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APC 2023 > Property Management > Flashcards

Property Management Flashcards

1
Q

What are the main documents relating to Property Management?

A
  • RICS Guidance Note on Commercial Property Management in England & Wales 2011
  • RICS Professional Statement on Estate Management 2016
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2
Q

Talk me through the RICS Guidance Note on Commercial Property Management in England & Wales 2011

A

A guide to best practice for commercial property managers

  • Focuses on how a property manager can be efficient, effective and accountable
  • Primary duty of care is to the client (landlord)

Gives specific advice on:
- Rent collection
- Service charges
- Managing buildings
- H&S
- Procurement of third party suppliers

Contains a useful summary of all relevant law and model terms of engagement

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3
Q

Talk me through RICS Professional Statement on Estate Management 2016

A

Mandatory – outlines 12 principles that share the culture of fairness and transparency

  1. Act in an honest, fair and transparent manner
  2. Carry out work with due skill, care and diligence
  3. Terms of Business with CHP
  4. Avoid COIs
  5. Do not discriminate
  6. All communications are fair, decent and clear
  7. All marketing is truthful
  8. Client money is held separately
  9. Hold appropriate PI insurance
  10. Make identity of your client clear
  11. Provide realistic assessments
  12. Ensure meetings, inspections and viewings are undertaken with regard to security and safety
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4
Q

What are the three forms of dilapidations schedules?

A
  1. Interim schedule (during lease with at least 3 years remaining)
  2. Terminal schedule (served in last 3 years)
  3. Final Schedule (served at LEX/break)
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5
Q

What is the first step when reviewing dilapidations?

A

Read the bludclart lease
- Check for lease terms to understand repairing obligations
- Check for a schedule of condition
- Check for Licence to Alter

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6
Q

What document relates to dilaps?

A

RICS Guidance Note on Dilapidations 2016

Aims to reduce claims between LL and Ts

Key points:
- Guidance on diminution valuations
- Explores supersession
- Emphasises importance of careful and considered estimates
- Both parties to keep to agreed timescales
- Both parties expected to act reasonably and make genuine endeavours to settle

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7
Q

What is the format of a dilaps schedule?

A

Format of schedule
- Outline repairing obligations
- State the remedy and cost
- Loss of rent over period to do works (if appropriate)
- Fees + VAT
- Negotiations on WP basis

If agreement not reached, court/ADR is used and Scott Schedule required

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8
Q

What limits the claim of a dilaps schedule?

A

Claim limited to cost of works or in accordance with S.18 of 1927 L&T act - the diminution in value (the difference in value of the property upon possession had the covenants to repair not been undertaken)

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9
Q

Why might a dilaps claim not be settled?

A
  • When the lease is not on full repairing terms
  • Reinstatement not required by LL
  • SoC limits repairing liability
  • If building is to be demolished or refurbished
  • Tenant has gone into administration
  • When agreement made to roll into renewal lease
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10
Q

What are the fundamental principles of rent collection?

A
  1. Accuracy of information
  2. Timing
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11
Q

When is rent usually paid?

A

On quarter days unless stated otherwise

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12
Q

When are the quarter days?

A

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

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13
Q

What is the difference between a standing order and a direct debit?

A

Standing order - can only take out a previously agreed amount of money
Direct debit - where any amount of money can be taken from the account

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14
Q

What steps or considerations should you undertake with regards to rent arrears?

A
  • Always read the lease (check for guarantors, and recovery procedures)
  • Check warning signs (Bounced cheques, persistent late payments)
  • Check for a rent deposit
  • Consider market strength, and chances of re-letting
  • Consider vacant unit costs
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15
Q

If a tenant goes into arrears, what remedies or steps can you take?

A

Ultimately, this is influenced by level of rent outstanding and history and context

  1. Court proceedings (CCJ)
  2. Use of a rent deposit
  3. Pursue former tenants and guarantors
  4. Serve a statutory demand
  5. CRAR scheme (Tribunals, Courts and Enforcement Act, 2007)
  6. Forfeiture
  7. Payment plan
  8. Agree a mutually beneficial arrangement
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16
Q

What is repair?

A
  • Meaning found in case law (Ravenseft Properties v Davstone 1978):
  • Liability cannot arise in absence of repair
  • Tenants may be responsible for inherent defects
  • Repair is not an improvement
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17
Q

Talk me through Ravenseft Properties v Davstone 1978

A
  • There was damage to a property as a result of a design defect
  • The defective areas were replaced
  • It was found that the remedial works fell under the tenant’s repairing liability
  • There is no exclusion for damage caused by an inherent design defect
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18
Q

What are the common types of repairing obligations?

A

FRI - fully, repairing and insuring
eFRI - effective FRI - when the LL is responsible for repairs and re-charges via service charge
IRI - less common in the UK. Only responsible for repair of internals.

19
Q

What remedies can landlords undertake for breach of repair?

A
  1. Serve a repair notice
  2. Forfeit the lease
  3. Serve an interim schedule of dilaps
  4. Do the works and charge the tenant
20
Q

Talk me through a notice to repair

A
  • Served under Section 146 of the Law of Property Act 1925
  • Must be served subject to the repair works required in the lease
  • Notice must be in writing and detail the following:
    1. Details of the breach
    2. Timescale to remedy the breach
    3. A course of action proposed if the tenant fails to remedy the breach
21
Q

Talk me through a forfeiture relating to breach of repair

A
  • Read the lease - there must be a forfeiture clause
  • LL will have to serve a S.146
  • Tenant must be given reasonable time to remedy the breach
22
Q

Talk me through LL entry to undertake works

A

Relates to Jervis v Harris 1996
- States LL has right to enter to undertake the repairs and then claim to recover the cost of doing so from the tenant as a debt.
- Gives the LL a right to pursue an effective remedy against defaulting tenants to ensure that premises are kept in good repair during term of the lease

23
Q

When would a Jervis v Harris clause be used?

