SGS 10 (Alienation)

Question 1

If the landlord is concerned about the covenant strength of a proposed assignee or under tenant, what can they do?

Answer 1

Could ask for a third party guarantee or a director’s guarantee or a rent deposit.

Question 2

When s.19(1A) applies, what conditions canNOT be imposed?

Answer 2

s.144 LPA 1925: cannot charge a premium for giving consent.

Question 3

s.19(1C)?

Answer 3

If any circumstances or conditions which fall under s.19(1A) are referenced to determination by the landlord, the landlord must act reasonably, or there must be a right for the tenant to to refer the issue to an independent third party.

Question 4

Crestfort v Tesco?

Answer 4

indicates all pre-conditions must be satisfied before landlord even has to consider giving consent.
But still subject to International Drilling test.

Question 5

What documents are required for the grant of an underlease?

Key covenants?

Answer 5

Licence to underlet (records consent and creates privity of contract between landlord and under tenant)

New lease (between T and UT)

SDLT1

AP1 (or FR1 if landlord’s title is unregistered)

Question 6

Assignment of registered lease - documents to lodge at LR?

Answer 6

AP1 
TR1 (cc)
SDLT5 (cc) 
DS1 and new charge (if applicable) 
AGA (from outgoing tenant to Landlord)

Question 7

What is the alternative to a TR1?

Answer 7

Deed of assignment - if original lease not registered.

Question 8

When is an application to the LR required?

Answer 8

Always for an assignment - register transfer and if applicable, discharge of outgoing tenant’s charge and registration of assignee’s charge.

Question 9

AGA details?

Answer 9

Original tenant remains liable to landlord. BUT released if assignee lawfully assigns the lease.
Recovery of rent arrears Landlord must serve notice on Tenant within 6 months of particular rent instalment becoming due (s.17(2)(a) and (b) LT(C)A 1995).

Question 10

Role of the surveyor?

Answer 10

Assesses covenant strength of proposed assignee.

Fees normally paid by tenant

Question 11

What does s.19(1)(a) do?

Answer 11

upgrades qualified covenants relating to alienation into fully qualified.
International Drilling: grounds for refusal must be based on L and T relationship

Question 12

What does s.19(1A) do?

Answer 12

Applies assignment provisions in new commercial leases and allows L and T to agree circumstances where consent may be refused and conditions which may be attached to consent that are automatically reasonable.

Question 13

s.1 LTA 1988?

Answer 13

All leases containing an FQC relating to alienation - where written application made to L for consent, must reopens within reasonable time.
Reasonable = 28 days (Dong Bang Minerva).

Question 14

Ashworth Frazer?

Answer 14

reasonable to refuse consent to assign where landlord believed proposed assignee intended to use premises in a way which would give rise to a breach of covenant.

Question 15

When would you use an FR1 vs an AP1?

Answer 15

AP1: use to register assignment or under lease where either: original lease registered or original lease unregistered but more than 7 years remain.

FR1: use if LANDLORD’s title is unregistered.

Question 16

Why is it necessary for a licence to underlet to contain covenants?
What is the key covenant?

Answer 16

NO privity of contract or estate between head landlord and under tenant. Difficult to enforce covenants against under tenant. Some covenants need to be performed by the occupier under tenant e.g. to repair premises.
KC = comply with terms of the headlease