8.2 Underletting/Assignment procedures & Licences

Question 1

The 2020 Code for Leasing Business Premises provides that the lease should allow Ts to ______ or ________ the _____ of the premises with the ________’s ______ not to be unreasonably ________ or _______.

Answer 1

the lease should allow Ts to assign or underlet the whole of the premises with the LL’’s consent not to be unreasonably withheld or delayed.

Question 2

The 2020 Code for Leasing Business Premises provides that the lease should allow Tenants to s_____ with g____ c________ without _______.

Answer 2

The lease should allow Tenants to share with group companies without consent. (no underlease needed if sharing as group companies treated as one entity and LL can still enforce covenants)

Question 3

The 2020 Code for Leasing Business Premises provides that the lease should allow Tenants to c_____ the lease to a b___ or r________ l______ i___________ without _______.

Answer 3

The lease should allow Tenants to charge the lease to a bank or reputable lending institution without consent. (limited exception) Commercial= floating charge over business and Resi=mortgage

Question 4

Which party provides notice to whom on completion of an underletting.

Answer 4

T’s sols (not UT) provides notice of underletting to head LL’s sols.

Question 5

Which party provides notice to whom on completion of an assignment?

Answer 5

Assignee’s sols provides notice of assignment to head LL’s sols.

Question 6

In assignment, which ONE document the LL’s sols organise the drafting, engrossment and execution during the transaction?

Answer 6

Licence to assign.

Question 7

In assignment, which document does T’s sols draft?

Answer 7

None!

Question 8

In assignment, which document does the Assignee’s sols draft and when?

Answer 8

Deed of assignment (TR1) at pre-completion.

Question 9

Why is the licence to assign/underlet important?

Answer 9

It provides the LL’s consent to the underletting or assignment.

Question 10

When is the licence to assign/underlet signed?

Answer 10

Either before or at the same time as completing the underlease or Deed of assignment (TR1).

Question 11

Which pre-completion search would the Assignee’s sols undertake?

Answer 11

OS1 if the outgoing T’s lease is registered.
OS3 if the outgoing T’s lease is not registrable.

Question 12

What are the 3 post-completion tasks for the assignee’s sols?

Answer 12

1.) SDLT/LTT
2.) Registration of assignment, if necessary
3.) Sent notice of assignment to LL’s sols.

Question 13

What will the T’s sols include on the completion statement to the assignee?

Answer 13

Rent apportionments for both parties, service charge, insurance rent.

Question 14

Who signs the deed of assignment (TR1)?

Answer 14

T (assignor).

Question 15

What 2 things will Assignee’s sols obtain from Assignee pre-completion?

Answer 15

1.) Signature for licence
2.) Completion funds

Question 16

At the pre-exchange stage of assignment, what CPSEs will the Assignee’s sols raise?

Answer 16

CPSE1 & CPSE4 (CPSE4 are specific to assignment)

Question 17

What happens if the Assignee does not want to instruct their sols to carry out pre-contract searches.

Answer 17

Assignee’s sols just advise of risks.

Question 18

During assignment, what does T’s sols do to deduce title?

Answer 18

T’s sols provide OCEs for T’s L/H title. If the L/H title is not registrable, they will provide the LL’s title.

Question 19

For underletting and assignment, who applies for consent?

Answer 19

T’s sols apply to the LL for consent.

Question 20

What will the Assignee’s sols report on at pre-exchange?

Answer 20

Assignee’s sols will report on T’s lease to the Assignee.

Question 21

Are pre-contract enquiries and searches required for underletting, assignment or both?

Answer 21

Both!

Question 22

In an underletting, what is a ‘Lease by Reference’?

Answer 22

Where the Underlease incorporates lections of T’s lease e.g. by referring to T’s covenants and the underlease stating that the UT needs to comply with T’s covenants.

Question 23

In both underletting and assignment what undertaking does LL ask for before drafting the licence?

Answer 23

LL asks for a costs undertaking from T’s sols, for legal and surveyor’s costs.

Question 24

The licence/consent to underlet/assign normally provides a limited time period (normally 3 months) for what to take place?

Answer 24

Completion of the assignment or underletting.

Question 25

Which pre-completion searches would the UT’s sols undertake if T’s title is already registered??

Answer 25

OS1 = against T’s L/H if underletting of WHOLE.
OS2= against T’s L/H if underletting of PART.

Question 26

Why would UT’s sols carry out an OS3 pre-completion search from the date of T’s OCEs?

Answer 26

If the underlease itself is not registrable (so is 7rs or less).

Question 27

When would the Assignee’s sols carry out an OS3 pre-completion search

Answer 27

If outgoing T’s lease is not registrable (7rs or less).

Question 28

Does the Licence itself specify the credit checks and references that will be required of a prospective tenant?

Answer 28

No, these will be carried out as part of the consent APPLICATION stage.