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RICS - FINAL APC > Property Management > Flashcards

Property Management Flashcards

1
Q

What are the core property management duties in the PMA?

A
  • The collection of rent, service charge and other sums, owing by the occupiers to the landlord.
  • The Management of the Property.
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2
Q

What are the remedies for Non-payment of Rent?

A

First thing a Property Manager should do is to meet with the tenant on site to discuss. Therein, before a decision for potential remedies is made; the PM should ask to see their accounts.

  1. Negotiate payment plan
  2. Check if has a Guarantor (S.17 of LL & T act allows the LL to claim against guarantor within 6 months if the guarantor settles the arrears, they are entitled to take an overriding lease.
  3. Draw down rent deposit
  4. CRAR
  5. Serve Statutory Demand (preliminary step for bankruptcy)
  6. Forfeiture / Surrender
  7. Court proceedings
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3
Q

What are the basics surrounding forfeiture?

A
  1. The lease would be forfeited by the Landlord entering the premises peaceably.
  2. The T has the right to apply to court for relief from forfeiture and this can be delayed by 6 months.
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4
Q

What is set out in the RICS SC in commercial property?

A

Mandatory requirements and the core principles

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5
Q

What are the 9 mandatory requirements in Service Charge Professional Statement?

A
  1. Recover expenditure in line with lease terms
  2. Recover no more than 100% of costs
  3. Annual provide budgets and explanatory notes
  4. Annually provide service charge accounts (showing actual figures)
  5. Annually provide service charge apportionment schedule
  6. Service charge money to be held in separate bank account
  7. Interest must be credited to SC account
  8. When acting for tenant, advise that if disputing payment then withold the amount in dispute
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6
Q

Aims of Service Charge Professional Statement?

A
  1. Improve best practice, fairness and transparency
  2. Ensure timely issue of budgets and YE certificates.
  3. Reduce cause of disputes, and provide guidance on dispute resolution.
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7
Q

Responsibility of Property Manager when issuing service charges?

A
  1. Ensure value for money
  2. Ensure quality services that are regularly reviewed
  3. Ensure standard of services are monitored
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8
Q

What is the difference between an assignment and a sublet?

A

Assignment - Tenant transfers legal interest in lease to another tenant. Incoming tenant takes over lease obligations.

Subletting - the new sub-tenant has a direct relationship with the tenant and pays them the rent, who then pays the landlord.

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9
Q

How would you deal with as assignment or sublet?

A
  1. Read the lease
  2. Get undertaking for your costs from the assignee
  3. What is the covenant strength of the assignee / sub tenant
  4. What is the proposed rent
  5. Are there any reasonable grounds to refuse consent
  6. LL & T Act 1988 - deal with the application PROMPTLY
  7. If agreed, License for assignment / sub let needs to be written.
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10
Q

Why sub-let rather than assign?

A
  • If market rent is higher than passing rent, then tenant could get profit rent.
  • original tenant may want to re-occupy in future and can temporarily grant a shorter term.
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11
Q

When did the LL & T (Covenants) Act come into effect ?

A

Came into force on the 1st January 1996.

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12
Q

What does the LL & T Act 1995 entail?

A
  • Deals with assignments only
  • Only applies to 1 assignment
  • Brought in Authorised Guarantee Agreements (AGA) to protect the LL
  • The code of leasing business premises says that an AGA should not be a condition of as Assignment unless the proposed assignee is of a weaker covenant.
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13
Q

What are 12 mandatory requirements for members set out in RICS Professional Statement, Real Estate Management 3rd Edition 2016?

A

Conduct business in honest, fair, transparent manner

Carry out work with skill and due diligence

Ensure clients are provided with clear terms of engagement

Avoid conflict of interest, and when they arise deal with them openly and promptly

Do not discriminate

Ensure communications are fair, clear, timely and transparent

Ensure all advertising and marketing is honest

Ensure client money held in separate accounts

Ensure professional indemnity insurance in place

Ensure scope of obligations of work is provided to all parties

Give realistic assessment of buying/selling/rental price

Ensure all inspections and meetings are carried out in accordance with client wishes

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14
Q

What is Statutory Demand?

