Property Management - Summary of Experience Flashcards

1
Q

What is an assignment?

A

The tenant transfers the legal interest in the lease to another tenant - The incoming tenant takes over all lease obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a sub-letting?

A

New party leases the property from the current tenant rather than landlord - Old tenant maintains relationship with the landlord

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the difference between an assignment and a sub-letting?

A

Assignment = old tenant no longer liable to landlord
Sublet = old tenant still has legal obligation to landlord but just has another relationship with sub-tenant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why would you sublet instead of assign?

A
  • May want to reoccupy in future
  • Not allowed to assign under lease
  • New party lower covenant strength
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Why would you assign rather than sublet?

A
  • No plans to occupy in the future
  • Rent too high for you
  • No longer need unit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What asset classes have you managed?

A
  • Retail
  • Industrial
  • Office
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Can you tell me about the RICS guidance note Commercial Property Management 2011?

A

Give guidance on:
- Acting as an agent of the landlord
- Managing third party suppliers
- Duty of care
- Tenant management
- Building management
- Financial management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How do you manage/balance expectations from landlord and tenants?

A
  • Clear communication
  • Set realistic expectations
  • Ensure timely maintenance/repair
  • Act as a mediator to disputes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Can you talk me through the CRAR process?

A

1) Assessing rent is overdue
2) Notice of enforcement - 7 days to pay
3) Enforcement agent instructed to take control of goods
4) Controlled goods agreement - retain possession of goods while paying off arrears
6) Sale of goods at auction if arrears remain unpaid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When would the CRAR process not be an acceptable option?

A

For anything other than rental arrears and for rent that is shorter than 7 days outstanding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a typical alienation clause?

A

Permit to assign/sub-let whole but not part, with landlord consent not to be unreasonably delayed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is a statutory demand?

A

a formal written notice or demand for payment of a debt served by a creditor
- This will state that if debt is not paid within 21 days, creditor can apply for bankruptcy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Can you tell me about a few different clauses within lease agreements?

A
  • Option to determine
  • Rent review
  • Rent
  • Service charge
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a management fee?

A

Fee charged by the property manager that is included within the service charge budget. Not calculated on % basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is a service charge cap and how are they calculated?

A

A limit set on the amount that landlords can charge tenants for maintenance and services in a property
- Usually calculated based on RPI but also CPI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is obligatory/mandatory under service charges in commercial property?

A
  • All expenditure sought must be in accordance with lease terms
  • SC budget/recs must be issued annually with explanatory comments
  • Must ensure SC apportionment matrix sent annually
  • SC monies must be held in one or more discrete bank accounts
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a 7 day letter?

A

Stating that CRAR action will be commenced and goods seized if the tenant doesn’t pay within 7 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What should PM do when they receive an application to assign or sub-let?

A

1) Review lease
2) Request undertaking of surveyor and legal costs
3) Check if proposed market rent is same as passing
4) Check effect on investment value of prop
5) Check if incoming tenant will pay rent deposit
6) Provide recommendation to client (approval)
7) Documented by solicitors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the aim of the Landlord and Tenant Act 1988?

A

S1 - States consent must be provided within a reasonable timeframe

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the aim of the Landlord and Tenant Act 1927?

A

S19 - Consent not to be unreasonably withheld
S18 - Limits amount of damages landlord can recover for breach of tenants repairing covenant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the use of a licence for alterations?

A

Protects landlord - requires tenant to reinstate unit at end of lease back to original letting
Protects tenant - prevents landlord from rentalising alterations/improvements at rent review

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Tell me about RICS service charges in commercial property

A

RICS Professional Standard: Service Charges in Commercial Property, 1st Edition, September 2018
- Supersedes previous 3 editions published as codes of practice on April 2019

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Can you talk me through the process of completing an LTA application as the one undertaken at Wooburn Industrial Estate?

A

1) Received T application by email - checked lease provisions and requested undertaking of costs
2) Considered application and requested further input from BS due to technical aspects of warehouse racking system - Reconfirm on costs to T
3) Provide client recommendation
4) Document LTA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How can consent be granted to make alterations?

A
  • Automatically by lease terms (no consent necessary)
  • Formal licence - Big changes
  • Simple letter - less complex - no solicitor needed
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Why should inspection be carried out after completion of tenant works?

