SGS 8: Contents of a lease 1

Question 1

What should you break down your advice to your client into?

Answer 1

Four Ls:

• Lease
• Law
• Landlord’s title
• Local authority consents

Question 2

How do you calculate the CED?

Answer 2

Read the definition of ‘Term’

• From and including/commencing on = the lease will expire on the day before that date in the relevant year/month
• From = where a lease is stated to be ‘from 25th March’, it will actually commence on 26th March and will expire on 25th March

Question 3

What is a break clause?

Answer 3

An option to end the lease before its CED, agreed in negotiations prior to grant

Question 4

What is a service charge?

Answer 4

Tenant pays a proportion of the repair + maintenance liability of the entire building/development, depending on the floor area they take up

Question 5

What is the service charge likely to be/depend on?

Answer 5

Lease of whole: tenant likely to assume responsibility for repair to the whole building. Contributions to shares facilities are recovered by way of a service charge
Lease of part: tenant only directly responsible for upkeep of its ‘internal envelope’. Landlord responsible for maintaining the structure and common parts of the building, recovered via a service charge levied on all tenants in the development

Question 6

What is insurance rent?

Answer 6

The premium paid by the landlord for insuring the premises against damage caused by insured risks and also for insuring against 3 years loss of rent. The tenant pays the IR to the landlord on the usual quarter days

Question 7

Landlord’s obligations re insurance

Answer 7

To insure the whole of the premises against damage caused by the insured risks

Question 8

When is the Landlord not obliged to reinstate the premises?

Answer 8

If, despite using reasonable endeavors, he is unable to obtain permissions

Question 9

Rent suspension clause

Answer 9

If the premises are damaged by an IR so they cannot be used or occupied, then the tenant does not have to pay the annual rent, insurance rent or service charge until the earlier of

• the date the Premises are agains fir for occupation
• three years from the date of the damage

Question 10

What if the premises are damaged or destroyed by an IR and cannot be occupied or used within three years?

Answer 10

Either party can serve a notice on the other to terminate the lease