Property Management - Level 1 Flashcards
Tell me about your responsibilities for occupied / vacant buildings / communal areas
- Tenant relations
- Lease management
- Maintenance and repairs
- Budgeting and financial management
- Collecting rent, SC and electricity
- Maintenance of communal areas
What is the Occupiers Liability Act 1957/1984?
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.
How do these impact upon your role?
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.
Tell me about the RICS guidance on Service Charges/ Real Estate Management / Commercial Property Management
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
Are you aware of any additional RICS guidance on Service Charges?
RICS Professional Statement - Service Charges in Commercial Property, 2018
RICS information Paper - Sinking funds, reserve fund and depreciation changes, 2014
Tell me about the relationship between alienation/alterations/repair/payment of rent and service charge on property management
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
What is the rule of privity of contract?
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.
What is the difference between an absolute/qualified/fully qualified covenant?
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.
What is the statutory duty placed on landlords under the Landlord and Tenant Act 1927/1988?
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
What remedies are available to landlords for breach of repairs?
- Serve a repair notice
- Forfeit the lease
- Serve an interim schedule of dilapidations
- Do the works and charge the tenant
What are the remedies for rent default?
- Court proceedings
- Use a rent deposit
- Pursue former tenants and guarantors
- Serve a statutory demand
- CRAR
- Forfeit the lease
- Negotiate a payment plan
- Agree another mutually acceptable arrangement
What are the main rent arrears recovery options for landlords?
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
What are the various forms of corporate insolvency?
- Administration
- Most common rescue route
- Period of protection known as moratorium restricts the actions which can be taken against the company whilst in place - Receivership
- Used when a company defaults on payments to a lender who is secured by a fix charge - 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 - 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
Talk me through your understanding of the Corporate Manslaughter and Corporate Homicide Act 2007
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.
What are your duties under the Act?
- Identifying and assessing risk
- Implementing and maintaining health and safety systems
- Providing information, instruction and training
- Monitoring and reviewing health and safety performance
How would you hand over a service charge account upon sale or change of manager?
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
What information would be required?
- Financial statements
- Service charge budget
- Contracts
- Leases
- Outstanding invoices / arrears
- Reserve/sinking fund
- Insurance information
- Any other relevant information such as ongoing maintenance work
Tell me about any RICS guidance you are aware of relating to licences for alterations
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
What is the process of considering a tenant’s application to alter?
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
Why is it important to handle applications properly?
The licence must clearly document the works agreed in order to ensure that both parties are protected from the carrying out of the work
What protection does a licence to alter provide?
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
How should an application be submitted?
In writing by the tenant to the LL or LL surveyor/PM
What is a cost undertaking?
Confirmation from the tenant for the payment of costs associated with the licence e.g. solicitor and LL surveyor fees
What information should be provided with the application?
Full plans and specification
Insurance information
What would you look for in the lease if you received an application?
Alterations clause and whether LL consent is required for the work
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.
- The tenant must have obtained LL consent before carrying out the improvements
- The improvements must be of a substantial nature and add value to the property
- The improvements must be in a permanent matter, rather than being temporary or easily removable
- The tenant must be able to show that the value of the property has increased as a result of the improvements
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.
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.
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.
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.
How do you deal with this scenario to avoid delays?
Through clear and efficient communication.
- Identify the need for superior LL consent
- Notify the LL and superior LL
- Provide all necessary information
- Follow up regularly
- Set realistic timelines
What are your duties in relation to timing / reasonableness?
- Respond to requests promptly
- Act in a reasonable manner when making decisions - taking into account costs and potential impact on tenants
- Ensure compliance with regulations
- Provide regular updates
- Act in the best interest of the property
What does S3 of the LTA 1927 relate to?
The apportionment of service charges - ensuring that they are apportioned fairly among tenants
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
How would you consider the impact of proposed alterations on building operations?
- Building regulations
- Health and safety
- Building systems
- Building maintenance
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.
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.
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.
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.
What H&S considerations relate to alterations?
- Risk assessment of conducting the works
- Electrical safety
- Site safety
- Asbestos
- Ventilation
- Waste management
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.
