Property Management Flashcards
What are the main principles of the RICS Professional Statement - Real Estate Management, 2016 that you adhere to?
Conduct business in an honest, fair, transparent and professional manner.
Due skill, care & diligence when carrying out work.
TofE - fair & clear
Avoid CofI
Don’t discriminate
Clear, fair & timely comms.
Client money held separately.
PII
Scope of obligations set out
Can you explain your understanding of the provisions in the RICS Professional Statement – Services Charges in Commercial property, 2018?
Managers must seek to recover no more than 100% of proper and actual costs.
Service charge accounts, and accurate record of actual expenditure, are issued annually to all tenants.
All costs should be transparent.
Management fees should be on a fixed-price basis.
What are some of the most common landlord and tenant obligations outlined within a commercial lease?
LL:
- Quiet enjoyment.
- Insurance: insure premise and recharge fully to tenant.
T:
- Payment of rent
- FRI - keeping premises in a state of repair.
- Use of property - user clause
- Alterations
Who is typically responsible for insuring the subject demise in a commercial lease agreement and why?
LL but recharges to tenant.
To ensure the property is definitely insured.
Could you explain the importance of regular communication in maintaining a strong landlord and tenant relationship?
Vital in maintaining a positive, productive and long-term relationship.
Prevents disputes
Improves lease management
Encourages tenant retention
Efficient issue resolution
How do you ensure clear communication when managing landlord and tenant relationships?
Inspect / visit properties once a quarter to ensure regular in person communication.
Follow up with email to ensure a permanent track of comms.
Can you provide an example of a dispute you’ve resolved through effective communication?
A tenant had received an invoice for the landlord completing an updated Reinstatement Cost Assessment and they did not think this was a rechargeable cost.
I responded in a timely and professional manner and informed the tenant that the RCA was a requirement for the building insurance.
I also guided the tenant to the clause which stated the landlord was able to recharge this costs.
The tenant accepted this and paid the invoice.
In your experience, how does clear and regular communication help in resolving disputes in a timely manner?
Identifying and addressing potential disputes early, can avoid escalation.
Often disputes come from misinterpretation of lease terms. Communicating in a clear and timely manner ensures each party knows their obligation.
Timely updates on key events - e.g. in a multi-let office, redecoration work was taking place. I informed the tenants of the timelines and that one area would not be redecorated until a roof leak had been remedied.
What triggered your action to contact the tenant in Droitwich who had fallen into arrears for insurance and service charge?
A weekly non-rent arrears schedule is issued by our finance team, showing the tenant in Droitwich had not paid their insurance / SC demands by the due date.
What actions did you take when the tenant did not respond?
Emailed and then tried calling but no luck.
I checked the lease to understand the timelines of recovering arrears.
Lease stated a statutory demand could be sent 5 working days after the due date.
How did the tenant respond after receiving the letter from the solicitors?
Tenant emailed and apologised for the delay and provided remittance of payment.
What was your role in the service charge for the multi-let industrial estate in Melton Mowbray?
I compiled invoices for the landscaping and security charges and analysed which charges were related to the occupied unit.
I then calculated the tenant’s contribution in line with the lease terms.
Who was liable for the service charge for the vacant units and how did you communicate this?
The landlord.
I set up a teams call to discuss the service charge and inform the LL of their responsibility.
I then followed up with an email after the meeting to confirm their contribution and the tenants.
What did the lease specify for the occupied unit about the service charge?
Tenant was to contribute 20.75% to communal facility charges.
What common facility charges were mentioned in the lease and which percentage was the tenant responsible for?
Security
Landscaping
How did you come to the decision of drafting a service charge?
Reached an agreement with the tenant whereby the actual costs were recharged on a quarterly basis, with invoices attached and calculations of their contribution.
Who did you involve in the review of the service charge draft before issuing it to the tenant?
Senior colleague who led the asset management of the property.
What was the first action you took when the tenant communicated their intent to install solar panels on the warehouse roof?
Checked the lease to see if this were permitted.
What kind of documentation did you request from the tenant regarding the proposed alterations?
Roof survey
PV array plan and documentation
Any details from the DNO.
How did you involve the building surveyor in the process?
I emailed the building surveyor informing him of the situation and obtained an undertaking for their costs.
Provided BS with the documentation provided asking for him to review the material and confirm he was happy it was compliant with lease and statutory obligations.
After the client’s approval, what were the steps taken to formalize the alterations?
LTA - appending the details of the works.
How did you ensure compliance with the regulations of the RICS Service Charges Professional Statement, 1st Edition when compiling the service charge budget and reconciliation?
Ensure the budget is apportioned fairly.
Obtain multiple quotes to ensure value for money and competitive.
Budget and reconciliation are issued in a timely manner.
What steps did you take to understand the areas of overspend and underspend?
Compare the year’s budget with actual expenditure and forecast if this is likely to remain the same.
Why did you issue a scope of work to service providers for tender and how did it help in budgeting?
To ensure the quotes received were comparable.
Value for money.
How did you recommend the apportionment of the service charge?
% based off of sqft and usage.
Building is split as multi-let office and single let warehouse.
Tenant is warehouse did not contribute to costs relating to communal area in office.
What information did you provide to the tenants along with the credit note?
Reconciliation of the SC budget.
What is the function of a LTA?
Protect parties at rent review and dilaps at lease expiry.
Other guidance for prop management?
RICS Guidance Note: Commercial property management in England and Wales, 2011
What’s the difference between subletting & assignment?
Subletting - new subtenant has a direct relationship with tenant. Tenant then pays rent to landlord.
Assignment - new tenant has a direct relationship with landlord.
What is an AGA?
Authorised Guarantee Agreement (LTCA 1995)
Most recent tenant to guarantee the lease obligations of the immediate assignee.
S17 notice must be served upon guarantor within 6 months of tenant defaulting.
What are dilapidations?
Negotiations that take place at lease expiry to bring property back to condition at start of lease.
Tenant can either do agreed works or pay a sum to LL to undertake the works.
What is CRAR?
CRAR (Commercial Rent Arrears Recovery)
Timeline:
1. Minimum of 7 days unpaid rent
2. Minimum of 7 clear days warning notice
3. Enforcement agents visit.
4. 2 clear days to follow
5. Re-entry by enforcement agent to seize goods
6. Allow 7 clear days before sale of goods.
7. Fees must be specified on the entry.
What is forfeiture?
Forfeiture clause allows LL to re-enter property and gain possession for a breach of the lease - peaceful re-entry or commencing County Court proceedings to recover possession.
What notice is served for breach of repair?
S146 of Law of Property Act 1925
Key case law on the meaning of repair?
Ravenseft Properties v Davestone (Holdings) Limited
