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FLK2 > Property Practice (week 6-10) > Flashcards

Property Practice (week 6-10) Flashcards

1
Q

what does a rent review clause typically disregard?

A

typically disregards any improvements made by the tenant at their own expense (make sure tenant is not penalised with higher rent due to their own investment in the property)

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2
Q

what is a mandatory requirement of the code for leasing business premises (RICS) if one party is unrepresented?

A

must advice the unrepresented party about the existence of the code and recommend them to seek professional advice

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3
Q

what is an OS1 search and when is it done?

A

it is a pre-completion search that ensures the landlord’s title is free from any entries that would prevent the lease from being granted. provides priority for the lease over any subsequent dealings with the property (lease of whole)

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4
Q

what is an OS2 search and when is it done?

A

it is a pre-completion search that ensure the landlord’s title is free from entries that would prevent the lease from being granted. (for lease of part)

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5
Q

when a lease states ‘from and including’ when does it end and when does it start?

A

the term starts on that date and includes it eg, 1st April 2023 for 5 years it ends the day before the same date 5 years later 31st March 2028

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6
Q

what is considered and disregarded when calculating an open market rent review?

A

disregard any improvements made by the tenant and assume premises are vacant and available for letting (fair market rent based on comparable properties without tenant specific alterations)

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7
Q

who is responsible for drafting the lease?

A

landlord’s solicitor

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8
Q

in an FRI lease does a tenant need to repair to ‘good repair and condition’ even if they were not in such a state at beginning of the lease?

A

FRI lease requires tenant to put premises into good repair and condition, even if they were not in such a state at the beginning of the lease. includes addressing inherent and structural defects unless explicitly excluded.

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9
Q

in an FRI lease - is the tenant responsible for inherent and structural defects?

A

yes they are, unless it is explicitly excluded in the terms

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10
Q

what are the traditional quarters for paying a lease?

A

25th December
25th March
24th June
29th September

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11
Q

what is an FRI lease? (full repair and insurance)

A

landlord is recouping all their costs as tenant ends up paying a lot - tenant is paying for the repairs on the property

means that the tenant picks up the costs associated with the property, and the landlord receives the clear rent

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12
Q

how is rent reviewed in an FRI lease?

A

reviewed to open market rent ‘upwards only’

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13
Q

are tenant’s responsible (under FRI lease) to repair damage caused by insured risk?

A

no they are not responsible unless the insurance payout has been withal or reduced as it is the tenant’s fault

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14
Q

what is covenant strength?

A

this is an issue of concern for an institutional investor. a landlord will want to know that the tenant has the means to comply with its obligations, and also that it has assets that the landlord can recover breaches against.

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15
Q

what are the 3 essential ingredients for a lease?

A
  1. must have exclusive possession
  2. fixed term or periodic term
  3. formalities
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16
Q

if a tenant proposes improvements but landlord has an absolute covenant against alterations and landlord refuses -what can the tenant do?

A

if tenant’s proposed alterations are improvements, then they can serve notice on the landlord. if landlord objects, tenant can apply to the court for permission to carry out improvements (under s3 landlord and tenant act). court will grant permission if improvements add to letting value of the property, are reasonable and suitable to the character of the property and will not diminish the vale of any other property belonging to the landlord.

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17
Q

if there is a qualified covenant against change of use can this be upgraded via statute to fully?

A

no - if there is a qualified covenant then the statute doesnt upgrade it to fully qualified (unlike covenants against alienation or tenant improvement)

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18
Q

can qualified covenants against alterations be converted to fully qualified?

A

yes - qualified covenant against alteration is converted to fully qualified covenant insofar as the tenant’s proposed alterations are improvements from tenant’s point of view.

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19
Q

what can tenant do if landlord refuses consent with a qualified covenant against alterations?

A

if landlord unreasonably refuses consent, then tenant can apply to court for permission to carry out improvements

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20
Q

when is a landlord allowed to charge a lump sum for granting consent to change of use under qualified user covenant?

A

can charge lump sum if the change of use requires structural alterations

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21
Q

how is an open rent review decision made?

A

landlord and tenant to first try to agree on the new rent. if they cannot come to an agreement, then a specialist valuer can be appointed to determine the rent.

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22
Q

if lease is up to 3 years = how is it registered?

A

no register and no note against landlord’s title

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23
Q

what are the registration requirements of a lease between 3-7 years?

A

no register but can note against the landlord’s title

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24
Q

what are the registration requirements for a lease that is 7+ years?

A

must be registered and the land registry and against the landlord’s title

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25
Q

is a commercial Tennant responsible for the repair and demise?

A

yes they are always responsible

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26
Q

what does absolute covenant mean?

A

against alterations meaning they are not permitted and landlord has no obligation to even consider such request

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27
Q

what does qualified covenant mean?

