Property Management L1 Flashcards
What documentation does the RICS provide for property managers?
RICS Professional Statement – Real Estate Management 2016 (3rd edition)
Aims of the RICS Professional Statement – Real Estate Management 2016
Outlines the principles that share the culture of fairness and transparency that underpin all activities undertaken by real estate managers.
12 Principles of the RICS Professional Statement – Real Estate Management 2016
- HONEST Conduct business in honest, fair, transparent and professional manner.
- CARE & DIL - Carry out business with skill, care and diligence and ensure staff have necessary SKILLS.
- TOE & CHP = Always provide clients with terms of engagement & complaints handling procedure
- COI = Avoid conflicts of interest. If arise deal with them openly and fairly.
- DISCRIMINATION- Do not discriminate unfairly in dealings
- COMMUNICATION - Ensure good communication (clear, timely, transparent)
- MARKETING/ AD -Be honest with Advertising/Marketing.
- CLIENTS MONEY - Ensure clients money is held separately to other monies and covered by adequate insurance.
- PII INSURANCE- Have PII so client does not suffer negligence.
- OBLIGATION- Make sure all parties are clear of your obligations.
- USE PROF JUD - Always use your best professional judgement to provide best selling/buying price
- INSPECTION- Make sure inspections, meetings and viewings are carried out as per your clients wishes and having regard for security and safety of all parties.
Advice for Property Managers - RICS Professional Statement – Real Estate Management 2016 (3rd edition)
- ETHICS - duty of care, Conflicts of Interest, corporate social responsibility
- TOE - Securing instruction - Terms of engagement
- HOT - New lettings and lease renewals - negotiating lease terms & agreeing HOT.
- RENT/ SC/ SUS - Managing real estate - collection of rent & service charge & Sustainability
- Portfolio and asset management - Performance measurement, principles of portfolio management.
- ENDING INSTRUCTIONS- Ending an instruction- written confirmation and handover
- H&S - Safety & Security - H&S, personal safety, Data Protection
- MONEY, PII & CHP - Business Management - PII, Holding Client’s money, complaints handling
RICS Guidance Note for best practice for PM
RICS Guidance Note on Commercial Property Management, England and Wales, 2011.
Aims/ Outline of RICS Guidance Note on Commercial Property Management, England and Wales, 2011.
- Best practice for commercial property managers
- How PMs can be efficient, effective and accountable to client and statute law.
- DUTY OF CARE - States duty of care is to landlord (the client)
- KEY INFO FOR PM - Information on key duties like rent collections, service charge and H&S
- MODEL TOE - Provides model terms of engagement
RICS Guidance Note on Commercial Property Management, England and Wales, 2011. KEY POINTS
- Energy Management - PM should be aware of any new regulations relating to environmental performance of buildings. Client Carbon Reduction Commitment (CRC). i.e. meter readings in a timely manner. EPC FOR BUILDINGS
. - Management Fees - Fixed fee annual review or indexation – should not be related to the value of money.
. - Service Charge - Clear and transparency – apportionment under the lease provisions, Keep SC money in separate account
. - Managing the building – ensuring you have all the relevant lease info, handover info. – EXAMPLE AWARD HOUSE
Conti.. Energy Management
Need to be aware of envi perf of building –> Crucial EPCs monitoring
What is a blue chip covenant?
- Considered as a FTSE 100 company
- Reputation for quality, reliability and the ability to operate profitably in good times and bad
What is the Occupiers Liability Act 1957/1984?
FOR OCCUPIERS WHO PUT IN PLACE PREVENTATIVES TO DETER INTRUDERS
(4) STEPS TO PREVENT INJURY
.
(3) DUTY DISCHARGED BY TAKING STEPS TO GIVE WARNING
The Occupiers Liability Act 1984 has implications for those occupiers of premises who want to implement preventive measures intended to deter intruders from unlawfully entering their premises.
Subsection (4) provides that it is their duty to take reasonable steps to ensure that the intruder does not suffer injury;
.
but subsection (3) provides that their duty may be discharged by taking reasonable steps to give warning of the danger or discourage persons from incurring the risk.
