Grant of a Lease

Question 1

FRI lease

Answer 1

full repairing and insuring lease

Question 2

lease

Answer 2

“the grant of a right to the exclusive possession of land for a determinate term less than that which the grantor has himself in the land”

Question 3

lease start date

Answer 3

commencement date

Question 4

reversionary lease

Answer 4

the term starts after the lease is dated

Question 5

Open market rent review

Answer 5

most common type of rent review adopted by FRI leases, involves ascertaining the rent based on comparable premises and certain principles

Question 6

“upwards only” rent review

Answer 6

rent can only increase

Question 7

Rationale behind “common disregards” in rent reviews

Answer 7

The rationale is that the tenant should not be penalised with a higher rent if, for example, the tenant has improved the premises for its own use

Question 8

Rent Suspension Clause

Answer 8

covers if a property is destroyed or damaged by one of the specified insured risks. The Annual Rent (+ possibly Service Charge and Insurance Rent) will be suspended until the property is reinstated or until a long-stop date (eg 3 years)

Question 9

RICS mandatory requirements are indicated by the word

Answer 9

must

Question 10

Good practice is indicated by the word

Answer 10

“should”

Question 11

Lease negotiations must be approached in a

Answer 11

constructive and collaborative manner

Question 12

An unrepresented party must be advised about the existence of

Answer 12

the Code and be recommended to seek professional advice

Question 13

The tenant’s repairing obligation should be appropriate to

Answer 13

the length of the term and the condition of the premises

Question 14

Under the Code, it is mandatory to prepare written

Answer 14

heads of terms, stating that it is subject to contract

Question 15

The Code aims to make commercial lease negotiations…

Answer 15

fairer and more transparent

Question 16

Who does the Code for Leasing Business Premises apply to?

Answer 16

RICS members and RICS regulated firms

Question 17

engross

Answer 17

to print a copy for signature

Question 18

an agreement for lease is needed where

Answer 18

the parties want to commit to completing the lease, but either are not yet ready, or there are conditions that need to be satisfied

Question 19

If the lease is not registrable, which pre-completion search could be used?

Answer 19

an OS3 search

Question 20

Post-completion, the landlord’s solicitor should

Answer 20

send a summary of main provisions of lease to client

Question 21

Post-completion, the tenant’s solicitor should

Answer 21

Arrange to submit SDLT or LTT return and pay appropriate SDLT or LTT if necessary
Register lease if necessary

Question 22

for lease of whole, what repair is the tenant responsible for?

Answer 22

interior, exterior, structural

Question 23

for lease of part, what repair is the tenant responsible for?

Answer 23

interior repair only

Question 24

Landlord is responsible for repairing the common parts but will recover the cost from the tenants via

Answer 24

service charge payments

Question 25

Where is the tenant's repairing obligation set out?

Answer 25

as a tenant’s covenant in the lease

Question 26

A covenant “to keep the Premises in good repair” means that if the premises are not in good repair, the tenant must

Answer 26

put the premises in good repair

Question 27

A tenant taking on a full repairing obligation should obtain

Answer 27

a survey

Question 28

A covenant to renew the premises is

Answer 28

onerous and should be avoided

Question 29

For an FRI lease, the cost of insuring will be recovered

Answer 29

from the tenant under the lease

Question 30

the money that the tenant or tenants pay to the landlord for insurance

Answer 30

“insurance rent”

Question 31

periodic tenancy

Answer 31

weekly, monthly, yearly etc

Question 32

If a 1-year term of a lease is “from and including” a certain day of the year, when will the term expire?

Answer 32

the day before in the following year eg start date 10th March 2023 ends 9th March 2024

Question 33

modern quarters for leases

Answer 33

1 January, 1 April, 1 July and 1 October

Question 34

For an FRI lease, rent is payable...

Answer 34

in advance

Question 35

rent review adopted by FRI lease

Answer 35

Open market rent review, which depends on a "hypothetical lease". involves ascertaining the rent based on comparable premises and certain principles. It is usually "upwards only".

Question 36

Common disregards in rent review

Answer 36

The rationale is that the tenant should not be penalised with a higher rent if they have improved the premises for its own use or built up goodwill for its business

Question 37

What should you put into a lease to cover if a property is destroyed or damaged by one of the specified insured risks?

Answer 37

Rent Suspension Clause

Question 38

under s.19(3), the landlord can unreasonably withhold consent to

Answer 38

a change of use

Question 39

When will VAT be charged and payable on rent under a lease?

Answer 39

If the commercial property is 3 years old or less OR if the landlord has opted to tax the commercial property

Question 40

How could you restrict the lease becoming a publicly available document once registered at the Land Registry?

Answer 40

Apply to the Land Registry for the filed copy lease to be an exempt information document with the relevant terms redacted

Question 41

Strongest ground for a lease to be designated as an exempt information document

Answer 41

if it contains 'prejudicial information'

Question 42

What advise would you give to the landlord of commercial premises who does not wish to undertake responsibility for maintaining the exterior and main structure of the building, or for insuring it?

Answer 42

Make provision in the lease for a management company to be responsible with the tenants being the shareholders

Question 43

What is a developer's obligation to deduce its freehold title to the buyer under the SCPC?

Answer 43

A developer must deduce a freehold title which will enable the buyer to register the lease with an absolute title.