PROPERTY MANAGEMENT Flashcards
What is the Occupiers Liability Act 1957
Imposes a duty of care on persons occupying or in control of any premises in relation to visitors
What is the Occupiers Liability Act 1984?
Confers a duty on the occupier of a premises to any persons other than visitors
Tell me about RICS guidance on service charges
RICS Professional Statement: Service Charges in Commercial Property, 1st Edition, September 2018
Supersedes previous 3 editions published as codes of practice on April 2019
RICS Code of Practice: Service Charge Residential Management Code, 3rd Edition, June 2016
Tell me about RICS guidance on Real Estate Management
RICS Real Estate Management, 3rd Edition, October 2016 (Professional Statement)
Tell me about RICS guidance on commercial property management
RICS Real Estate Management, 3rd Edition, October 2016 (Professional Statement)
RICS Code for Leasing Business Premises, 1st Edition, February 2020 (Professional Statement)
RICS Commercial Property Management in England and Wales, 2nd Edition, October 2011 (Guidance Note)
What is the rule of privity of contract?
Only the parties to a contract can enforce its terms (a third party cannot)
What is an absolute covenant?
A bar/prohibition against doing something
Gives Landlord absolute control
What is a qualified covenant?
Requires landlord consent - no statutorily implied provision that landlords consent is not to be unreasonably withheld
What is fully qualified consent?
A covenant consent that requires landlord consent, but states it must not be unreasonably withheld
What does it mean for consent to not be unreasonably withheld
Landlord has a duty to consent unless it is reasonable to not do so
Duty of providing reasonableness is with the landlord
Duty to respond within a reasonable period
What is the statutory duty placed on landlords under the Landlord & Tenant Act 1927
Gives tenant who has made improvements to a premises a right to compensation
Some preconditions must be satisfied (providing notice)
Can claim the net addition to the value of the holding as a direct result of the improvement
The reasonable cost of carrying out the improvements at the termination of the tenancy
What is the statutory duty placed on landlords under the Landlord & Tenant Act 1988?
This act imposes statutory duties on landlords in connection with covenants to assign and underlet serve notice of decision within a reasonable period.
What remedies are available to landlords for a breach of repairs?
Lease may allow landlord to enter property and carry out repairs and recover cost
S.146 notice
Claim for damages
Court order to compel the tenant to carry out repairs
What are the remedies for default?
CRAR
Lease forfeit
Use of Rent Deposit Deed
Statutory demand - written demand for payment which can result/support a winding up petition
Claim on AGA/Guarantor
What are the various forms of corporate insolvency?
Compulsory liquidation
Creditors Voluntary liquidation (CVL)
Administration (ADM)
Administrative receivership (ADR)
Company Voluntary Arrangement (CVA)
Tell me about your understanding of the Corporate Manslaughter and Corporate Homicide Act 2007?
The Act clarifies criminal liabilities of companies where serious failures in the management of H&S results in fatalities
What are your duties under the Corporate Manslaughter and Corporate Homicide Act 2007?
Owe a duty of care to take reasonable care of a persons safety
Duty of care to the systems of work and equipment used by employees
Duty to the conditions of worksites and other premises
Duty of care to products or service supplied to customers
What are the offences and penalties under the Corporate Manslaughter and Homicide Act 2007?
Unlimited fines
Remedial orders
Publicity orders
Imprisonment
What is a deleterious material?
Degrade with age causing structural problems.
Examples
High alumina cement (corrosion).
Calcium chloride (corrosion)
Wood wool shuttering (separation of walls / ceilings).
Please name 2 examples.
Brown staining on concrete. Corrosion of concrete framed buildings.
How do deleterious materials differ from hazardous materials?
Hazardous materials - harmful to health (e.g. asbestos / radon gas / lead paint)
How can you tell when a property was built?
Construction type.
Why is it important to inspect the surrounding area?
Location / aspect / facilities / transport.
Contamination / hazards / flooding / substations.
Evidence / local market.
What are the key principles of the RICS Professional Statement - Real Estate Management
2016?
