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APC 2023 > Property Management - Level 1 > Flashcards

Property Management - Level 1 Flashcards

1
Q

Tell me about your responsibilities for occupied / vacant buildings / communal areas

A
  1. Tenant relations
  2. Lease management
  3. Maintenance and repairs
  4. Budgeting and financial management
  5. Collecting rent, SC and electricity
  6. Maintenance of communal areas
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2
Q

What is the Occupiers Liability Act 1957/1984?

A

Two pieces of legislation that establish the duties and responsibilities of occupiers of premises towards visitors and other persons who may be on the premises.

The OLA 1957 states that an occupier of a premises owes a duty of care to visitors who enter or use the premises. The occupier is responsible for taking reasonable care to ensure that visitors are safe from harm while on the premises.

The OLA 1984 extends the duty of care to include the safety of individuals who are not visitors.

Under both Acts, an occupier is defined as someone who has control over the premises. The Acts also specify that an occupier’s duty of care is subject to the visitor’s own level of care.

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3
Q

How do these impact upon your role?

A

The PM is responsible for ensuring that the premises are safe for visitors and anyone who may enter the premises.

To comply with these Acts, PMs must take reasonable steps to identify potential hazards and ensure they are properly addressed. This includes regular inspections, maintenance and repairs - ensuring that warning signs are posted where appropriate.

The PM must also ensure that appropriate H&S procedures are in place.

Failure to comply with the Acts can result in legal action, including claims for compensation.

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4
Q

Tell me about the RICS guidance on Service Charges/ Real Estate Management / Commercial Property Management

A

RICS Professional Statement - Real Estate Management , 2016

RICS Guidance Note - Commercial Property Management in England & Wales, 2011

RICS Professional Statement - Service Charges in Commercial Property, 2018

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5
Q

Are you aware of any additional RICS guidance on Service Charges?

A

RICS Professional Statement - Service Charges in Commercial Property, 2018

RICS information Paper - Sinking funds, reserve fund and depreciation changes, 2014

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6
Q

Tell me about the relationship between alienation/alterations/repair/payment of rent and service charge on property management

A

The PM is responsible for ensuring that these aspects are properly addressed and managed, in order to protect the interests of the LLs and Ts, and to ensure the safe and efficient operation of the property

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7
Q

What is the rule of privity of contract?

A

Legal principle that limits the rights and obligations of a contract to the parties that have entered into it. This means that only the parties who have signed the contract are legally bound by its terms, and no other party has any rights or obligations under the contract.

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8
Q

What is the difference between an absolute/qualified/fully qualified covenant?

A

Absolute covenant = covenant that requires a party to do or refrain from doing something without any conditions or qualifications. It is a strict obligation that must be complied with without exception.

Qualified covenant = covenant that is subject to certain conditions or qualifications. The conditions may be specified in the covenant itself or implied by law.

Fully qualified covenant = covenant that is subject to both a condition and a limitation. The condition may be a specific requirement that must be met, while the limitation may restrict the scope or extent of the covenant.

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9
Q

What is the statutory duty placed on landlords under the Landlord and Tenant Act 1927/1988?

A

S11 of LTA 1985 - LLs are required to keep the property in a reasonable state of repair, and to maintain its fixtures, fittings and services.

S11 of LTA 1985 - LLs are required to give Ts reasonable notice before entering the property, except in emergencies

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10
Q

What remedies are available to landlords for breach of repairs?

A
  1. Serve a repair notice
  2. Forfeit the lease
  3. Serve an interim schedule of dilapidations
  4. Do the works and charge the tenant
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11
Q

What are the remedies for rent default?

A
  1. Court proceedings
  2. Use a rent deposit
  3. Pursue former tenants and guarantors
  4. Serve a statutory demand
  5. CRAR
  6. Forfeit the lease
  7. Negotiate a payment plan
  8. Agree another mutually acceptable arrangement
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12
Q

What are the main rent arrears recovery options for landlords?

A

Read the lease to establish what procedures are in place for the LL to recover the arrears

Options include:
CRAR
Statutory demand
Draw down on rent deposit
Action against guarantors

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13
Q

What are the various forms of corporate insolvency?