A
  • To check surveyor is satisfied with the works completed
  • To see if there are any snags that require rectification
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is a property managers responsibility when managing a vacant building?

A
  • Insurance
  • Repairs
  • EPC
  • Inspections - insurance purposes
  • Inform council - rates
  • Security
  • Maintain landscaping / asbestos
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is the tax on insurance on premiums?

A

Insurance Premium Tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What are the two fundamental principles of rent collection?

A
  • Accuracy of information provided
  • Timing of when demands are sent out / rent is collected by
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is the difference between a standing order and a direct debit?

A

Standing order = regular payment set up by payer and payer has control
Direct debit = payer authorises payee to take payments (set up by bank)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How can you pre-empt tenant being in rent arrears?

A

Consistent late payments and bounced cheques

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What are typical lease terms regarding interest on late rent?

A

2-4% above base rate and 14 days after due date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is the first step to assessing if rent arrears can be recovered?

A

Check the lease obligations - READ LEASE (see what procedures are in place)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What are the different remedies for rent default?

A
  • Negotiate payment plan
  • Draw down rent deposit
  • Pursue guarantor
  • CRAR
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What is to be considered before drawing down on a rent deposit ?

A

Tenant covenant strength - can they top back up?
Future debt - If tenant struggling may be best to keep for future debt e.g. dilaps

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Does the landlord need to give T notice before drawing down on rent deposit?

A

Depends on what the deed says

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Does the landlord have to use rent deposit for arrears?

A

No - At their discretion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

How can the court be used to recover tenant arrears?

A

landlord can obtain a court judgement
- High court enforcement officer may enforce this and will need to pay court fees
- similar to CRAR
- Slow process and expensive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

When can a former tenant be pursued for arrears?

A

If lease started before 01/01/1996
- This is due to abolishing of privity of contract - before this any tenant original tenant under lease was responsible even if lease had been transferred

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What is the process of serving a statutory demand?

A

1) Notice served - T has 21 days to pay/propose plan
2) After this time landlord can present winding up petition to court

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What are the timelines for CRAR?

A
  • 7 days unpaid rent
  • 7 days rent
    HERE ENFORCEMENT AGENT ATTENDS
  • 7 further days before goods seized
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What goods can’t be seized under CRAR?

A
  • Perishable goods
  • Work tools
  • Kit belonging to 3rd party
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What are tenants rights under CRAR?

A

Can apply to court for order that no further steps can be taken without permissions from court

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What is forfeiture?

A

Lease clause allowing landlord to regain possession of a lease by peaceful re-entry or court action

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

When can forfeiture be used?

A

if forfeiture clause in lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What are tenants rights under forfeiture?

A
  • Have right to apply for relief to the court
  • If granted, lease is restored
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

How can landlords right to forfeit be waved?

A
  • If there is a payment plan agreed
  • If CRAR is exercised
  • If S.25 notice served
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

How can a least be terminated by forfeiture?

A
  • Peacefully re-enter and change locks
  • Court proceedings to recover possession
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What is the landlord and tenants covenant act 1995?

A

Act that abolished privity of contract and introduced authorised guarantee agreements (outgoing tenant acts as a guarantor for party who assigns lease)
- Have to serve a S.17 notice to guarantor within 6 months of tenant not complying with their contractual obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

According to RICS Code of Leasing Business Premises, when should AGAs be used?

A

If assignee has weak covenant strength, no guarantor and no rent deposit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What is key consideration when reviewing rent arrears recovery methods?

A
  • Chance of reletting property
  • Vacant possession value and void costs VS value being let now
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Four main options for landlord when tenant not fulfilling their repairing obligations?

A
  • Serve notice of repair - S146 of law and prop act 1925
  • Forfeit lease
  • Serve interim/terminal schedule of dilaps
  • do works themselves and recharge T
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

What must be included in notice to repair?

A

S146 of law and prop act 1925
- Details of repairing breach
- timescale allowed to remedy breach
- court of action proposed if T fails to remedy

53
Q

How can a landlord forfeit a lease for failure to repair?

A

Must serve S146 notice on tenant (stating details, timescale and proposed course of action)

54
Q

What is the leading case law for landlord right to re-enter property to undertake repairs?