Act honestly, fairly & professionally.
Due skill, care & diligence.
Terms of business.
Not to discriminate unfairly.
Avoid conflicts of interest.
Clear concise communication.
Truthful marketing.
Handling clients’ money.
Professional indemnity insurance.
Client objectives.
Realistic assessment of value / cost.
Safely carry out inspections / meetings.
Is this statement mandatory?
Yes - commercial & residential managers.
Name 3 areas of specified advice.
Ethics.
Securing instructions.
Management.
Ending instructions.
Safety / security.
Are you aware of any other guidance?
RICS Guidance Note on Commercial Property Management in England & Wales, 2011
(i.e. best practice for commercial managers).
On what basis can property management fees be calculated?
Fixed fees.
What is the famous case, defining repair?
Ravenseft Properties v Davstone (Holdings) Ltd 1978.
(i.e. tenants may be responsible for inherent defects / repair is not an improvement).
What is the difference between FRI, effective FRI and IRI?
Full Repairing & Insuring (FRI) = tenant is responsible
Effective FRI = landlord is responsible for repairs and recharges tenants (via service charge).
Internal Repairing & Insuring (IRI) = landlord is responsible for external repairs.
Where did you look to establish the responsibility?
Lease > Tenants Obligations > Repair Clause
What did the repair clause say?
Repair, maintain & clean the premises …
Keep it in good & substantial repair …
Maintained & clean condition.
What can a landlord do to remedy a repair?
Notice of Repair
_ Section 146 Notice (Law of Property 1925)
_Served by the landlord
_ Identified specific repair breach
_ In writing - details of breach, timescale for remedy, proposed action
Forfeiture
_ Must have a forfeiture clause
_ Served by the landlord
_ Section 145 Notice
_ Identify breach & remedy
Interim Schedule of Dilapidations
_ Issued by Building Surveyor
_ Used when the landlord wants the tenant to stay
Landlord’s right to re-enter
_ Jervis vs Harris 1996
_ Re-enter to carry out remedial works
_ Re-charge the tenants (Used when the landlord wants the tenant to stay)
What is the ‘Leasehold Property (Repairs) Act 1938’?
Applies to lease with a term of 7+ years.
Must have 3+ years remaining.
Protects tenants from interim schedules.
Is a tenant responsible for repair if there is an inherent defect?
Yes - Ravenseft Properties v Davstone (Holdings) Ltd 1978.
What is a wayleave?
Temporary right.
Receives annual payment.
Cannot be transferred.
What is an alteration?
Carried out by the tenant - during the lease.
Approved in writing - prior to works commencing.
Subject to reinstatement.
Are you aware of any guidance relating to alterations?
RICS Licence for Alterations Guidance Note 2013.
If you were a landlord, what would you need to consider before accepting an alteration request?
Check long term impact on investment value.
Consider if reinstatement is required at expiry.
Ensure necessary planning consents / building regulations are met. Equality Act 2010 / CDM compliance.
What is a Licence for Alterations?
Legal document.
Protects parties at rent review.
Protects parties at expiry - from a schedule of dilapidations.
What is included in a license for alterations?
Landlord and Tenant Details (name and address)
Premises
Insurance
Lease Details
Works
When would a license to alter be required?
If the lease requires Landlord consent to carry out works.
What is the difference between an assignment and a subletting?
Assignment
- New tenant has a direct relationship with the landlord.
Sub-letting
- Sub-tenant has a direct relationship with the existing tenant.
- Sub-tenant pays rent to existing tenant.
- Existing tenant pays the landlord.
When might you sublet rather than assign?
Requirement of head-lease.
Part not whole.
Profit rent.
Re-occupation.
Lessor covenant strength.
What alteration provisions may a lease include?
Open = allowing.
Qualified = subject to conditions (i.e. non-structural alterations only).
Absolute = not allowing.
What is a Licence to Assign?
Granted consent.
What is included in a Licence to Assign?
Original lease details.
Consent to Assignment.
