alienation (w8)

Question 1

how does assignment of leases work?

Answer 1

existing tenant (assignor) sells/transfers lease to new tenant (assignee)

Question 2

define alienation

Answer 2

a disposal of all or part of tenant’s interest in a lease

Question 3

what happens to the relationship of landlord and tenant during assignment

Answer 3

landlord becomes landlord of assignee who is now entitled to exclusive possession of land

Question 4

can assignor sell lease without consent

Answer 4

not always- most commercial leases require landlord consent

Question 5

what does an absolute covenant against assignment mean

Answer 5

means that assignment is not allowed- usually used in commercial leases for part assignments

Question 6

define a qualified covenant against assignment

Answer 6

assignment is only allowed with landlord’s consent, but s19 converts qualified into fully qualified covenant

Question 7

define a fully qualified covenant against assignment

Answer 7

landlord must act reasonably when deciding to withhold consent of tenant selling the lease (within reasonable time (s1))

Question 8

when is it reasonable for landlord to withhold consent of assignment?

Answer 8

-when assignee’s proposed use is against what landlord wants
-when they cannot provide good reference / concerns regarding payments
- when assignee is newly incorporated + cannot produce accounts

Question 9

does tenant have any claims where landlord does not act reasonably in giving consent for assignment?

Answer 9

-tenant may be able to claim damages

Question 10

true or false?
Landlord and tenant cannot agree to circumstances that parties agree to be ‘reasonable grounds’ and conditions that may be imposed on assignment

Answer 10

false. they usually do in commercial leases

Question 11

define privity of contract

Answer 11

parties to a contract can enforce obligations against each other even after contract has been assigned

Question 12

define privity of estate

Answer 12

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

Question 13

what was the law for old leases for original and new tenant?

Answer 13

original tenant remained liable to landlord to perform obligations, only limited obligations automatically passed to new tenant
- new tenant would’ve to covenant directly to landlord

Question 14

what is the new leases law for original and new tenants?

Answer 14

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

Question 15

define an authorised guarantee agreement (AGA) when alienating leases

Answer 15

mechanism whereby original tenant can agree to guarantee obligations of incoming tenant (keeping them liable like old leases basically)

Question 16

true or false?
- if there is a subsequent assignment, original tenant’s liability under AGA ends.

Answer 16

true. an original tenant only guarantees the next tenant under AGA

Question 17

what is the pre-exchange procedure for assignment?

Answer 17

• get landlord consent
• tenant’s sol to give undertaking for costs
• tenant’s sol to ensure there are funds
• landlord’s sol draft a licence to assign
  -tenant’s sol draft contract
• tenant’s sol deduce title
• if not registered (less than 7 year lease) provide landlord’s title
• assignee’s sol to amend draft contract
• assignee’s sol to investigate title
• assignee’s sol to raise CPSE1 enquiries PLUS CPSE4 enquiries
• assignee’s sol to raise searches

Question 18

define an undertaking for costs

Answer 18

a promise by solicitor to pay costs- breach may lead to disciplinary action by SRA

Question 19

how can a lease be varied by landlord for assignee during assignment pre-exchange

Answer 19

via a deed of variation

Question 20

what is the exchange procedure during assignment

Answer 20

tenant and assignee’s sol to exchange contract (using formula B)

Question 21

what is the pre-completion procedure during assignment

Answer 21

-tenant’s sol prepare completion statement for assignee
- carry out pre-completion searches
-OS1 search for whole lease, OS2 search for part lease, OS3 search for unregistered?
- landlord prepare licence to assign in triplicate
- assignee draft deed of assignment - TR1 form for registered lease
- parties to execute lease

Question 22

what is the completion procedure during assignment

Answer 22

• assignee’s sol send tenant’s sol completion monies
  -all sols complete and date licence to assign over phone
• tenant & assignee’s sol to agree to complete and date deed

Question 23

what is the post-completion procedure during assignment

Answer 23

assignee’s sol to:
- pay Land tax (SDLT / LTT)
- register lease if necessary
- send formal notice of assignment to landlord’s sol

Question 24

define underletting

Answer 24

another form of alienation where tenant does NOT pass leasehold interest entirely but underleases to an undertenant.

Question 25

what are some requirements for underletting

Answer 25

- under lease must be shorter than actual lease - tenant remains tenant to landlord, must pay rent + ensure to meet obligations - tenant receives rent from undertenant - tenant can enforce under tenant's covenants to ensure tenant doesn't fall foul.

Question 26

how do qualified covenants against underletting work

Answer 26

- absolute covenant= tenant cannot underlet - qualified covenant= turns into fully qualified, landlord can withhold consent so reasonable decision must be held within reasonable time

Question 27

what are limitations regarding payment to landlord

Answer 27

landlord may require that rent is no lower than tenant's lease

Question 28

who does privity of contract exist within, in underletting

Answer 28

- between landlord and tenant - between tenant and undertenant - between landlord and undertenant

Question 29

what are under tenant's liabilities to the landlord when underletting

Answer 29

- landlord is not able to enforce covenants against undertenant, so will want to covenant to be direct to undertenant - tenant remains liable to landlord

Question 30

what is the pre-exchange procedure when underletting

Answer 30

- consent from landlord - get undertaking for costs before beginning work - landlord's sol prepare draft licence to underlet - also see draft under lease to ensure compliance with tenant's obligations - tenant's sol to draft underlease - tenant's sol draft agreement for underlease if necessary - undertenant's sol to investigate title, searches and enquiries - TENANT will deduce title

Question 31

what is the pre-completion procedure when underletting

Answer 31

- prepare completion statement - OS1/2/3 search as appropriate

Question 32

what is the completion procedure when underletting

Answer 32

- parties' sol agree to date and complete licence to underlet -UT's sol sends T's sol completion monies - sol's to agree completion and date + send completed original and counterpart under lease to each other