A

Jervis v Harris
- Gives LL right to pursue remedy against defaulting tenant to ensure premises kept in good condition

55
Q

In what circumstances can Jervis and Harris clause be used?

A
  • Tenant is solvent
  • Landlord wants to continue lease
  • landlord wants to carry out repairs themselves
  • threat of entry may mean tenant does works themselves
56
Q

Please can you take me through how you instructed and got in place the PPM schedule at Ilford High Road?

A

New instruction noted no PPM in place
1) Made client aware - Requested that Workman BC attend site and draw up a quote
2) Client confirmed - I attended site with BC to assess these items
3) 10 year PPM drawn up (to be reviewed 5 yearly)- Confirmed items on a call with the client and that we would recover via the service charge
4) Received confirmation and budgeted for works in the upcoming year

57
Q

What were the repair items that needed attending to at Ilford High Road under the PPM?

A
  • Roof works (LL responsibility to repair) - Replacement
  • Damaged brickwork and copings
  • Road surface repair to the service yard
58
Q

What are the aims of the RICS service charge professional standard?

A
  • Improve best practice, fairness and transparency
  • Ensure timely issue of SC budgets and YE certificates
  • Reduce causes of disputes, and provide guidance on dispute resolution
59
Q

What are the 9 mandatory requirements in Service Charges Professional standard?

A
  • Recover expenditure in line with lease terms
  • Recover no more than 100% of costs
  • Annual provide budgets and explanatory notes
  • Annually provide service charge accounts (showing actual figures)
  • Annually provide service charge apportionment schedule
  • Service charge money to be held in separate bank account
  • Interest must be credited to SC account
  • When acting for tenant, advise that if disputing payment then withhold the amount in dispute
60
Q

What is the responsibility of the property manager when issuing service charges?

A
  • Ensure value for money
  • Ensure quality services that are regularly reviewed
  • Ensure standard of services are monitored
61
Q

What is a sinking fund?

A

A fund within the service charge set up for specific costs that occur occasionally e.g. roof repair, painting

62
Q

What is a depreciation charge?

A

A fixed percentage of the original cost of a property that is charged off to expense in order to compensate for property depreciation

63
Q

What are the 4 methods of service charge apportionment?

A
  • Floor area
  • Floor percentage
  • Weighted floor area
  • RV
64
Q

What is a reserve fund?

A

A fund set aside to cover the cost of a major expenditure - useful for unexpected expenses

65
Q

What are the different types of insolvency?

A
  • Administration
  • CVA
  • Receivership
  • Liquidation
66
Q

What are the implications for the landlord when a tenant goes into administration?

A
  • Landlord cant take any action against the company as it is protected
  • If rent is being paid, the equivalent amount can be claimed from administrator
  • Administrator may seek to assign the lease
67
Q

What are the implications for the landlord when a tenant goes into liquidation?

A
  • Landlord can deduct funds from RD
  • Landlord can seek court order to terminate lease
  • Landlord can forfeit lease
  • Landlord can assign lease
68
Q

What is the difference between a covenant being absolute/qualified/fully qualified?

A

Absolute = can’t do anything
Qualified = can do something with LL consent
Fully qualified = can do something with LL, not to be unreasonably withheld or delayed

69
Q

What is Occupiers Liability Act 1957?

A

Duty of care - occupiers must ensure visitor safety using premises

70
Q

What is Occupiers Liability Act 1984?

A

Duty of care - Occupiers must ensure duty of care even to unlawful visitors e.g. trespassers

71
Q

What is statutory duty placed on the landlord in the Landlord and Tenant Act 1927 and 1988?

A

Consent not to be unreasonably withheld or delayed

72
Q

What is the Corporate Manslaughter and Corporate Homocide Act 2007?

A

Companies can be found guilty as a result of serious management failure or duty of care - Unlimited fine

73
Q

How do you hand over a SC account upon sale or change of manager?

A

Complete interim SC rec for the period

74
Q

What is a cost undertaking?

A

Undertaking by one party to pay costs of another

75
Q

What is a warranty?

A

Written guarantee promising to repair/replace item within set time period

76
Q

What is TUPE?

A

Transfer of undertakings of employment
- Protects employees if business they are in changes hand
- Moves employees from old employer to new employer
- applies to those that work at prop e.g. cleaner

77
Q

What are the health and safety / fire obligations as PM?

