6): The Grant and the Assignment of a Commercial Lease/Underlease Flashcards
What is a lease?
Right to exclusive possession for a set period.
An estate in land, not ownership.
Contractual relationship between landlord (lessor) and tenant (lessee).
How do commercial and residential leases differ?
Commercial: governed by Landlord and Tenant Act 1954 (unless contracted out).
Residential: separate regime with rights of tenure, renewal, enfranchisement, etc.
What are the drafting steps for a commercial lease?
Landlord’s solicitor drafts lease.
Tenant’s solicitor reviews and proposes amendments.
What is the purpose of an agreement for lease?
Contract to enter into a lease on a fixed date or when conditions are met.
Creates contractual obligation on both parties.
What must the tenant investigate in relation to title?
Ensure landlord has power to grant lease.
If mortgaged, lender’s consent required.
If lease is an underlease, check alienation covenant.
For leases >7 years, landlord must deduce freehold title for HMLR registration.
For subleases >7 years, deduce head lease and freehold.
What pre-contract steps must be taken for a lease?
Same searches/enquiries as with freehold purchase.
What are the deed formalities for executing a lease?
Must comply with s.52 LPA 1925 – must be a deed.
Lease split in two parts:
Part I signed by landlord, given to tenant.
Part II (counterpart) signed by tenant, given to landlord.
What are the tenant’s post-completion obligations?
Pay rent in advance from completion to next rent date.
Submit land transaction return (SDLT/LTT).
When must a lease be registered or noted at HMLR?
> 7 years: Must register with own title.
3–7 years: May be voluntarily noted.
<3 years: Cannot be noted.
What must the assignee’s solicitor investigate before lease assignment?
Check lease terms (already exists).
Check any superior freehold title.
If lease has absolute title at HMLR, no need to investigate freehold.
What pre-contract enquiries and consents are needed for lease assignment?
Same searches as for freehold.
Review lease to see if landlord’s consent is required.
What is required to validly assign a lease?
Must be by deed under s.52 LPA 1925.
If lease is registered: execute TR1.
If lease is unregistered & >7 years: TR1 triggers first registration.
What is the role of title guarantees in assignments?
Full/limited title guarantee implies lease covenants, incl. repair.
Seller’s solicitor should modify covenant wording to exclude unperformed obligations.
What formalities apply before lease assignment completion?
Searches:
Registered lease: OS1 (HMLR, 30-day priority).
Unregistered: Land Charges search (Form K15).
Landlord’s licence to assign (2 parts):
Part I: signed by landlord.
Part II: signed by tenant.
Prepare TR1/deed of assignment.
Prepare Authorised Guarantee Agreement (AGA) if applicable.
When can a landlord require an AGA?
Lease granted after 1 Jan 1996 + qualified covenant against assignment.
Only if reasonable.
Assignor guarantees assignee’s compliance (lasts while assignee holds lease).
What happens on/after assignment completion?
Submit SDLT return (England) or LTT (Wales).
Registered lease: register assignment at HMLR.
Unregistered lease >7 years: triggers first registration.
Serve notice of assignment on landlord.
What is a licence to assign and who drafts it?
Landlord’s consent for tenant to assign lease.
Drafted by landlord’s solicitor.
Required under alienation covenants — without it, risk of forfeiture.
How does the licence affect privity of contract?
- Before 1 Jan 1996: landlord requires direct covenant from assignee.
- After 1 Jan 1996:
Landlord may require:
Direct covenant (if tenant-only).
Authorised Guarantee Agreement (AGA) from assignor.
What key terms must a licence to assign include?
Express consent from landlord.
Covenants based on lease date (before/after Jan 1996).
Agreement to pay landlord’s legal costs for licence.
