Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

SQE Property Practice > 6. Grant of a Lease > Flashcards

6. Grant of a Lease Flashcards

1
Q

For a 10 yr FRI lease of a unit in a retail park, how many rent reviews are likely?

A

1 at 5 years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the formalities for a tenancy 3 years or under?

A

It can be an ORAL tenancy (not only writing)!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A lease of what term requires a DEED?

A

+3rys

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

On rent review, can rent be increased to reflect T’s goodwill/business success?

A

No, this is normally disregarded.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

On grant of a lease, when would an OS3 search be used pre-completion?

A

When the lease is NOT REGISTRABLE (7yrs or less).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Why are institutional investors attracted to commercial property?

A
  1. Income
  2. Capital Growth
  3. Reasonably Secure
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What type of T may an institutional LL be more attracted to?

A

A more established business with better covenant strength.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What may the LL require of a T with weaker covenant strength?

A

Guarantor and/or rent deposit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A LEASE is a grant of a right that fulfils what 3 criteria?

A
  1. EXCLUSIVE POSSESSION
  2. CERTAIN TERM (fixed term or periodic tenancy)
  3. FORMALITIES (+3yrs required a DEED)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Name some key FRI lease provisions:

A

Repair and insurance covenants
User covenants
Alienation
Alterations
Rent review

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Which is more valuable to a LL, fixed term or periodic tenancy?

A

Fixed term.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How can the term of the lease impact SDLT/LTT?

A

Shorter term can mean less SDLT/LTT due.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What Commencement Date can be in the lease?

A

Any - it does not have to be the same as the completion date.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

If a Commencement Date is earlier than the date of the lease, will T be liable for rent during the unoccupied period?

A

Generally NO.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If a Term is ‘FROM AND INCLUDING’ when will it expire?

A

Expires a day earlier in the expiry year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If a Term is simply ‘FROM’ when will it expire.

A

Starts a day after the ‘from’ date and
Expires the same ‘from’ date in the expiry year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

A BREAK CLAUSE of ‘5th anniversary of Term Commencement’ would be what type of break date?

A

Specific date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

A BREAK CLAUSE OF ‘Any time after the 5th anniversary of Term Commencement’ would be what type of break date?

A

ROLLING break

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Resi long lease or market rent short lease:
15 or 20 yr term?

A

Market Rent lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Resi long lease or market rent short lease:

Ground rent payable?

A

Resi long lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Resi long lease or market rent short lease:

Premium/lump sum payable upon grant

A

Resi Long lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Resi long lease or market rent short lease:

Rack rent?

A

Market rent short lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

How is the rent normally expressed in a FRI lease?

A

Expressed P/A but payable quarterly.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Is rent normally due in advance or arrears?

A

If EXPRESS in lease, in ADVANCE on the Quarter Day (either Modern or Traditional)

Otherwise, in arrears (normally resi)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

How does a FRI lease normally require T to actually send the payment?

A

by standing order.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Type of Rent Review?

Lease states increasing rent amounts on particular years of the term

A

STEPPED RENT

27
Q

Type of Rent Review?

Increased by agreed measure of inflation

A

INDEX-LINKED RENT

28
Q

Type of Rent Review?

Rent calculated on T’s turnover at property e.g. Retail leases

A

TURNOVER RENT

29
Q

Type of Rent Review?

Reflect the value of the premises on the open market at time of review

A

OPEN MARKET RENT REVIEW

30
Q

What is an ‘upwards only’ rent review in an FRI lease?

A

Upon Rent Review, even if the value is lower than the current rent, it will NOT DECREASE (only increase or stay the same).

31
Q

Is it fair to assume that T has complies with its covenants on Rent Review?

A

YES - otherwise T may unduly benefit from a breach.

32
Q

Would it be fair to assume a LL has complied with its covenants on Rent Review?

A

No - it would be unfair for T to be subjected to higher rent for LL’s breaches.

33
Q

2 basic assumptions for Rent Review?

A
  1. VACANT and AVAILABLE premises
  2. WILLING LL and WILLING T
34
Q

Rent Review is based on the rent payable for a hy___________ L____ of co_________ pr_______ , using basic a__________ and d_________.

A

Rent Review is based on the rent payable for a HYPOTHETICAL LEASE of COMPARABLE PREMISES , using basic ASSUMPTIONS and DISREGARDS.

35
Q

SDLT is calculated on the first ____ years’ rent.