A

Ensure GRA and FRA carried out annually

78
Q

What insurance is a landlord typically required to have under leases?

A

Insurance against property damages - Loss of rent and public liability insurance

79
Q

What is involved in third party procurement?

A

Contractor needs to be on approved supplier list
- Must tender works to at least 3 contractors
- Contractor must be safe contractor accredited

80
Q

What is death by negligence?

A

Person liable for death of another through negligent behaviour/conduct

81
Q

Why is rateable value not viewed as appropriate method of service charge apportionment?

A

Does not reflect a reasonable assessment of benefit of using common services

82
Q

Why was a PPM instructed such as at Ilford High Road (What are the benefits)?

A
  • Performed to preserve a property’s condition
  • Demonstrates proactive approach (especially here as just commenced management) - Avoid any hidden costs and demonstrates strong management skills
83
Q

How would you manage a rent deposit?

A

Comply with obligations under rent deposit deed
- Hold funds in separate bank account designated to deposits
- Need to protect funds in case LL becomes insolvent

84
Q

What do you do if the tenant can’t pay rent?

A

1) Attend site to see if they are trading
2) Find out reason for inability to pay - Assess from their, could need payment plan/drawdown/CRAR/guarantor(AGA)/forfeiture

85
Q

How is forfeiture for non-payment of rent different to forfeiture for non-compliance of repair?

A

Repair = service S146 of law and prop act 1925 and tenant has 6 months to remedy breach
Rent = 21 days pass, walk in and change locks

86
Q

Why is it important to look at management accounts as well as audited accounts?

A
  • Audited accounts may be a year or so out of date as these are submitted 9 months after year end
  • Management accounts show a business is doing on a month/quarterly basis
87
Q

What is a reasonable time to respond to application to assign?

A

Usually 1 week but dependent on agent

88
Q

What is dilapidation figure based on?

A

The diminution in value as a result of wear and tear from the tenant’s occupation

89
Q

Tell me about your responsibilities for vacant buildings

A
  • Vacant unit inspection
  • Rates
  • Ensuring building is suitable for viewing
90
Q

What is the rule privity of contract?

A

Only the parties to a contract can enforce its terms

91
Q

What are the penalties under the Corporate Manslaughter and Homicide Act 2007?

A
  • Unlimited fines
  • Remedial orders
  • Publicity orders
  • Imprisonment
92
Q

What information was provided with the LTA such as the one at Wooburn Industrial Estate?

A

Information provided in writing:
- Scope of works - Including plans
- Acceptance of fees
- Site specific risk assessments
- Permit to work
- Insurances necessary

93
Q

What happens if superior landlord consent is required?

A
  • Advise tenant potential for increased costs and longer time of processing as superior landlord may withhold consent - Agreement may be between three parties
94
Q

What is section 3 of the Landlord and Tenant Act 1927?

A

Enables a business tenant to carry out improvements which are prohibited by the lease and improve the letting value of the premises

95
Q

What happens if you discovered unlicensed works on review or assignment?

A

Breach of lease
- May be able to reject assignment
- Potential to forfeit lease
- Retrospective licence
- Could rentalise (if improvement but depends on wording)

96
Q

How do dilapidations relate to alterations?

A

Licence to alter an extension of the lease and will be considered at the end of the lease - May be required to reinstate and will be included in dilaps

97
Q

How do MEES relate to alterations?

A

Reasonable to withhold LL consent if works negatively impact EPC rating

98
Q

Can consent be granted retrospectively?

A

Yes on the agreement full plans and scope are provided to complete licence docs

99
Q

What is a duty of care deed? What is its purpose?

A

A document between property manager and landlords funder - Creates legal relationship between the parties for payment of rent and general matter

100
Q

What are some key duties of a property manager?

A
  • Client report
  • Collecting monies
  • Service charge budget/rec
  • Occupier liason
  • Energy management
  • H and S compliance
  • Procurement of third party suppliers (contractors)
101
Q

What are the issues associated with a lack of insurance?

A
  • Increase risk if claim made
  • Negligence / against the law
102
Q

What are the two tests for insolvency?

A
  • Cash flow insolvency test
  • Balance sheet insolvency test
103
Q

What is CVA?

