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Property Management > Property Management > Flashcards

Property Management Flashcards

1
Q

what is an assignment

A

Tenant transfers legal interest of the lease to another tenant.

The incoming tenant takes over lease obligations

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2
Q

What is a sub-letting

A

Lease property from tenant, original tenant maintains relationship with the landlord and is the legally responsible for the lease obligations

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3
Q

Difference between an assignment and sub-letting

A
  • assignment original tenant is no longer labile, sub-letting they are.
  • Landlord has direct relationship with new tenant under a assignment, sub-let no relationship
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4
Q

Why sub-let rather than assign

A
  • lease requirements
  • tenant may want to re-occupy in future
  • New tenant may be of lesser covenant strength
  • there is a profit rent (market rent is higher than the passing rent)
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5
Q

Typical alienation clause

A

Permitted to assign/sub-let the whole but not part, with LL consent not to be unreasonably withheld or delayed

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6
Q

What should PM do when receives application to assign or sub-let

A
  • review lease (what are the terms)
  • check if proposed market rent is same as passing rent
  • check effect on investment value
  • provide recommendation to the client
  • request undertaking of surveyor and legal costs
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7
Q

Aim of LL&T Act 1988

A

S1 of LL&T 1988 states consent must be provided within reasonable timeframe (without delay)

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8
Q

Aim of LL&T 1927

A

S19 states consent must not be unreasonably withheld

S18 limits the amount of damages a LL is able to recover for breach of T repairing covenant

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9
Q

Benefit of Licence for alterations?

A
  • Protection for LL - requires T to reinstate unit at end of lease, ensure works are completed to standard proposed.
  • Protection for T - prevents LL from rentalising improvements
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10
Q

Key RICS publication in regards to alterations

A
  • RICS guidance note: licence for Alterations in Commercial Property 2012
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11
Q

Process for completing LTA

A
  • receive T application
  • review lease
  • initial review of plans
  • get undertaking
  • review with 3rd party eg building surveyors
  • Document LTA
  • complete final inspection after works completed
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12
Q

Different ways that consent to make alterations can be granted

A
  • automatically under the lease
  • Formal Licence deed (LTA)
  • letter licence
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13
Q

Why should inspection be carried out after completion of tenant works?

A
  • surveyor to be satisfied that works were carried out to specified standards
  • check if any snags
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14
Q

PM responsibilities when managing vacant building?

A
  • ensure security
  • inform insurance provider
  • maintain building
  • inform rating authority
  • weekly insurance inspections
  • H&S statutory requirements FRA, GRA etc.
  • isolated utilities and power supplies
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15
Q

Implications of insurance act 2016

A
  • Introduced new responsibility to policy holders to provide all relevant information and aim to reduce claims
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16
Q

what is the tax on insurance premiums

A

Insurance premium tax (standard @12% high @20%)

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17
Q

two fundamental principles of rent collection

A
  • Accuracy of information provided
  • Timing of when demands are sent out
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18
Q

Difference between standing order and direct debit

A
  • standing order - regular payments set up by payer
  • direct debit - payer authorises the payee to take payments
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19
Q

Warning signs of further tenant rent arrears

A
  • persistent late payments
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20
Q

typical lease terms regarding interest on late rent

A

2-4% above base rate, 14 days after due date

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21
Q

First step when seeking to recover rent arrears?

A
  • read lease - understand what procedures are in place
  • talk to tenant to understand why late payments
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22
Q

remedies for rent default

A
  • negotiate payment plan
  • draw down rent deposit
  • peruse guarantor
  • CRAR
  • serve statutory demand
  • forfeiture
  • court proceedings
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23
Q

what should be considered before drawing down on rent deposit?

A
  • Read rent deposit deed (withdrawals clause, notices, top ups)
  • tenant covenant strength
  • further debt
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24
Q

Does LL need to give T notice before drawing down on rent deposit?

A
  • depends on what the Rent Deposit deed states
25
Q

Benefit of drawing down on rent deposit

A
  • good if T only struggling short term
  • provides relief for tenant so they can focus on recovering business
  • tenant can top up deposit when financially stable
26
Q

How can court proceedings be used to recover tenant arrears

A
  • LL can obtain court judgement
27
Q

when can former tenant be perused for arrears

A
  • if the lease started before 1st Jan 1996 yes.
    if after no as protected under LL&T act 1995
28
Q

what is statutory demand?

A
  • preliminary step to perusing winding up proceedings (AKA bankruptcy)
29
Q

what is the process of serving a statutory demand?