A
  1. Administration
    - Most common rescue route
    - Period of protection known as moratorium restricts the actions which can be taken against the company whilst in place
  2. Receivership
    - Used when a company defaults on payments to a lender who is secured by a fix charge
  3. Company Voluntary Agreement
    - Contract between a company and its creditors appropriate for when a company is insolvent, but the directors believe it has a viable future, with financial restructuring
    - Under this statutory scheme, the company agrees terms for the repayment of accrued debts
  4. Pre-Pack Administration
    - Allows the directors of a company to buy out and retain elements of the business which are trading well and placing the remainder of the company into administration
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14
Q

Talk me through your understanding of the Corporate Manslaughter and Corporate Homicide Act 2007

A

UK law that was introduced to hold companies accountable for serious failures in health and safety that lead to the death of employees or members of the public.

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15
Q

What are your duties under the Act?

A
  1. Identifying and assessing risk
  2. Implementing and maintaining health and safety systems
  3. Providing information, instruction and training
  4. Monitoring and reviewing health and safety performance
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16
Q

How would you hand over a service charge account upon sale or change of manager?

A

Refer to the RICS Information Paper on Commercial Property Handover Procedures, 2015 which provides information on how to handle a change of managing agent or client

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17
Q

What information would be required?

A
  1. Financial statements
  2. Service charge budget
  3. Contracts
  4. Leases
  5. Outstanding invoices / arrears
  6. Reserve/sinking fund
  7. Insurance information
  8. Any other relevant information such as ongoing maintenance work
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18
Q

Tell me about any RICS guidance you are aware of relating to licences for alterations

A

RICS Guidance Note - Licence for Alterations, 2013

Sets out advice for surveyors who are dealing with applications from tenants to make alterations to office and industrial properties

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19
Q

What is the process of considering a tenant’s application to alter?

A

Read the lease to ascertain whether LL consent is required

Ask for a full set of plans and specification

Obtain an undertaking for LL surveyor and legal costs

All alterations need to be documented via a licence to alter

Consider whether reinstatement is required at the end of the lease term

Provide report to client and obtain instructions

Instruct LL solicitor to prepare LTA

Inspect the completed works to ensure they are as agreed

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20
Q

Why is it important to handle applications properly?

A

The licence must clearly document the works agreed in order to ensure that both parties are protected from the carrying out of the work

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21
Q

What protection does a licence to alter provide?

A

Protection at rent review and dilapidations at the end of the lease

Most licences require the tenant to reinstate the works at the end of the lease

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22
Q

How should an application be submitted?

A

In writing by the tenant to the LL or LL surveyor/PM

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23
Q

What is a cost undertaking?

A

Confirmation from the tenant for the payment of costs associated with the licence e.g. solicitor and LL surveyor fees

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24
Q

What information should be provided with the application?