A

Company voluntary agreement
- Company in financial difficulty but not insolvency
- Makes viable proposal to creditors with aim to secure acceptable % they are owed

104
Q

What is administrative receivership?

A

Company breaches terms of borrowing - Creditor may appoint administrative receiver to collect money owed

105
Q

What is compulsory liquidation?

A

Company unable to pay its debt - company winded up and stops trading and liquidator sells of assets

106
Q

What is voluntary liquidation?

A

Company unable to pay its debt and ceases to trade - assets sold off to repay creditors

107
Q

What is the difference between an insured and uninsured risk? (example of each)

A

Insured risk (e.g. escape of water) = risk which premises required to be insured under lease
Uninsured risk = risk not insured against (e.g. wear and tear issues or terrorism)

108
Q

How long is PPM usually valid for?

A

Between 10-15 years. 10 in case of Ilford High Road

109
Q

What are the timescales for reporting within the service charges professional statement?

A

Budget = Issued minimum 1 month prior to start of SC year (comments and matrix
Reconciliation = within 4 months of SC year end (expenditure cert + explanations0

110
Q

What is a budget?

A

The expenditure for an individual property that the landlord/agent expects to be incurred within a set period of time (service charge accounting period)

111
Q

What is a reconciliation?

A

Formally documents the agreement of the bank statement balance to the total of client money held, recorded by the cash book balance.

112
Q

What is a reconciliation(SC)?

A

A comprehensive comparison of all service charge - Income demanded against all service charge expenditure (including accruals / prepayments) for a given SC accounting period.

113
Q

What is a year end statement?

A

The account of service charge expenditures/costs and related notes within the service charge period. These are issues following the end of each service charge period

114
Q

How does ADR relate to SC under the professional statement?

A

ADR supported and recommended as basis to settle SC disputes
- Lease has a provision for ADR and is proactively pursued

115
Q

Tell me about the right to challenge under the service charge professional statement

A
  • Leases should have a provision for disputes to be resolved through ADR
  • RICS nominate suitable person if meditation cannot determine dispute
116
Q

When can you forfeit a lease?

A

If rent remains unpaid 21 days after due - S.146

117
Q

How would you go out forfeiting a lease?

A

Peacable re-entry (can’t be done on mixed-use, residential or if someone is in premises)

118
Q

What is a waiver?

A

If right to forfeit has arisen, if landlord acts in way that treats the lease as continuing, they waiver the right to forfeit

119
Q

What amounts to a waiver?

A

Communicating with tenant once right to forfeit for non-payment of rent has arisen

120
Q

What should you consider prior to forfeiture?

A
  • Not to waive the right
  • Evidence that a S.146 can be served
  • If there is a commercial advantage to forfeiture
121
Q

How can you pursue a former guarantor? (what legislation?)

A

By serving notice on former tenant/former guarantor if there is an AGA - Served within 6 months of debt arising

122
Q

When did CRAR come into force?

A

2014

123
Q

What are the requirements for CRAR?

A
  • Minimum sum equivalent to 7 days rent outstanding
  • 7 days notice before attendance - details included within notice served
  • Notice served in specific way
  • Time limit for seizing goods from service notice is 12 months
  • Goods can only be seized between 6am and 9pm
  • Goods seized must be valued and not sold for 7 days
124
Q

What is a winding up petition? What is it used for?

A
  • Step after statutory demand
  • Statement of intent by creditor to shut down business due to unpaid debt
  • Most serious legal action a creditor can take
  • 7 days before financial info becomes public
125
Q

What did CRAR replace?

A

Replaced the common law right to ‘levy distress’

126
Q

Is there any RICS guidance with regards to alteration?

A

RICS Guidance Note: Licence for Alterations in Commercial Property, 2nd Edition 2013

127
Q

What is administrative receivership?

A

When a party breaches terms of its borrowing - creditor may appoint an administrative receiver to collect the money owed

128
Q

What are the benefits of a PPM?

A
  • Preserves a property’s condition
  • Proactive approach - aims to avoid unplanned disturbances and sudden maintenance costs
129
Q

What are the requirements under RICS Real Estate Management for rent demands?

A

You should submit rent demands in a timely manner and ensure they are clear and understandable by tenants

  • To include relevant taxation in demand