A
  • notice served and T has 21 days to pay or propose plan
  • after this time LL can present winding up petition to court
30
Q

What is CRAR

A
  • Commercial rent arrears recovery
  • Introduced in 2014 by ‘Tribunals, Courts and Enforcement Act
  • no minimum amount of arrears
31
Q

what are CRAR timelines

A
  • 7 days unpaid rent
  • 7 days notice
  • enforcement agent visits
  • 7 days before sale of any seized goods
32
Q

what goods cannot be seized under CRAR

A
  • perishable goods
  • work tools
  • 3rd party belongings
33
Q

what are tenants rights under CRAR?

A
  • apply to court for order that no further steps can be taken without permission from court
34
Q

what is forfeiture?

A
  • clause in lease that allows landlord to re-gain possession of lease
  • either by peaceful re-entry or court action
35
Q

when can forfeiture be used

A
  • when there is a forfeiture clause in the lease
  • no notice is required from LL
36
Q

What are tenants rights under forfeiture?

A
  • Tenant has the right to apply for relief from forfeiture
  • can only apply to court as they are only one that can grant it
  • if they grant it, lease is restored as though forfeiture never happened
37
Q

How can LL right to forfeit be waived?

A
  • LL agrees payment plan with T
  • if CRAR is exercised
  • if S25 notice is served under LL&T1954
38
Q

what was LL&T act 1995

A
  • abolished privity of contract for all new leases as of 1 Jan 1996
  • S16 introduced (Authorised Guarantee Agreements) AGA
  • S17 notice must be served on guarantor within 6 months of tenant not complying
39
Q

According to RICS code of Leasing Business Premises when should AGAs be used?

A
  • if assignee is of week covenant strength, has no guarantor and is not paying a rent deposit
40
Q

What is key consideration when reviewing rent arrear recovery methods?

A
  • chance of re-letting
  • current passing rent vs market rent
  • vacant possession costs
41
Q

Four main options for LL when T not fulfilling their repairing covenants

A
  • serve repair notice S146 of Law and property Act 1925
  • Forfeit lease
  • serve interim schedule of dilapidations
  • do works themselves and recharge tenant
42
Q

what must be included in notice of repair (S146 of the Law and property act 1925)

A
  • contain details of repairing breach
  • state timescale for remedy
  • course of action if T fails to remedy
43
Q

How can LL forfeit lease for failure to repair

A
  • must be forfeiture clause
  • S146 under Law and property act 1925
44
Q

3 possible stages of PPM?

A
  • cyclical maintenance
  • preventative maintenance
  • responsive maintenance
45
Q

RICS Key publication for Service Charges

A

RICS Service Charges in Commercial Property 2018

46
Q

Aims of service Charge professional Statement?

A
  • best practice, fairness, transparency
  • timely issue of budgets and YE certs
  • Reduce cause of disputes + dispute resolution
47
Q

8 mandatory requirements in service charge professional statement

A
  • recover expenditure in line with lease terms
  • recover no more than 100% of costs
  • Annual budgets and explanatory notes
  • Annual reconciliations
  • Annual apportionment schedule
  • SC money to be held in separate bank account
  • interest must be credited to SC account
  • if tenant dispute, only disputed payment amount should be withheld
48
Q

responsibility of PM when issuing SC budgets

A
  • ensure value for money
  • Ensure quality services that are regularly reviewed
  • ensure standard of services are monitored
49
Q

what is a sinking fund?

A
  • a fund set up for paying specific costs that occur occasionally
  • roof repairs, paining needed every 5 years
50
Q

what is a reserve fund?

A
  • A fund set aside to cover costs of major works or other significant items of expenditure
  • Useful for unexpected expenses
51
Q

what is a depreciation charge

A
  • measure of the wearing out of reduction in life on an asset
  • Depreciation distributed across the useful life of the asset.
  • eg plant replacement
52
Q

4 methods of SC apportionment

A
  • floor area
  • fixed percentages
  • weighted floor areas (shopping centres)
  • rateable value
53
Q

Different types of insolvency?

A
  • administration
  • receivership
  • liquidation
  • Company Voluntary Administration (CVA)
54
Q

What are implications for landlord when tenant goes into admiration

A
  • company is protected from action being taken eg CRAR
  • if rent being paid, equivalent amount can be claimed from administrator
55
Q

What is warranty?

A

Written guarantee promising to repair/replace item within set time period

56
Q

what is the RICS guidance note relating to Property Management

A

Commercial Property Management in England and Wales

57
Q

How is forfeiture for non-payment of rent different to forfeiture for non-compliance of repair?

A
  • Repair - Serve S146 of Law of Property Act 1925 - tenant gets 6 months to remedy breach
  • Rent - 21 days passes, walk in and change locks
58
Q

What is dilapidation figure based on?

A

The diminution in value as a result of the wear and tear

59
Q

In a statutory demand what is the minimum for a company, and the minimum for a single person occupier

A
  • £750 for business
  • £5,000 for individual

Property Management (1 decks)

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