A

Full plans and specification
Insurance information

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25
What would you look for in the lease if you received an application?
Alterations clause and whether LL consent is required for the work
26
What are improvements under the LTA 1927?
Any works or alterations made to a property by a tenant that add value to the property. The Act specifies that improvements must be of a substantial nature and should add value to the property. 1. The tenant must have obtained LL consent before carrying out the improvements 2. The improvements must be of a substantial nature and add value to the property 3. The improvements must be in a permanent matter, rather than being temporary or easily removable 4. The tenant must be able to show that the value of the property has increased as a result of the improvements
27
How does this impact upon landlord consent?
It provides an opportunity for the LL to assess the proposed improvements and determine whether they are of a substantial nature and likely to add value to the property. The LL may specify conditions or restrictions on improvements, such as requiring the work to be carried out by a qualified professional or requiring that the improvements be completed within a certain timeframe.
28
What is an improvement?
An example could be the installation of a new HVAC (Heating, Ventilation, and Air Conditioning) system which increases the sustainability credentials of the building and thus adding value to the property.
29
What does not to be unreasonably withheld or delayed mean?
Legal phrase commonly used in Ll and T agreements, meaning that one party cannot refuse or delay consent to a request from the other party if such refusal or delay would be unreasonable or unjustified.
30
What happens if superior landlord consent is required?
The T would need to request the consent of their immediate Ll, who would in turn request the consent of the superior LL. The process for obtaining superior LL consent may vary depending on the terms of the lease agreement.
31
How do you deal with this scenario to avoid delays?
Through clear and efficient communication. 1. Identify the need for superior LL consent 2. Notify the LL and superior LL 3. Provide all necessary information 4. Follow up regularly 5. Set realistic timelines
32
What are your duties in relation to timing / reasonableness?
1. Respond to requests promptly 2. Act in a reasonable manner when making decisions - taking into account costs and potential impact on tenants 3. Ensure compliance with regulations 4. Provide regular updates 5. Act in the best interest of the property
33
What does S3 of the LTA 1927 relate to?
The apportionment of service charges - ensuring that they are apportioned fairly among tenants
34
What would happen if you discovered unlicensed works on review or assignment?
Read the lease to ascertain whether LL consent is required Request full information of the works including plans and specifications - look to implement a retrospective licence to alter if required
35
How would you consider the impact of proposed alterations on building operations?
1. Building regulations 2. Health and safety 3. Building systems 4. Building maintenance
36
What is a warranty?
Legally binding guarantee made by one party to another that certain conditions or standards will be met. The purpose is to provide protection against any defects or issues that may arise.
37
What are reinstatement provisions?
Clause in a lease that specify the condition in which a tenant must leave the property at the end of their tenancy. These provisions generally require the tenant to restore the property to its original condition, as set out in the lease agreement, before vacating the property.
38
How do dilapidations relate to alterations?
When a tenant makes alterations, they are generally required to reinstate the property to its original condition at the end of the lease term. If a tenant fails to properly restore the property, the LL may be entitled to claim for dilapidations.
39
How does the Equality Act 2010 relate to alterations?
PMs should consider the potential impact on disabled people and whether any reasonable adjustments are required to the alterations plans to ensure access and equality.
40
What H&S considerations relate to alterations?
1. Risk assessment of conducting the works 2. Electrical safety 3. Site safety 4. Asbestos 5. Ventilation 6. Waste management
41
How does MEES relate to alterations and your reasoned advice?
Alterations should not have a negative impact on the sustainability performance of the building. Should alterations negatively impact the building then consent can be reasonably withheld.
42
If consent is refused, what remedies does a tenant have?
Work with the LL to understand why the consent has been refused and make reasonable/appropriate adjustments to the plans and specification to ensure that the consent can be granted. Mediation/dispute resolution
43
Can consent be granted retrospectively?
Yes
44
How do you document consent?
Through a licence
45
What is a final inspection and why would you carry one out?
Inspection following the completion of works to ensure that the work has been carried out as agreed and to a suitable standard
46
Following alterations, can you and how would you adjust a service charge?
1. Review the lease agreement 2. Assess the impact of the alterations 3. Recalculate the service charge to reflect any changes
47
What is TUPE?
Transfer of Undertakings (Protection of Employment) Regulations UK law that protects employers rights when the business they work for is transferred to a new owner or when a service is outsourced or transferred to a new contractor
48
What is the purpose of TUPE?
To protect the interests of employees and ensure that they are not disadvantaged by the transfer of the business or service.
49
How might TUPE relate to property management?
If a property management company is acquired by another firm, the employees of the original company would be covered by TUPE regulations If a property management contract is awarded to a new managing agent, TUPE may apply to the employees who were previously employed by the outgoing contractor
