Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

APC Commercial > Property Management > Flashcards

Property Management Flashcards

1
Q

What does the RICS GN on Commercial Property Management in England and Wales, 2011 relate to?

A

-Best practice for commercial pm
-Primary duty of care is to LL, the client.
-Contains and useful summary of all relevant statute law and a model of tofe.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In a lease what is the difference between an absolute, open or restrictive (qualified) clause?

A

Absolute - Not allowing alienation
Open - Allowing alienation without restrictions
Restrictive - Allowing alienation subject to restrictions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the difference between assignment and sub-letting?

A

Assignment - New tenant has direct relationship with Landlord.

Sub-letting - Sub-tenant has direct relationship with Tenant who has direct relationship with Landlord.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are some reasons to sub-let instead of assigning?

A

Requirement of lease
If Market Rent higher than passing rent then there is net profit
If Tenant wants to re-occupy in the fiture
The new party is of lesser covenant strength.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What actions needs to be undertaken when dealing with an assignment/underletting?

A

Read lease to establish what is permitted

Will T give LL undertaking for Surv and legal costs?

Is proposed rent the market rent and/or same as passing rent?

What will be the effect on Investment value

What is the strength of the covenant for the proposed tenant, are their accounts to consider?

Are there reasonable grounds for withholding consent?

Has a deposit been agreed/ is there an AGA clause?

Obtain clients approval and once confirmed obtain licence to assign or sublet.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the aim of the LTA 1988?

A

Ensure statutory duty exists on Landlord to deal with consents diligently and not to be unreasonably withheld. Failure to do so can result in successful claim for damages.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does the Landlord and Tenant (Covenants) Act 1995 do?

A

For leases after 1st Jan 1996, it abolishes privity of contract and introduces AGAs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is privity of contract?

A

Even after assignment of lease, the Tenant is still obligated to ensure lease covenants enforced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is an AGA?

A

Authorised Guarantee Agreement, where most recent former tenant guarantees lease obligations of the immediate assignee as a voluntary agreement to be agreed between LL and T.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are 2 useful functions of a Licence to Alter?

A
  1. Protects the parties at rent review
  2. Protects the parties at the end of lease for dilapidations.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does the LTA 1927 do?

A

S19, prohibits improvements being made to the property without Landlord’s consent and that such consent TBUW. If this section has been followed, LL may be obliged to pay compensation for alterations that constitute improvements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the 3 forms of dilapidation schedules?

A
  1. Interim - served by LL or T during least, with at least 3 years remaining.
  2. Terminal - Served normally in last 3 years of lease.
  3. Final - Served at or after lease expiry/break clause date when T is out of occupation and LL wants to agree claim for damages.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is a typical format for a dilaps schedule?

A

Outline repairing obligations

State remedy and cost of breach

Loss of rent, if approp, over period to do works.

Fees plus VAT for claim for surveyors and lawyers.

Negotiations conducted on without prejudice basis until agreement reached.

If agreement not reached, LL surveyor may prepare a Scott’s Schedule for the Court/ADR setting out summary of LL and T position.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are some options for when tenants default on their rent?

A

Court proceedings
Use rent deposit
Pursue former tenants and guarantors
Serve a statutory demand
Commercial rent arrears recovery scheme
Forfeit the lease
Negotiate a payment plan
Agree another mutually acceptable arrangement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What does CRAR mean?

A

Commercial Rental Arrears Recovery Scheme

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Outline what CRAR does?

A

Available to LL where minimum level of rent is due under commercial lease.

No minimum amount of arrears

Only available to collect rent not service charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the timeline for CRAR?

A

Min 7 days of unpaid rent
Min of 7 days clear warning notice
Enforcement agent visits
2 clear days to follow
Re-entry by enforcement agents to seize goods
Allow 7 days before sale of goods
Fees must be specified on notice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a statutory demand and what does it do?

A

Preliminary step to pursuing bankruptcy or winding-up proceedings. Puts pressure on tenant to pay arrears.