Occupiers Liability Act 1957 vs 1984
The 1957 act is mainly concerned with lawful visitors and provides that all lawful entrants are owed the same ‘common duty of care’.
As the 1957 act was not concerned with trespassers, the 1984 was enacted to govern the duty of occupier to trespassers.
Case Law for Occupiers Liability Act 1984?
Lowery v Walker [1911]. The Claimant was injured by a horse when using a short cut across the defendant’s field. The land had been habitually used as a short cut by members of the public for many years and the defendant had taken no steps to prevent people coming on to the land.
Corporate Manslaughter and Corporate Homicide Act 2007
Deals with the criminal liability of organizations for deaths resulting from serious management failures.
Corporate Liability: The Act establishes that organizations can be held criminally liable for deaths that result from serious failures in their management systems.
Gross Breach of Duty of Care: To establish corporate manslaughter or corporate homicide, it must be proven that there was a gross breach of the duty of care owed by the organization to the deceased person.
- What are your duties under the Act?
Risk Assessment: Organizations are required to conduct risk assessments to identify potential hazards and risks associated with their activities.
Duty of Care: Organizations have a general duty of care to ensure the health and safety of their employees, customers, clients, and other individuals who may be affected by their activities.
Reporting and Investigation: Organizations should have mechanisms in place for reporting safety incidents and near misses.
What are the offences and penalties under the Act?
–> Corporate Manslaughter and Corporate Homicide Act 2007
- Penalties: If an organization is found guilty of corporate manslaughter or corporate homicide, it can face significant penalties, including an unlimited fine. The court may also order the organization to publicize the conviction.
- Crown Prosecution Service (CPS): The CPS is responsible for deciding whether to bring charges under the Act. It conducts investigations and, if appropriate, initiates legal proceedings against the organization.
What legal documentation do you require as a property manager?
- Title plan and register
- Leases - signed by LL & T
- Rent deposits
- Any licences
- Rent review memorandums
- Any deed of covenants and easements
Why is it important your property management database system is updated?
- This ensures we raise charges correctly
- We know if leases and inside or outside the act and don’t run the risk of creating a periodic tenancy
- We have key dates so can anticipate lease events.
What is Alienation
Alienation’ is the right granted in a lease for a tenant to assign, sublet, or share occupation of their property. –> I.E. Sublet the property or Assign the property
Alienation
Section 4 of L&T act 1988 - tenant can assign lease with L consent
Always read the lease!
The usual clause is that the landlord’’s consent is not to be unreasonably withheld or delayed.
Assignment vs Subletting
Upon ASSIGNMENT the new tenant (T2) has a direct relationship (used to be privity of contract) with the landlord
When SUBLETTING a new sub tenant (T2) has a direct relationship with the tenant (T1) and pays them the rent who then pays the landlord –> I.E. like UK Music at Savoy Hill - got profit rent
Alienation Clauses (x3)
Open covenant - Allowing alienation
Qualified covenant - Subject to some conditions
Absolute covenant - Not allowing a subletting or assignment
Why Sublet over assign?
- Its a requirement of the lease
- For part of the demise and the not the whole
- If the tenant wants to reoccupy in the future – take back occupation.
- The new party is of a lesser covenants strength
- If the market rent is higher that the passing rent (face rent) then there is a profit rent (E.G. Like UK Music, they got a £10K profit rent)
What to do when dealing with an assignment or a sublet
- Read the lease before advising client - are there any grounds for withholding consent
- Will the tenant undertake the surveyor’s and legal costs
- Obtain client approval to proceed
- Has a rent deposit been agreed and is there an authorised guarantee agreement
- Cov Strength of the proposed new tenant? Are there accounts and references to consider?
What Act relates to the Assignment of Leases?
The Landlord and Tenant Covenants Act (1995). Came into effect 1st Jan 1996
What does it do? –> The Landlord and Tenant Covenants Act (1995)
- It relates to the assignment of leases.
- It abolished privity of contract.
- Leases created after this act are known as “new” leases.
- It created Authorised Guarantee Agreements.
- Allowed for only one AGA to be in place at a time.