50
What is a duty of care deed?
It is a deed of covenant that sets out the obligations of one party to another regarding the maintenance and repair of a property. Often between a client and a managing agent.
51
Why is a duty of care deed often required?
It is used to clarify the responsibilities of both parties in relation to the property, and to ensure that the LL or managing agent is meeting its legal obligations.
52
What would you do if you were asked to signed one?
Review the document carefully to ensure an understanding of the obligations that it imposes. Also seek legal advice to ensure that the deed is fair and reasonable, and that it does not expose you to any undue liability. Once satisfied with the terms of the duty of care deed, it can be signed to indicate agreement to its terms.
53
What are some of the key obligations associated with the collection of monies?
Check terms of the lease for timing of payment and interest on arrears Client accounting procedures must comply with current RICS regulations
54
What would you do if an occupier defaulted on payments?
Read the lease Check to see if a rent deposit is in place Contact the tenant to ascertain whether there has been a payment issue and when it can be expected Notify the LL to keep them informed of the default Consider other forms of default collection methods
55
How would you deal with rental deposit deeds?
Ensure that they are securely stored and that the money is kept as per the terms of the deed
56
What is a key principle for good property management?
Act in an honest, fair, transparent and professional manner
57
Tell me about the usual insurance requirements for a landlord
Usually the responsibility of the LL and recharged to the T Cover for reinstatement of the building for a range of insurance perils Insurance Act 2016 is the key law to be complied with
58
How can you pass on the costs of insurance to tenants?
Read the lease and check the insurance provisions LL can recharge the insurance premium to the tenant if set out in the lease agreement
59
What are the issues associated with lack of insurance?
1. Financial risk 2. legal liability
60
How do you ensure that insurance cover is appropriate?
1. Review the insurance policy 2. Assess the property and potential risks 3. Use an RICS accredited insurance broker 4. Regularly review and update the policy where required 5. Ensure compliance with legal requirements
61
What is public liability insurance?
Type of insurance that provides protection to an individual or business in the event that they are held responsible for causing injury or damage to another person or their property.
62
Why is it important?
Can provide coverage for accidents or incidents that occur on a property that result in injury or damage to a third party, such as a visitor or a tenant.
63
Why is effective occupier liaison important?
Helps to foster a positive relationship between PMs and Ts. This helps to ensure that the needs and concerns of Ts are heard and addressed in a timely and appropriate manner, which can help to reduce the likelihood of disputes arising.
64
Tell me about the role of property managers in relation to energy management
1. Monitoring energy usage 2. Identifying energy saving opportunities 3. Implementing energy efficient practices 4. Communicating with occupants 5. Reporting on energy performance
65
What is a BMS?
Building Management System Centralised system that controls and monitors a building's mechanical and electrical equipment, such as HVAC, lighting, security and fire alarms. It allows building owners and managers to optimise the performance of building system's and reduce energy consumption, as well as providing real-time information on the building's status and performance.
66
As a property manager, what are your H&S / fire safety obligations?
1. Ensuring the property is safe from hazards for occupants and visitors 2. Implementing and maintaining appropriate H&S procedures 3. Carrying out regular risk assessments and maintenance 4. Complying with fire safety regulations 5. Ensuring that electrical systems are regularly inspected and maintained
67
Tell me about third party supplier procurement in relation to your property management role
EPC procurement for buildings. Requirement to obtain three quotations to ensure value for the client and provide a recommendation on the party to instruct.
68
How do you ensure good management of mixed use developments?
1. Understanding the different uses 2. Allocate service charge costs fairly (separate schedules if necessary) 3. Maintain good communication 4. Ensure compliance with regulations 5. Ensure adequate facilities maintenance
69
What are the two tests for corporate insolvency
The cash flow test - assess whether a firm is able to pay its debts and when they fall due The balance sheet test - assess whether a firm's liabilities exceed its assets
70
How do you deal with property management in the case of tenant insolvency?
1. Review the lease agreement to understand the rights of the LL 2. Notify the insolvency practitioner about the status of the tenancy 3. Secure the property if vacated 4. Review insurance 5. Review service charge 6. Consider reletting 7. Seek legal advice Keep client updated throughout
71
What is PPM?
Planned Preventative Maintenance
72
Why is it beneficial?
Proactive maintenance approach that involves regular inspections, repairs and maintenance to prevent equipment or systems from failing. The goal of PPM is to increase the lifespan of equipment and reduce the likelihood of unexpected failures.
73
What advice would you give close to the end of a lease?
Read the lease Ascertain whether the tenancy is protected Discuss with client form of notice to serve on tenant
74
How do empty rates affect property managers?
PMs are responsible for notifying the local rates authority of changes in tenancy. There is a 3-month empty rates period for commercial buildings and 6-months for industrial
75
What is reconciliation?
Process of comparing two sets of records or accounts to ensure they are accurate and in agreement. Reconciliation of SC budgets typically involves comparing the budget to the actual expenditure to identify any discrepancies and issue a balancing service charge invoice at the end of the service charge budget year.