Available when no dispute over level of arrears.

Tenant has 21 days to pay arrears. After this LL can present bankruptcy petition to court if arrears over £750.

Court has no residual discretion to set aside statutory demand in order to avoid any injustice.

19
Q

What is a Section 146 Notice and what does it do?

A

Notice found within Law of Property Act 1925. Used when LL seeking forfeiture for other reason other than rent. Notice must state how breach is to be remedied and LL compensated.

20
Q

What does Section 6 of the Law of Distraint Amendment Act, 1908 do?

A

Where arrears for tenant can be recovered via sub-tenant. Notice informs sub-tenant that tenant is in arrears, specifies the amount and requires the sub-tenant to pay LL the amount directly.

21
Q

What does Section 17 of the Landlord and Tenant (Covenants) Act 1995 do?

A

Requires Landlords to serve notice to former tenant/guarantor when the current tenant falls into arrears. Must serve notice within 6 months from the start of arrears.

22
Q

What are the 4 main options available where Tenant not repairing their property?

A
  1. Serve repair notice.
  2. Forfeit the lease.
  3. Serve an interim schedule of dilapidations
  4. Do the work and charge the tenant.
23
Q

What is a Notice to Repair

A

Served under S146 of Law of Property Act 1925. Details what repairing/decorating breach has occurred, timescale allowed to remedy and course of action proposed if no action taken.

24
Q

What guides commercial service charge in the uk?

A

RICS Professional Standard - Service Charges in Commercial Property (1st Edn, Effective April 2019)

25
Q

What are some aims and objectives of the RICS PS - Service Charge in Commercial Property?

A

Improve general standards and promote best practice.

Ensure timely issue of budgets and year-end certificates

Reduce cases of disputes

26
Q

What are the 9 principles involved in the management of service charge accounts ?

A
  1. All expenditure that is seeked to recover must be in accordance with terms of lease.
  2. Recover no more than 100% of the proper and actual costs of the services.
  3. Ensure that service charge budgets with explanatory comments issued to tenants annually.
  4. Ensure annual approved service charge accounts issued to tenants.
  5. Ensure they provide tenants with apportionment matrix.
  6. Service charge monies to be held in one or more discrete bank accounts.
  7. Interest earned accounts must be credited to service charge accounts.
  8. Where tenant disputes payment, they must only withhold disputed amount.
  9. Any service charge money raised incorrectly must be adjusted to reflect error without undue delay.
27
Q

What are some types of insolvency arrangements?

A

Administration

Receivership

Company Voluntary Arrangements

28
Q

What are the timescales for service charge budgets and year end accounts?

A

As stated in the RICS PS - Service Charge in Commercial Property:

-PM should serve s/c budget, apportionment matrix and explanatory comments at least 1 month before the new s/c year.
-PM should serve audited year end accounts to the tenant within 4 months of the s/c YE, if delay to this individuals should be notified and must not be longer than 12 months (RICS - RE management, 2016)

29
Q

What do you understand by the RICS Professional Statement - Real Estate Management (3rd Edn, Oct 2016)?

A

-States mandatory core principles
-Provides specific advice for ethical issues, managing real estate, ending instructions, safety and security and business management.

30
Q

What are the 12 principles within RICS Professional Statement - Real Estate Management?

A
  1. Conduct business in honest, fair, transparent and prof manner.
  2. Carry out work with due skill and care and ensure employed staff have this skill.
  3. Ensure clients provided with clear and fair tofe. Should meet all legal req.
  4. Do utmost to avoid conflicts and where they exist treat approp.
  5. Don’t discriminate.
  6. Ensure all dealings with clients are fair, clear, timely and transparent.
  7. Ensure all advertising and marketing material is honest, decent and truthful.
  8. Ensure all clients money held separately and covered by adequate insurance.
  9. Have approp PII cover in order to manage risk.
  10. Ensure your scope of obligations made clear to all parties you deal with.
  11. Where provided in service, give realistic assessment of selling, buying price associated with occupancy or financial outcome using best judgement.
  12. Ensure all meetings, inspections and viewings carried out with client’s lawful and reasonable wishes.
31
Q

In SJBP, what did the forfeiture clause state?

