage Asbestos?
Own premises: their organisation itself is likely to be the dutyholder. This means they will need to manage any identified ACMs in the buildings their staff occupy, which in turn means having an AMP and survey information in place.
Managing agent: if they are acting as a managing agent on behalf of the landlord they cannot, in law, take on the statutory duties. These still remain with the landlord, since the landlord is the dutyholder. The surveyor can commission surveys and management plans on behalf of the landlord.
Third-party clients: if the surveyor has been engaged by a client to carry out refurbishment and building works, depending on the contractual terms, they will probably have a direct responsibility to gather sufficient asbestos information before work starts
What document has RICS issued regarding to Property Management?
RICS guidance note Commercial Property Management in England & Wales (2nd ed.) 2011
What are they principals of the RICS GN on Commercial Property Management in England & Wales (2nd ed.) 2011?
The overall objective for a property manager is to act as an agent for the landlord to manage their responsibilities to comply with:
The property’s occupational leases to occupiers; and some laws in owning or operating a property;
Support in making a financial/economic success of the property; and the successful use and operation of the property.
What are a property manager’s core duties under RICS GN on Commercial Property 2011?
The property manager has two core duties:
The collection of rent, service charge and other sums, owing by the occupiers to the landlord, from the occupiers and
The management of the property.
How should a property manager deal with Deposits?
The property manager will need to review the occupational leases and associated rent deposit deeds to understand what deposits are held and on what terms. It is recommended that the property manager establishes a separate, interest-bearing account
What advice does RICS give regarding handover from a previous property manager?
The RICS information paper, Commercial property service charge handover procedure (2011)
What are the duties of a property manager when managing a building?
UNCLE CP
understanding of the landlord’s legal responsibilities.
Not only ensure that they assist their landlord to fulfil all of their legal obligations, but also maintain records to demonstrate that the property manager has done so.
Has copies of all of the leases and related documents.
To ensure that the landlord understands their responsibilities.
Ensure the effective operation of the property.
Has copies of all of the leases and related documents.
The property manager should consider maintaining an electronic database of all the key documents, dates, etc.
What management policies should a property manager have?
ACHROMIC L
Appointing and managing contractors;
Calculation and management of the service charge account;
Health and safety compliance;
Repair and maintenance of the building;
Operation of the building;
Management of procurement.
Insurance;
Collection of rent, service charge and other monies;
Liaising with occupiers – generally, and also specifically in relation to consents such as consent to assign, consent to alter and so on
What insurance should a building have?
Insurance against damage to the property, including loss of rent, and public liability insurance
Why is public liability insurance a good idea?
If a person is injured whilst in the managed property then they will consider making a claim against all of the people involved.
This is especially important if managing a high foot fall area.
How should contracts with third-party suppliers be set up?
The contracts should be made between the Landlord and supplier
A property manager should:
ensure they have a comprehensive, signed contract in place with all third party service providers
ensure the contracts clearly state that the property manager is entering the contract as agent for the landlord
ensure the contracted scope of services is clear