Assignee’s covenants.
Tenant’s covenants.
Provisos.
When might a landlord refuse a Licence to Assign?
Requirement of head lease.
Re-occupy.
Lesser covenant strength.
Redevelopment / demolish.
What does privity of contract mean?
Original landlord is liable for tenant / assignee rent defaults.
Abolished by the Landlord & Tenant Covenant Act 1995.
What is an Authorised Guarantee Agreement?
New lease = January 1996.
Most recent former tenant only to guarantor lease obligations.
Please tell me about rent collection.
English / Welsh / Irish quarter days - 25 March, 24 June, 29 September & 25 December.
Are you aware of any guidance relating to service charges?
RICS Code of Practice for Service Charges in Commercial Property 2014.
Is this guidance mandatory?
No - best practice.
Reduces disputes.
Ensures timely issue of budgets.
Negotiation guidance.
How can service charges be apportioned?
Floor area
Fixed %
Rateable value.
Weighted floor area.
Why is it important to benchmark service charges?
Best practice.
Ensures operational performance standards are checked.
Commercial Index - International Total Occupancy Cost Code.
How can a tenant challenge a service charge?
Request justification.
When can a schedule of dilapidations be issued?
Interim
- Served with at least 3+ years remaining.
Terminal
- Served in the last 3 years of the lease.
Final
- Served at termination date (within 56 days).
What is the format of a schedule of dilapidations?
Served as draft initially.
Outline repairing obligations.
State remedy / cost.
State loss of rent - over period of time to do works (if appropriate).
Fees.
Negotiations.
Landlord’s Surveyor-‘Scott Schedule’ prepared for Court / Alternative Dispute Resolution.
Are you aware of any guidance around dilapidations?
Dilapidations in England and Wales 7th Edition 2024
Why might a schedule of dilapidations not be agreed?
Lease is not FRI.
Reinstatement not required.
Schedule of condition in place.
Demolish / substantial refurb.
Diminution in value cap.
Administration.
What would you consider when advising on dilapidations at lease expiry?
Original state - schedule of condition.
Future use - demolish / refurb / change of use.
Cost of repair vs payment to the landlord.
What is the time limit to serve a schedule of dilapidations?
56 days after the termination date.
What is the purpose of a schedule of conditions?
- Agreed items of disrepair.
- Agreed prior to lease commencement.
- Limits tenant’s repairing obligations.
- Limited reinstatement.
What actions would you take if a property were to become vacant?
Insurance.
Maintenance.
Remove combustible materials.
Regular inspections.
H&S / Fire Risk assessment / Asbestos register.
Inform rating authority - empty rates.
Security.
Disposal / marketing strategy.
How do you determine the tenant’s insurance obligations?
Read the lease.
Usually responsibility of the landlord - recharge tenant.
RICS Guidance Note on Insurance for Commercial Property Managers 2011.
What is a restrictive user clause?
Can depress the market rent (i.e. restriction on opening hours).
What is insolvency?
Tenant - administration, receivership, company voluntary arrangements, voluntary liquidation,
bankruptcy, court proceedings for individuals
What actions do you take, as a landlord’s managing agent, if your tenant was insolvent?
Tell the landlord / client.
Read the lease (rent deposit / guarantor).
Check amount owed (rent, insurance, service charge).
Make an application for rent (if occupied).
Follow empty building procedure.
What are the different types of planned maintenance?
Cyclical
-Regular activities carried out irrespective of condition (e. g. re-decorating / plant room servicing).
Preventative
- Building Surveyor report - forecast repairs / maintenance (e. g. replace windows).
Responsive
- Initiated by occupier (e. g. repair leak).
What is a sinking fund?
A fund established by periodically setting aside money to cover the future repair or replacement of a wasting asset. (Roof for example).
What is CRAR?
Commercial Rent Arrears Recovery, also known as CRAR. CRAR is a statutory procedure which replaced the ancient law remedy of Distress for Rent. It came into force in April 2014.
Enforcement agent must serve notice. Can only be on commercial premises.