76
What is your duty of care in relation to SC?
To ensure that the budget set is reasonable and accurate, and that the service charge funds are spent in accordance with the budget and the lease terms. The PM should provide the Ts with detailed information on the budget, expenditure and accounting procedures.
77
How should interest be dealt with?
Review the lease to ascertain whether interest can be charged on late payment There is often a grace period for the payment of rent and others with interest being charged between 2% & 4% above base rate
78
What is a rent deposit drawdown?
Using a rent deposit to pay off outstanding debts The PM should review the clauses of the rent deposit deed to ascertain the procedure to correctly draw down on the rent deposit which often involves notifying the tenant in advance of the draw down
79
What is a payment agreement?
Negotiated between LL and T setting out terms of payment for outstanding debts - for example instalments
80
What is forfeiture?
Legal process allowing a LL to terminate a lease an repossess their property, without the need for court proceedings.
81
Where would you find out if you can forfeit a lease or not?
Review the lease for a forfeiture clause
82
How can you effect forfeiture?
Typically done when a tenant breaches the terms of their lease, such as failing to pay rent or by committing a serious breach of covenant.
83
What is a waiver?
The voluntary surrender of a known right or privilege
84
What amounts to a waiver?
When a LL accepts rent or other payment from a T with knowledge of the Ts breach of a lease covenant, but without enforcing the right to terminate the lease or take legal action. This action effectively waives the right for the LL to enforce the covenant.
85
What is a S146 notice?
Part of the LTA 1927 - notice from the LL to a T who has breached terms of their lease. The notice sets out the breach of the lease and gives the T time to remedy the breach or to vacate the property. If the T fails to do so then legal action can be taken.
86
What is a remediable breach?
Where a breach of covenant is capable of being remedied or fixed. If a tenant has not caused any irreparable damage or if the breach can be corrected through a reasonable amount of work or expense.
87
What is the difference between continuing and once and for all breach?
Continuing breach = ongoing and persists over time until it is remedied - LL can seek an injunction to require the T to comply with the lease, as well as damages for any losses suffered Once and for all = breach that can be remedied by a single action, and does not continue to occur over time - LL may be able to seek damages for any losses, but may not be able to obtain an injunction The distinction between the two is important as it can affect the remedies available to the LL.
88
What should you consider prior to forfeiture?
Negotiate with the T and discuss with the LL as to whether the issue(s) can be resolved
89
What is a Jervis v Harris clause?
Provision in a lease that allows a LL to recover costs associated with repair and maintenance work that may have been overlooked during the term of the lease
90
How can you avoid recognising the continuance of a lease?
By ensuring that the T vacates the property making it clear that they are no longer in possession of the property In addition, ensure that no rent or other payments are accepted following the lease end
91
What is peaceable re-entry?
Remedy available to LLs in case of a breach of a lease agreement by the T. It allows the LL to re-enter the leased premises without using force, without a court order and without terminating the lease. The LL must physically take possession of the property by changing the locks and leave a notice of re-entry and the reason for it. The purpose is to put pressure on the tenant to rectify the breach and pay any outstanding rent or damages owed
92
What is a bailiff?
Court officer who has the authority to enforce court judgements and orders, including the collection of debts and the repossession of property.
93
How can you pursue a former guarantor?
By sending a letter of demand requesting payment and, if necessary, initiating legal proceedings.
94
Under what legislation can you do this?
Landlord and Tenant (Covenants) Act 1995
95
What notices must be served and what are the relevant timescales?
Section 17 notice Within 6 months
96
What is CRAR?
Commercial Rent Arrears Recovery Scheme
97
When did it come into force?
April 2014
98
What are the requirements of CRAR?
Minimum of 7 days unpaid rent Minimum of 7 clear days warning notice Enforcement agents visit 2 clear days to follow Re-entry by enforcement agents to seize goods Allow 7 clear days before sale of goods Fees must be specified on the entry notice
99
When can CRAR not be used?
Can only be used for basic rent demanded plus VAT and interest payable Not service charge or other payments
100
What are court proceedings and how can they be used to recover debts?
LL can obtain a court judgement and then secure payment of the arrears by way of a charge over other property. Proceedings can also be issued to recover arrears following repossession.
101
What is a statutory demand?
Preliminary step to pursuing bankruptcy or winding-up proceedings. Gives the tenant 21 days notice to pay the arrears - after which the LL can present a bankruptcy or winding-up petition to the court if the arrears are over £750
102
What is a winding up petition?
Legal petition filed by a creditor to initiate a compulsory liquidation of the company.
103
What is the difference between a sinking and reserve fund?
A sinking fund is a fund formed by periodically setting money aside for the replacement of a wasting asset. It is usually intended that a sinking fund will be set up and collected over the whole life of the wasting asset A reserve fund is a fund formed to meet the anticipated future costs of maintenance and upkeep in order to avoid fluctuations, or an anticipated large, one-off increase in the amount of service charge payable each year

APC 2023 (37 decks)

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