A

5yrs

36
Q

If Rent Review is BEFORE 5th ANNIVERSARY of Term Commencement, what may be the SDLT/LTT implication?

A

T may need to pay MORE SDLT/LTT.

37
Q

If Rent Review is ON OR AFTER 5th ANNIVERSARY of Term Commencement, what may be the SDLT/LTT implication?

A

NO further SDLT/LTT payable.

38
Q

If new rent is agreed AFTER RENT REVIEW DATE, what may T need to pay?

A

Additional sum + interest as per lease BECAUSE new rent is backdated to the Rent Review date.

39
Q

The Code for Leasing Business Premises applies to…?

A

RICS members and RICS regulated firms/agents.

40
Q

(The Code for Leasing Business Premises)

If LL is a RICS members but their sols are not, what should the sols do if there is a non-compliant term in the lease?

A

Advise their client of this (sols would not be under the RICS obligation).

41
Q

The Code for Leasing Business Premises aims to:

Increase equality and fairness of N_________ of T____
Promote C____________ H____ of T____.

A

Increase equality and fairness of negotiation of terms.
Promote comprehensive HoTs

42
Q

An unrepresented part must be told and advised what?

A

about the Code and advised to seek professional advice

43
Q

What must RICS members do in respect of the Code’s MANDATORY REQUIREMENTS and GOOD PRACTICE?

A

-MUST follow mandatory requirement
-MUST follow Good Practice UNLESS EXCEPTIONAL CIRCUMSTANCES

44
Q

(MANDATORY REQUIREMENTS of the code)

HoTS to include - Extent of premises, Break rights and Term, Rent and Rent Review, as well as as what 4 other clauses?

A

Repair
Alienation
Permitted Use
Alterations

45
Q

(MANDATORY REQUIREMENTS of the code)

Negotiations must be…?

A

Constructive and collaborative

46
Q

What are the lease-specific CPSEs?

A

CPSE 3

47
Q

For a very short lease with LIMITED repair and other obligations, what may T decide about searches and what must their sols advise?

A

Not to order all searches and their sols must advise of risks.

48
Q

For a grant of lease, is there exchange and, if so, a deposit?

A

Exchange if parties are not ready to complete yet (e.g. conditions to be satisfied before completion)

No deposit.

49
Q

On grant of a lease, what monies should T’s sols need to request from their client?

A

Normally first Quarter’s rent in advance and Service Charge & Insurance Rent apportionments

50
Q

Which parties sign the original and counterpart lease and what happens on completion?

A

LL - original
T - Counterpart

Sent to each other after completion.

51
Q

What will an agreement for lease usually contain as an annexure?

A

Draft lease

52
Q

If lease of WHOLE, which parts of the premises is T responsible for?

A

internal AND external

53
Q

If lease of PART, which parts of the premises are T responsible for?

A

Interior only

54
Q

Who is responsible for maintaining the COMMON PARTS?

A

LL but they recover cost from T through SERVICE CHARGE

55
Q

A FRI lease will require T to keep the premises in good repair. What should T bear in mind when interpreting this clause?

A

T must also PUT the premises into good repair if they are not already.

56
Q

What would a qualified repair obligation require and how common would this be?

A

T to keep premises in good repair but no better than upon grant of lease, as per SCHEDULE OF CONDITION.

NOT an FRI lease and only in EXCEPTIONAL CIRCUMSTANCES e.g. difficult market or short letting

57
Q

What is the effect of including ‘to keep the premises in good repair AND CONDITION’ to the repair clause?

A

More onerous on T and will include to remedy condensation .

58
Q

If whole premises need rebuilding (RENEWAL), who bears this obligation?

A

NOT T, as this would be too onerous

59
Q

For a new build, INHERENT AND STRUCTURAL DEFECTS should be …

A

excluded from T’s repair obligation.

60
Q

Who is responsible for insuring the premises in an FRI lease?

A

The LL, who recovers whole or proportionate Insurance Rents from T.

61
Q
  1. If damage is caused by an Insured Risk, would such damage be included still within T’s repairing obligation?
  2. Any exceptions?
A
  1. NO! Excluded from T’s repair obligations.
  2. UNLESS insurance will not pay out due to T’s negligence.
62
Q

After completion of a FRI lease, what might the LL want their sols to send them?

A

A summary of the main lease provisions.

63
Q

Leases between 3-7 years are not registrable but could be voluntarily what by T?

A

Noted on LL’s title as an OVERRIDING INTEREST

64
Q
A

SQE Property Practice (16 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions