Alienation

Question 1

What is the primary effect of assigning a lease?

Answer 1

The existing tenant passes the lease to a new tenant.

Question 2

Who is referred to as the assignor in a lease assignment?

Answer 2

The existing tenant.

Question 3

What does the term alienation mean in the context of leasehold interest?

Answer 3

A disposal of all or part of the tenant’s interest in the lease.

Question 4

What happens to the landlord’s relationship after assignment?

Answer 4

The landlord becomes the landlord of the assignee.

Question 5

What obligations does the new tenant (assignee) have after assignment?

Answer 5

Pay the rent and perform the other tenant covenants.

Question 6

What is a common reason a tenant may want to assign their lease?

Answer 6

They no longer need the premises for their business or cannot afford the rent.

Question 7

What is the typical requirement in a commercial lease before assignment?

Answer 7

Tenant must apply to the landlord for consent.

Question 8

What is an absolute covenant against assignment?

Answer 8

Assignment is not allowed.

Question 9

What does s19(1)(a) of the Landlord and Tenant Act 1927 do to qualified covenants?

Answer 9

Converts a qualified covenant into a fully qualified covenant.

Question 10

What is the time frame considered reasonable for a landlord to respond to a consent application?

Answer 10

Measured in days or weeks instead of months.

Question 11

True or False: A landlord can withhold consent based on personal dislike of the prospective tenant.

Answer 11

False.

Question 12

What must a landlord have to justify withholding consent?

Answer 12

Concerns about the assignee’s ability to pay rent.

Question 13

What is privity of contract?

Answer 13

The ability of the original parties to a contract to enforce obligations against each other, even after assignment.

Question 14

What is privity of estate?

Answer 14

The ability of the landlord and tenant for the time to enforce lease provisions against each other.

Question 15

What did the Landlord and Tenant (Covenants) Act 1995 change regarding liability after assignment?

Answer 15

The original tenant is released from liability, and all tenant covenants are passed to the new tenant.

Question 16

What is an authorised guarantee agreement (AGA)?

Answer 16

A document where the original tenant agrees to guarantee the obligations of the incoming tenant.

Question 17

What happens to an outgoing tenant’s liability under an AGA after a subsequent assignment?

Answer 17

The outgoing tenant’s liability under the AGA ends.

Question 18

What is the procedure for assignment of a lease similar to?

Answer 18

A freehold transaction.

Question 19

What is the role of the landlord’s solicitor in the pre-exchange stage?

Answer 19

Takes instructions, confirms receipt of application, and drafts licence to assign.

Question 20

What is a common requirement for the tenant’s solicitor during the consent application?

Answer 20

Provide an undertaking for costs.

Question 21

What does a completion statement detail?

Answer 21

The money due on completion, including apportioned rent and other charges.

Question 22

Fill in the blank: An undertaking for costs is a promise by a solicitor to _______.

Answer 22

[pay costs].

Question 23

What are CPSE1 and CPSE4 enquiries?

Answer 23

CPSE1 are general enquiries, while CPSE4 are specific to the assignment of a lease.

Question 24

What happens during the exchange of a contract for assignment?

Answer 24

The tenant’s solicitor and assignee’s solicitor exchange in a similar manner as for a freehold contract.

Question 25

What must the landlord prepare for the completion of an assignment?

Answer 25

A licence to assign in triplicate.

Question 26

What is a key difference between the grant of lease and assignment procedure?

Answer 26

An assignee generally takes the lease as it is, with limited negotiation opportunities.

Question 27

What is required from the assignee in terms of rent upon completion?

Answer 27

The assignee must pay half of that quarter’s rent to the tenant.

Question 28

What type of search is carried out if the lease is registered?

Answer 28

An OS1 search of the whole of the tenant’s leasehold title.

Question 29

How many copies of the licence to assign does the landlord prepare?

Answer 29

In triplicate.

Question 30

What form is used for the deed of assignment if the lease is registered?

Answer 30

Form TR1.

Question 31

What happens on completion of the assignment?

Answer 31

The assignee's solicitor sends completion monies, and solicitors agree to complete and date the licence to assign and deed of assignment.

Question 32

What does the assignee’s solicitor arrange post-completion?

Answer 32

Submits SDLT or LTT return, registers assignment if necessary, sends formal notice of assignment to landlord’s solicitor.

Question 33

What is underletting?

Answer 33

Underletting is when a tenant grants an underlease to an undertenant without passing on the leasehold interest entirely.

Question 34

What must the term of the underlease be in relation to the original lease?

Answer 34

The underlease must be for a shorter term than the lease itself.

Question 35

Why might a tenant want to underlet?

Answer 35

If they are not using all of the premises, do not need them at the moment, or cannot find a willing assignee.

Question 36

What happens if the lease is silent on underletting?

Answer 36

The tenant is free to underlet.

Question 37

What is a qualified covenant against underletting?

Answer 37

A covenant that allows underletting only with the landlord's consent.

Question 38

What does privity of contract refer to?

Answer 38

The ability of original parties to a contract to enforce obligations against each other after assignment.

Question 39

What is privity of estate?

Answer 39

The ability of the landlord and tenant to enforce lease provisions against each other.

Question 40

What is a significant difference between privity of contract and privity of estate?

Answer 40

Privity of contract does not exist between the landlord and the undertenant.

Question 41

What is usually required from the undertenant to the landlord?

Answer 41

The undertenant may need to covenant directly with the landlord.

Question 42

What are some common restrictions placed on underletting?

Answer 42

Restrictions may include not underletting with property not belonging to the landlord or on payment of a lump sum.

Question 43

What is the procedure for underletting?

Answer 43

It follows the steps of a grant of lease transaction, with additional considerations for the headlease and headlandlord.

Question 44

What does the landlord's solicitor do in the pre-exchange stage?

Answer 44

Takes instructions, considers application to underlet, requests undertaking for costs.

Question 45

What is typically included in a completion statement for underletting?

Answer 45

Details of money due on completion, including apportioned annual rent, service charge, and insurance rent.

Question 46

What search is conducted if there is an underletting of the whole of the tenant’s interest?

Answer 46

An OS1 search is carried out.

Question 47

What search is conducted if there is an underletting of part of the tenant’s interest?

Answer 47

An OS2 search is carried out.

Question 48

What is the importance of the term granted by the underlease?

Answer 48

It must be less than the remaining term of the tenant’s lease.

Question 49

What can the tenant's solicitor do during the pre-exchange stage?

Answer 49

Draft the underlease and review the draft licence to underlet.

Question 50

What is an example of a potential issue that may arise in the pre-exchange phase?

Answer 50

The draft underlease may contain obligations that are less onerous than those in the tenant's lease.

Question 51

What is a direct covenant?

Answer 51

A covenant given by the undertenant to the landlord in the licence to underlet.

Question 52

What terminology can be confusing in the context of underletting?

Answer 52

Terms like headlandlord, landlord, tenant, subletting, sublease, and subtenant.

Question 53

What is the rent that is payable under an underlease?

Answer 53

The rent under the underlease, not the rent under the tenant’s lease.

Question 54

What is required from the undertenant in an underlease regarding service charge and insurance rent?

Answer 54

An appropriate sum for service charge and insurance rent to cover tenant's obligations.

Question 55

What type of search is conducted for an underletting of the whole tenant’s interest?

Answer 55

An OS1 search against the tenant’s registered leasehold title.

Question 56

What type of search is conducted for an underletting of part of the tenant’s interest?

Answer 56

An OS2 search against the appropriate part of the tenant’s registered leasehold title.

Question 57

What is an OS3 search used for?

Answer 57

To check for adverse entries against the tenant’s interest when the underlease is not registrable.

Question 58

What happens on completion of the underlease?

Answer 58

Parties’ solicitors agree to date and complete the licence to underlet and exchange executed underleases.

Question 59

What must the tenant’s solicitor do post-completion of the underlease?

Answer 59

Send notice of underlease to the landlord’s solicitor.

Question 60

What should the undertenant’s solicitor arrange post-completion?

Answer 60

Submit SDLT or LTT return and pay appropriate SDLT or LTT if necessary.

Question 61

What is the summary of the grant of underlease procedure?

Answer 61

Similar to grant of a lease; involves negotiation, completion of the licence and underlease, and post-completion obligations.

Question 62

What is required for an assignment or underletting by the tenant?

Answer 62

The landlord’s consent.

Question 63

What form is typically required for the landlord’s consent?

Answer 63

A deed.

Question 64

What is a common feature of a licence to assign or underlet?

Answer 64

Consent is granted for a limited time (e.g., 3 months).

Question 65

What must an assignee of an old lease do in a licence?

Answer 65

Covenant directly with the landlord to observe lease obligations for the remainder of the lease.

Question 66

Is a direct covenant to the landlord necessary for the assignment of a new lease?

Answer 66

Not strictly necessary, but the landlord may require it.

Question 67

What does an underlessee need to do in relation to the landlord?

Answer 67

Covenant directly with the landlord to observe lease obligations until the next lawful assignment.

Question 68

What is an authorised guarantee agreement?

Answer 68

An agreement where the outgoing tenant guarantees the performance of tenant obligations.

Question 69

What is required after an assignment or underletting regarding notice?

Answer 69

Formal notice must be given to the landlord within a month.

Question 70

What is a charge in the context of leasing?

Answer 70

A tenant may create a charge over their lease similar to a mortgage.

Question 71

What does it mean to share occupation under a lease?

Answer 71

A tenant may share occupation with a third party without creating an underlease.

Question 72

What does the 2020 Code for Leasing Business Premises state about assigning or underletting?

Answer 72

Tenants should be allowed to assign or underlet the whole of the premises with landlord's consent not to be unreasonably withheld.

Question 73

What is a key requirement for landlords regarding notice of dealing?

Answer 73

They must be informed of the completion of assignments or underlettings.

Question 74

Fill in the blank: An assignment or underletting by the tenant requires the landlord's _______.

Answer 74

consent.