Real Estate Flashcards
what does the solicitor check for in the commercial lease?
9 things
duration rent review service charge alienation payment of rent use of premises insurance alterations irritancy
What are the lease management documents?
deposit agreement
guarantee
licence for works
explain duration under the commercial lease
sets our how long the lease is for
landlord prefers longer lease as looking for assured return on investment
tenants would possibly want it to be shorter (plans could change)
explain rent review under the commercial lease
sets out when each rent review will take place, the method of review
landlord prefers this to be as frequent as possible in order to increase rent often
tenant would want this to be as infrequent (cheaper)
landlord would put in an upwards only clause
explain service charge under the commercial lease
a fair proportion of the service costs subject to any adjustments made by the landlord
landlord will want to give tenant as much notice as possible so that they can pay
tenant will want as much notice as possible so they have time to pay
also want the cost to be as low as possible
low rent = higher service charges
explain alienation under the commercial lease
contract will include standard provision prohibiting tenant from assigning or subletting the lease without the landlords consent
landlord wants to know who is renting the premises at all times
tenants lease could be terminated if sublet without consent
explain payment of rent under the commercial lease
dates when rent is payable
landlord wants the rent to be paid in easy instalments so there are no issues with payment from the tenant
tenant will want smaller, frequent instalments so they don’t have to pay large sums at a time
explain use of premises under the commercial lease
sets out the purpose for which the tenant may use the premises
landlord doesn’t want the premises being used for inappropriate purposes
tenant needs to know exact purposes allowed so as not to breach the lease
explain Insurance under the commercial lease
usually covers a full repairing and insuring basis - means tenant is solely reliable for repairs
landlord doesn’t want to take responsibility for repairs to damage not caused by them
tenant wouldn’t prefer this
explain alterations and additions under the commercial lease
tenant is prohibited from making major alterations to the property and may be required to reinstate it
landlord wants to keep property in the same condition it started in
tenant will not want to make any changes in case the have to change them back/pay a fine
explain irritancy under the commercial lease
allows landlord to terminate the lease is any one of a number of specified breaches by the tenant occurs
stops landlord from having to continue the lease where the tenant is not acting the way they should
encourages tenants to be careful to follow the lease terms properly
explain the deposit agreement for lease management documentation
as an alternative to seeking guarantees to secure an otherwise inadequate tenant, landlords will sometimes seek deposit agreements
money is placed into a financial pot at the commencement of the lease which the landlord can dip into in the event of a default by the tenant
can apply to rent but also other costs like damage
interest accumulated on the deposit belongs to the tenant and the tenant can acquire this yearly
explain the guarantee for lease management documentation
used in circumstances where a guarantee regarding the tenants obligations under the lease is required
prepared on the assumption that a full guarantee is given, making the guarantor a debtor in their own right regarding any failure by the tenant to meet the obligations
what are the conditions for bankruptcy?
must owe a debt of at least £1500 but no more than £17000 if you want to apply through MAP
if the debt is over £17000 or you own assets valued over £2000 then only option is to apply through the full administration route
must have received money advice from a money advisor
must live or have lived in scotland, or established a business in scotland in the year leading up to your bankruptcy
must not have been made bankrupt in the last 5 years
cant apply though MAP if youve been made bankrupt this way in the last 10 years
need to either meet MAP conditions, be apparently insolvent or have a certificate or sequestration
how can a creditor make an individual bankrupt?
creditors will ask the sheriff to make you bankrupt
you must owe them at least £3000 including fees, interest etc
the creditor must have provided you with the debt advice and information package
(must have been sent this at least 2 weeks before petition)
you must be apparently insolvent
what is apparent insolvency?
legal term that shows you cannot pay your debts
a creditor must have gone to court and obtained a ruling that you owe the debt
what evidence can be used to prove apparent insolvency?
charge for payment
- requires payment in 14 days or can be used to prove AI
statutory demand
- gives notice that a creditor may make you bankrupt if you dont pay
- becomes evidence after 21 days
what is gratuitous alienation?
when the trustee discovers that the debtor has disposed of parts of the assets prior to sequestration
s.98(2)
must be shown that there has been transfer of the debtors property or a renunciation of a claim or right
an alienation will be challenged if made to an associate of the debtor within 5 years of the date of sequestration
if made to someone who is not an associate then the period goes back as far as 2 years
who is an associate for gratuitous alienation?
s.229
spouse/CP (includes former)
business partners and other associates
debtors employer or employee
a friend of a debtor no matter how close cannot be an associate
neither can fiance, mistress etc
when does alienation become completely effectual?
moveables - date of delivery
heritage - recording of disposition
what is unfair preference?
choosing to pay one creditor to the prejudice of others
preference must have occurred no more than 6 months before the date of sequestration
a prejudice is unfair if a creditor is preferred to the prejudice of the general body of creditors
s.99(1)
what happens to the family home if owned fully by the debtor?
fully own the house yourself then your interest in the property transfers to the trustee
becomes their duty and intention to sell
have to check for a mortgage and make sure repossession hasnt begun by the lender
if there is a mortgage and the equity in the house isnt far greater than what is owed its unlikely the trustee will sell
if there is a spouse need to check that there are no interests in the house under the matrimonial homes (family protection) act 1981
usually wont sell where children involved
what happens to the family home which is jointly owned?
trustee cannot sell without the co-operation of the joint owner
can buy out the partners share - can be possible via remortgage
if you jointly own the property and there is enough equity to make it worthwhile to release it to your creditors, you may be able to ask the other owner/s to buy you out of your share via lump sum/installments/remortgage
what is bankruptcy?
bankruptcy is the legal process by which you are formally declared insolvent (means you cant pay your debts as they become due)
to become bankrupt the court has to issue a bankruptcy petition against you (you can apply or your creditors can)
what happens when you are made bankrupt?
your assets are used to pay your debts
must follow the bankruptcy restrictions
name and details are placed in the register of insolvencies
how long does bankruptcy last?
6 months for MAP
usually 12 months for full administrative
what are the conditions for applying for bankruptcy through MAP?
must owe total debt of at least £1500 but no more than £17000
total assets cannot exceed £2000
must have taken money advice from a money advisor
living or have lived in scotland 1 year
not been sequestrated in 5 years
not made bankrupt through MAP for 10 years
pay application fee £90
have a signed certificate of sequestration
what are the conditions under MAP bankruptcy?
discharged after 6 months
trustee discharged shortly after
cannot borrow more than £2000 where you already have debts of £1000 or more without disclosing your bankruptcy status
cannot engage in business transactions without disclosing the name of the business
what happens if you do not comply with restrictions under MAP or to comply with your trustee?
committed an offence and liable to a fine, imprisonment or both
failure to co-operate with your trustee can result in consequences such as a bankruptcy restriction order
what are the conditions for applying for full administration bankruptcy?
owe total debts or £3000 or more but do not qualify for MAP
be living or have lived in scotland for the past year
not made bankrupt in 5
pay application fee of £200
must have received money advice from a money advisor
must be either apparently insolvent, have a certificate of sequestration but dont qualify for MAP
what are the conditions under a full administration bankruptcy?
not discharged until at least 12 months
after discharge you must continue to pay your debtor contribution order if you have a regular income (usually 48 months)
provide your trustee with the current financial information every 6 months until debtor contribution order has ended,
keep trustee informed of changed in circumstances
co-operate fully
what happens if you fail to co-operate under the full administrative bankruptcy?
fail to co-operate with terms - committed an offence and liable to a fine, imprisonment or both
failure to co-operate with your trustee can result in consequences such as a bankruptcy restriction order
what is a certificate for sequestration?
granted by an authorised person and certifies you have demonstrated that you are unable to pay your debts as they become due
most money advisors, insolvency practitioners are authorised to grant a certificate
use it to apply for your own bankruptcy
must apply within 30 days or issue
no charge for the certificate itself but may be charged for the advice
what is the trustees role in bankruptcy?
person who administers the bankruptcy - works for the accountant in bankruptcy
gathers the debtors assets, including property and sells them pay the costs of managing their bankruptcy and pay debts
trustee will contact the debtor about their finances and request information about such assets, who their creditors are, income and weekly outgoings, entitled to ask for wage slips, bills, bank statements etc
what are the consequences of bankruptcy?
credit rating is affected for many years
banks may freeze or close your accounts and savings are transferred to the trustee
name and details remain in public record in register of insolvencies for 2 years
trustee may seek to enforce bankruptcy restrictions on the debtor due to their conduct
what are the examples of behavior which would warrant a bankruptcy restriction order?
incurring debts they knew that had no chance or repaying
giving away assets or selling them at less than their value (gratuitous alienation)
gambling
not co-operating with the trustee
explain the discharge of bankruptcy
debtor is discharged (12 or 6 months) but the administration of the bankruptcy continues until the trustee has done everything required and is then discharged themselves
debtor must continue to co-operate until the trustee is discharged
trustee remains in office until the administration of the debtors estate is concluded and only then can they seek their own discharge
once a debtor is discharged they have no personal liability to repay the debts they had before being made bankrupt
if the trustee recovers all the costs of the bankruptcy and pay the creditors in full, plus interest, and theres money left over/assets remaining they are returned to the debtor
what are the exceptions to the rule that debtors no longer have liability for debts after bankruptcy?
student loans court fines any fraud incurred aliment all secured payments such as mortgages