A

Preliminary step to pursuing winding-up proceedings (AKA bankruptcy)

Can be used to put pressure on tenant to pay arrears

Used on undisputed arrears of £750 + where rent deposit has already been used

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15
Q

Benefit of Licence for Alterations?

A

Protection for LL - requires T to reinstate unit at end of lease, back to how it was originally let

Protection for T - prevents LL from rentalising alterations/improvements at rent review

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16
Q

Aim of LL & T Act 1927?

A

S18 of LL & T Act 1927 limits the amount of damages a LL is able to recover for breach of T repairing covenants

S19 of LL & T Act 1927 states consent must not be unreasonably withheld

17
Q

How would you pursue a guarantor?

A

S.17 of the LL & T 1995 - allows the LL to claim against the guarantor within 6 months of the charge becoming due

18
Q

What is a sinking fund?

A

A fund set up for paying specific costs that occur occasionally EG roof repairs or painting needed every 5 years

19
Q

What is a reserve fund?

A
  • A fund set aside to cover cost of major works or other significant items of expenditure
  • Useful for unexpected expenses
20
Q

What is the purpose of Dilapidations?

A

It entitles the Landlord to get the Property back in the same condition as it was handed over to the Tenant.

21
Q

What must be included in notice to repair?

A

This is S146 of Law and Property Act 1925

Must contain details of repairing breach that has occurred

Must state timescale allowed to remedy breach

Must state course of action proposed if T fails to remedy

22
Q

What is Public Liability Insurance?

A

Covers cost of legal action and compensation claims made against your business by general public

23
Q

What is the leading case law for LL right to re-enter property to undertake repairs?

A

Jervis vs Harris

Gives LL right to pursue remedy against defaulting tenants to ensure premises are kept in good condition.

24
Q

What was LL & T (Covenants) Act 1995?

A

Abolished Privity of Contract for all new leases as of 1 January 1996

Introduced Authorised Guarantee Agreements (AGAs) - former tenant guarantees lease compliance of assignee

25
Q

4 methods of service charge apportionment?

A

Floor area

Fixed percentages

Weighted floor area (typical in shopping centre)

RV

26
Q

How would you manage a rent deposit?

A

Comply with Rent Deposit Deed

Hold funds in separate bank account which is designated as tenant deposits

Need these funds protected in case LL becomes insolvent

27
Q

What is a planned maintenance programme?

A

Planned maintenance activity supervises by a property manager or building surveyor;

  1. Cyclical maintenance - covers work done to maintain the general condition of the property and some communal fittings
  2. Preventative maintenance - proactive programme that ensures buildings and other property assets operate efficiently
  3. Responsive maintenance - emergency repairs.
28
Q

What is TUPE?

A

Transfer of undertakings of employment

Protects employees if business they are in changes hand

Moves employee from old employer to new employer.

29
Q

What is a sweeping up clause?

A

When the landlord is able to recover costs for additional services or costs that might not have been contemplated when the lease was granted but that the landlord might later wish to recover.

May be referred as ‘any other costs and expenses reasonably incurred in connection with the building’ in a lease.

30
Q

What information has RICS published in related to service charges?

A

RICS Information Paper – sinking funds, reserve funds and depreciated charges 2014.

31
Q

What is the legislation governing service charge budgets by the RICS?

A

RICS Professional Statement – Service Charges in Commercial Property 2018

32
Q

How do you calculate management fees in the service charge?

A

Fees are set on a fixed price basis not as a % of expenditure

33
Q

On an assignment part way through the service charge period who is liable to pay any balancing charges on reconciliation?

A

Assignee

34
Q

What is the Risk control Hierarchy?

A
  • Eliminate
  • Substitute
  • Engineer Control
  • Administrative Control
  • PPE
35
Q

What can the enforcement agents take when they attend site for CRAR?

A

Items which belong to the tenant that have a value on their balance sheet

36
Q

Different types of insolvency?

A

Administration

Company Voluntary Arrangement (CVA)

Receivership

Liquidation

37
Q

What goods cannot be seized under CRAR?

A

Perishable goods, work tools, and kit belonging to a 3rd party

RICS - FINAL APC (16 decks)

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