A

means that they are only permitted with the landlord’s consent - landlord doesnt have to give consent

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28
Q

what does fully qualified covenant mean?

A

landlord must act reasonably in deciding to withhold covenant

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29
Q

if a lease has a qualified covenant against alteration - can this be converted?

A

yes = if the lease contains a qualified covenant against alterations then it can be converted to a fully qualified covenant as the tenant’s proposed alterations are improvements from the point of the tenant.

30
Q

what is a licence for alteration?

A

document that the landlord has consented under a qualified covenant.

31
Q

what are the 4 details of work consented to in a licence for alteration?

A

1) carry out the works in compliance with the landlord’s requirements (typically good quality materials and high standard of workmanship)
2) obtain all necessary consent which could include planning permission
3) pay the landlord’s costs (eg, surveyor and solicitors)
4) reinstate the premises (at end of lease - put it back to original state without alterations)

32
Q

when there is an absolute covenant on improvements then tenant will apply to court to allow it.. when will court give permission if improvements…..

A
  • add to letting value of the property
  • are reasonable and suitable for character of the property
  • will not diminish the value of any other property belonging to the tenant
33
Q

what remedy does a landlord have if a tenant assigns lease without obtaining consent as required by qualified covenant?

A

if tenant assigns lease without obtaining necessary landlord’s consent as required by qualified covenant, landlord may pursue forfeiture of lease.

34
Q

what is the common law position for old leases in terms of liability in assignment of leases?

A

privity of contract remains for the original tenant and so remains liable to landlord for rent and performance of other obligations, even after lease is signed.
privity of estate means new tenant is also liable to landlord for rent and obligations that run with the land

35
Q

what are the responsibilities for assignment in terms of the original tenant’s obligations (new lease)?

A

assigning a lease transfers all obligations and leasehold interest to new tenant and original tenant is released from duties under lease (subject to AGA)

36
Q

what are the responsibilities of the original tenant for underletting?

A

underletting allows original tenant to grant a new lease to subtenant but the original Tennant remains responsible for the obligations under the original lease to the landlord.

37
Q

what is the contracting out of security of tenure procedure?

A

serving warning notice at least 14 days before lease completion and obtaining statutory declaration if lease completion is less than 14 days away.
lease must reference both warning notice and declaration.

38
Q

does a tenant need to be in occupation of premises at end of tenancy to qualify for security of tenure?

A

tenant must be in occupation of premises for purpose of their business at the end of the lease term to qualify for security of tenure. (if sublet entire property then tenant loses right to claim security of tenure)

39
Q

what is privity of contract?

A

ability of the original parties to a contract to enforce obligations against each other, even after contract has been assigned

40
Q

what is privity of estate?

A

ability of landlord and tenant at the time to enforce the provisions of the lease against each other.

41
Q

when is the deadline for applying to the court to challenge landlord’s opposition using a s25 notice and seek renewal lease?

A

tenant must apply by the date of the deadline which is outlined in the s25 notice (termination date) = deadline for applying to the court to ensure they can challenge the landlord’s opposition and seek renewal of the lease

42
Q

what must a tenant do if the lease completion is less than 14 days from date of notice for contracting out? (what type of declaration)

A

if lease completion is less than 14 days from the date of notice then tenant must provide a statutory declaration made before an independent solicitor, not just a simple signed declaration. failure to provide correct form of declaration means lease is not validly contracted out and tenant enjoys security of tenure

43
Q

what is the consequence if the procedure for contracting out are not followed?

A

the lease is valid but tenant enjoys security of tenure (as contracting out of the security of tenure provision has not been correctly done)

44
Q

what is a s25 hostile notice (and who serves it)?

A

landlord serves it and involves the landlord’s intention to oppose lease renewal on statutory grounds. landlord must prove their genuine and honest intention to occupy the premises for their own use for it to be valid.

45
Q

what must a landlord prove when they serve a hostile s25 notice?

A

must prove their genuine and honest intention to occupy the premises for their own use for it to be valid

46
Q

what are the 3 elements needed to prove security of tenure?

A
  1. needs to be a tenancy
  2. needs to be occupied by the tenant
  3. needs to be for business premises
47
Q

who can apply to the court to grant a new tenancy under security of tenure?

A

both tenant and landlord can apply to the court for an order to grant for a new tenancy

48
Q

what is the earliest you can apply to the court after being served s25 notice?

A

as soon as s25 notice has been served

49
Q

what is the deadline (latest you can apply to the court) that you can apply to the court when you have been served a s25 notice?

A

the date of termination (specified in the notice)

50
Q

when is the earliest you can apply to the court after being served a s26 notice?

A

either the service of the counter notice or 2 months after the service of the s26 notice

51
Q

when is the latest you can apply to court after being served a s26 notice?

A

date before proposed commencement date of the new lease

52
Q

what can the court grant (for issuing a new lease) if have security of tenure?

A

court can grant up to 15 years, rent will be open market rent, and other terms are determined by the court having regard to the terms of the current tenancy and relevant circumstances

53
Q

what is a s25 notice?

A

landlord states when current teeny will end (date of termination) must be on or after date of contractural term dates

54
Q

when must a s25 notice be served?

A

must be served between 6-12 months before date of termination

55
Q

what is a friendly s25 notice?

A

landlord is willing to renew lease to start the date after the date of termination

56
Q

what must a landlord submit if they oppose a s26 notice?

A

must submit a counter-notice with grounds of opposition

57
Q

what are the 3 discretionary grounds (if landlord establishes court has discretion whether to grant or not) for opposing the renewal of a protected lease?

A

(a) breach of tenant repairing obligation = evidence of serious breach
(b) persistent delay in paying rent = length of delay and number of times
(c) other substantial breaches of tenant obligations = evidence of serious and persistent breaches

58
Q

what are the 3 mandatory grounds (if landlord establishes court must grant possession to landlord) for opposing the renewal of a protected lease?

A

(d) availability of suitable alternative accommodation = landlord must make an offer of suitable alternative accom
(e) intention to demolish or reconstruct premises or carry out substantial work = firm and settled intention to redevelop potentially show planning permission
(f) landlord intends to occupy premises = firm and settled intention, has owed reversion at least 5 years before date of termination

59
Q

how is compensation calculated when landlord opposes renewal of protected lease (for business that has occupied premises for less than 14 years and for business occupiers over 14 years)

A

for less than 14 years = at 1x rateable value
for more than 14 years = at 2x rateable value

Rateable value: value based on estimated annual rental value of premises, and it is fixed by the local authority for purpose of the calculating business rates due for the premises.

60
Q

what is a s26 notice and who serves it?

A

served by a tenant but it is a request for a new lease of the same premises

61
Q

what is the effect of a qualified covenant against alienation?

A

it is upgraded to a fully qualified covenant and therefore, landlord MUST act reasonably. Also, landlord is under a statutory duty to respond to the written request within 28 days (reasonable time)

62
Q

what documents should a landlord provide to a tenant’s solicitor when granting a lease?

A

tenant’s solicitor needs to investigate landlords registered title so need to have CPSE1 enquiries (as with freehold)
CPSE3 additional enquiries in respect of new letting
agreement for lease (appropriate when landlord has agreed they will complete works before completion of the lease)
written consent from lender is required giving the landlord permission to grant the lease

63
Q

what are the consequences if a landlord surrenders their lease but they have a subtenant?

A

the landlord will become the immediate landlord of the subtenant under the terms of the sublease

64
Q

when must SDLT need to paid by?

A

paid with 14 days of the effective date. usually, completion but will be earlier if tenant goes into occupation

65
Q

what document creates privity of contract between the landlord and the undertenant?

A

licence to underlet (because landlord and undertenant as well as the tenant enter into this document). grants them formal permission to underlet and will contain a covenant from the undertenant to comply with the tenant covenants in the lease

66
Q

when can a landlord serve a s25 notice? (what is the time frame)

A

can be served by landlord 12 months before the expiry (at the earliest) or any time after whilst tenant is holding over and the terms of its current lease are continuing.

67
Q

when is the earliest date of termination for a s25 notice? (eg, if lease is due to end 19th may but today is 1st Jan - when is the earliest date of termination if send s25 notice on the 1st jan?)

A

The date of termination must be at least 6 months but no more than 12 months after the date of the s25 notice being served. Therefore, if lease was due to end 19th may but today is 1st jan and serve s25 notice then lease will need to be terminated earliest 6 months from 1st jan so 1st July is the earliest date.

68
Q

what can be CRAR recover?

A

used to recover principal rent plus VAT and interest owed on principal rent which is outstanding under the lease. insurance premium is NOT classed as principal rent

69
Q

what type of covenant is this “tenant shall not do [] without landlord’s consent?

A

it is a qualified use covenant and it does NOT upgrade a qualified use covenant to a fully qualified covenant. therefore, there is no obligation on the landlord to act reasonably

70
Q

what is a TR1 and who enters into it when assigning a lease?

A

entered into by tenant and assignee and it will transfer the lease to the assignee. licence to assign is entered into by all parties and grants permission to assign. assignee will enter into a direct covenant with the landlord to comply with the tenant covenants in the lease.

71
Q

who serves a s27 notice, what does it do and how long is the notice?

A

the tenant serves this and the tenant can terminate the tenancy by serving it at least 3 months notice

72
Q

when granting a lease of part - what search form should be used and how long is the priority period?

A

need to have an official search on form OS2 which gives a 30 working day priority period

FLK2 (9 decks)

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