A

The Landlord was able to re-enter the property if at any time the following occurs:
-Rent unpaid for 14 days whether demanded or not
-Any breach of condition or tenant covenant within lease.
-In the result of a Tenant going into admin or CVA.

Once LL enters property the lease ends but without prejudice to any right or remedy of the LL in respect of any breach of covenant by Tenant.

32
Q

In SJBP was anything done before following through on forfeiture?

A

The Tenant had a history of not paying on time and a payment plan was agreed but was not met. I felt that terminating the lease via forfeiture was the best option and believed it was possible that a higher covenant strength tenant would be able to occupy the premises.

33
Q

What is a Company Voluntary Arrangement?

A

A CVA is a contract between a company and its creditors for when the company is insolvent but directors believe it has a viable future with financial restructuring.

Company nominates insolvency practicioner to oversee implementation of proposed strategy.

Under scheme, company agrees terms for repayment of accrued debts. Arrangement will be binding on all creditors if approved by at least 75% of creditors having regard to their value of debt.

34
Q

What is Administration?

A

Process commenced either by company or creditors. Purpose is to create period of protection for company for administrator’s to deal with the assets of company in most appropriate way. This period of protection is known as a moratorium and restricts actions taken against company while its in place.

Directors of company still have office but powers cease. Administrator must send proposals to creditors within 8 weeks and then with their agreement will implement a strategy.

While T is in administration, options of LL are limited due to moratorium. If rent is still being paid and equivalent can be claimed from the administrator.

The administrator may ask the LL for consent to assign the lease.

35
Q

For BSQ, talk me through how you created the new service charge budget?

A

Had meeting with clients 4 months before new budget to discuss there wishes regarding any additional expenditure and ways we could offset other costs against this.

I also looked at last years budget against the latest YE figures and obtained more of an understanding as to the potential costs.

I drafted the budget and presented it to my client for their thoughts.

Once my client approved I sent the budget to my accounts team to arrange the setting up of charges and then sent all tenants the new budget booklet with explanatory comments and a net apportionment matrix.

36
Q

What does the RICS PS Service charge in commercial property say about management costs?

A

Should be fixed rather than a % of the actual budget.

Fixed fees should be calculated by how much actual work is carried out in managing the service charge.

37
Q

How would you anticipate payment of replacing plant equipment in a few years time.

A

May set up PPM schedule that establishes a timetable for future works.

38
Q

What is a Sinking fund?

A

Fund formed periodically by setting aside money for the replacement of a wasting asset.

39
Q

What is a reserve fund?

A

Fund formed to meet anticipated future costs of maintenance and upkeep to avoid fluctuations in amount of service charge payable each year.

40
Q

What costs should service charges exclude?

A

-Initial costs (i.e leasing equipment)

-set up costs for fitting out management office space

-improvement costs above normal maintenance

  • future redevelopment costs

-costs attributable to void properties.

-Any negligence costs relating to management or owner.

-Costs and fees related to owner’s investment interest i.e rent collection fee.

41
Q

What is Section 17 of the LTA Covenants 1995 Act?

A

If assignee in arrears LL can send notice to guarantor (prev tenant) for payment of arrears within 6 months of date of arrears.

42
Q

In STJP, what would happen if the T paid their arrears on the 14th day?

A

The LL would not be permitted to enter and forfeit the lease as this was still within the stated period.

43
Q

What does Jervis V Harris relate to?

A

Relates to LL being able to claim reimbursement from T if they enter property to undertake work that is classed as a breach of repair. This is a type of clause found within leases.

44
Q

When should a Jervis V Harris clause be used?

A

-When T is solvent.
-Where LL wants lease and rent to continue.
-LL wants to retain control to carry out repair works.
-Where threat of entry may compel T to do work.

APC Commercial (17 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions