Rent Reviews Flashcards
What is time of the essence in a rent review clause?
timing is material to the performance of the contract. time is not of the essence unless is specifically stated (Holdings vs. BBC)
Outline the Rent Review Procedure.
- Written instructions from client.
- Gather legal docs (lease, LTA, Planning etc).
- Read Lease (is time of the essence)
- Inspect and Measure.
- Gather Comparables
- Give Written Recommendations to client
- Service Notice to Landlord/ Tenant
- Negotiate
- 3rd Party needed? Arbitrator, Independent Expert. PACT?
- Calderbank Offer?
- Sign Rent Review Memo
What is a Calderbank Offer? How long is the offer valid for?
Calderbank v Calderbank (1975)
Its an written unconditional offer to settle the rent review. Must include suggestions as to how the costs will be paid (legal, court fees, arbritrator fees etc). For example, if L makes a offer and T refuses. Then and independent expert raises the rent above L’s original offer then T will be liable for fees.
Offer open for 21 days
What are Deeming Provisions
Deeming Provisions states that when L proposes a new rent. If T doesn’t respond in time, the proposed rent is valid.
Starmark Enterprises v CPL Distribution (2001) £84,400 rent upheld.
Lease Terms affecting value?
- Alienation Provisions
- The User Clause - is it limited
- Repairing obligations - what are the tenants obligations?
What are some common Assumptions in a Rent Review Clause
- Vacant Possession
- The subject property is fit for immediate occupation and use
- The property is available to let on the open market by a willing landlord to a willing tenant at the market rent
- All the covenants in the lease have been observed by the Tenant
- The property may be used for any purpose permitted under the terms of the lease.
What are some common Disregards in a Rent Review Clause?
- Any effect on the rent of the tenant’s occupation
- Goodwill
- Any increase in rental value caused by tenants improvements
- Any licences (such as alcohol) that is personal to the Tenant
Case Law – Ponsford v HMS Aerosols – the lease had no provision for excluding Tenant’s improvements, therefore they were taken into account at rent review
What is the Hierarchy of Evidence?
Determines which evidence for getting to market rent is most true.
- Open Market lettings
- Lease Renewals
- Rent Reviews
- Independent Expert
- Arbritrator Awards
Dispute Resolution Procedures for Rent Reviews?
- L and T Negotiation
- Calderbank Offer
- Independent Expert/ Arbitrator (Apply through RICS)
Why do you not use an Calderbank Offer when using an Independent expert in determining Rent Reviews
Independent Expert cannot award costs, Arbitrator can.
What are arbitrators and Independant Experts Governed by?
Arbitration Act 1995 and the lease
Can you appeal the judgement of an Arbitrator or IE?
Arbitrator - some right of appeal
In dependant Expert - None
Can Sue a A or IE?
Can sue for negligence if can prove that they acted in bad faith.
What are A and IE bound by when deciding the new rent?
A must be between the two offers made by L and T. IE can be their own market determination.