A
  • When the tenant in solvent
  • When the LL wants the lease to continue
  • Where the LL wants control over the works
  • Where threat of re-entry may compel the tenant to do the work
24
Q

What is a schedule of condition?

A
  • It schedules the condition of a property including photos, records and plans
  • Limits the tenant’s repairing obligations and reinstatement at the end of a lease
  • Agreed by negotiation between the landlord and tenant prior to commencement of a lease
25
Q

When would a landlord want to use a schedule of condition?

A
  • If the asset is newly developed or refurbished as to document the condition
26
Q

What is a service charge?

A

Charges to tenants of multi-let assets of costs incurred by a LL to maintain and manage the property

27
Q

What are the usual arrangements for a service charge?

A
  • S/c budgets should be agreed with the tenant prior to commencement of the s/c year
  • Annual accounts prepared at year end
  • Balancing payment made at year end upon presentation of audited accounts
28
Q

What RICS documents relate to Service Charges?

A

RICS Professional Statement – Service Charges in Commercial Property 2018

29
Q

What are the aims of the RICS Professional Statement – Service Charges in Commercial Property 2018?

IS.TI.RD

A
  • Improve general standards and promote best practice, fairness and transparency in the management of s/c
  • Ensure timely issue of budgets and certs
  • Reduce cases of disputes and provides guidance on resolution
30
Q

What principles must a professional involved in the management of a service charge account must act in accordance with?

A

9 principles set out within the 2018 PS

  1. All expenditure recovered must be in accordance with terms of the lease
  2. Must seek to recover no more than 100% of the cost
  3. Ensure s/c budgets are issued annually with commentary
  4. Ensure approved accounts showing accurate record of expenditure is circulated annually
  5. Ensure an s/c apportionment matrix is provided annually
  6. Monies must be held in one or more discrete account
  7. Interest earned must be credited to the account
  8. If a dispute arises, must ensure payment withheld should reflect only the sums in the dispute
  9. Any error in s/c billing should be adjusted without undue delay
31
Q

What is in a service charge budget?

(MUSHE)

A
  • Management (fees, H&S fees)
  • Utilities
  • Soft services (landscaping, gritting)
  • Hard services (plumbing, drainage)
  • Exceptional expenditure
32
Q

How is a service charge apportioned?

A
  1. Floor area
  2. Fixed percentage
  3. Rateable value
  4. Weighted floor area
33
Q

Which document refers to Sinking and reserve funds?

A

RICS information paper - sinking funds, reserve funds and depreciation charges 2014

34
Q

What is a sinking fund?

A

A sinking fund is where money is set aside for the replacement of a wasting asset (i.e air conditioning)

35
Q

What is a reserve fund?

A

A reserve fund is formed to meet the anticipated future costs of maintenance (i.e. recurring items such as cleaning)
- Helps avoid major uplift in s/c budget

36
Q

What are the different forms of insolvency?

A
  1. Administration
  2. Receivership
  3. Company Voluntary Arrangements (CVAs)
37
Q

Talk me through Administration

A
  • Commenced by the company, it’s lenders or creditors
  • Creates a period of protection (‘Moratorium’) for the company for the administrator to deal with assets in an appropriate way
  • Restricts action being taken whilst in this period
  • Administrators must send proposals to creditors within 8 weeks

Most common scenarios:
1. Pre-pack business sale
2. Administration trading
3. Wind up

38
Q

What to do when a tenant becomes insolvent

A
  • Tell your client
  • Consider legal action
  • Read the lease – see who is liable
  • Make contact with administrator or receiver
  • Check arrears (rent, s/c and insurance)
  • Ensure property is insured and inform insurers
  • Submit a claim for arrears
  • Consider dilaps
  • Consider position re empty rates
  • Think about re-letting
39
Q

What legislation relates to Administration?

A

Enterprise Act 2022
- Act provided a more streamlined and simplified out-of-court procedure

40
Q

Talk me through a Licence for Alterations

A
  • Written landlord approval to allow tenant to undertake alterations
  • Completed before the works commence
  • Obtain an undertaking for costs at the commencement of the instruction
  • Protects parties at rent reviews and at dilapidations
  • Most licences will require reinstatement
41
Q

What is the RICS guidance on Alterations?

A

RICS Licence for Alterations Guide 2013

  • Provides advice for surveyors dealing with applications from tenants
  • Highlights importance of dealing with matters without delay
  • States importance of a licence
42
Q

What steps should you take when dealing with a LTA?

A
  • Read the lease
  • Ask for plans / specification
  • Obtain an undertaking for surveyor and legal fees
  • Consider risks and factor in compliance with CDM and equality act
  • Report to client
  • Draft LTA
  • Inspect upon completion to ensure works are correct
43
Q

What is a planned maintenance programme and what are the three stages?

A
  • Planned maintenance activity supervised by a property manager or building surveyor
  1. Cyclical maintenance - regular activities i.e servicing of plant, redecoration, cleaning
  2. Preventative maintenance
  3. Responsive maintenance - initiated by the occupier i.e repairing leaks, unblocking drains

APC 2023 (22 decks)

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