Head 17: 8 Flashcards
(20 cards)
[Commercial leases]
Some typical tenant’s obligations clauses in commercial leases?
(i) payment of rent (Scottish quarter days: Candlemas (28 Feb), Whitsunday (28 May), Lammas (28 August), Martinmas (28 Nov))
(ii) payment of all outgoings
(iii) payment of VAT
(iv) compliance with statutory requirements
(v) to maintain and repair
(vi) to paint
(vii) to leave in good repair
(viii) to permit access
(ix) to pay insurance premiums; not to endanger insurance
(x) not to make alterations without prior (written) approval
(xi) permitted user
(xii) not to affix signs without prior approval
(xiii) not to pollute
(xiv) not to deposit goods or materials
(xv) not to cause nuisance
(xvi) not to overload electrical circuitry
(xvii) to observe all real burdens etc.
(xviii) to allow landlord facilities to relet/resell
(xvix) to indemnify landlord against loss
(xx) to pay costs in connection with lease
[Commercial leases]
Two important landlord’s obligations clauses typically found in commercial leases?
i) to insure [however, tenant may have to meet premiums]
(ii) “Under the reservations, conditions and others herein contained or referred to, to warrant lease to tenants against all hands and against all mortals.”
[Commercial leases]
What does consent to registration allow?
Typically a commercial lease will have consent by the tenant to reservation and execution in the Books of Council and Session.
Consenting to registration for execution allows summary diligence to be carried out.
[Commercial leases]
Is there an implied right to change the rent in commercial leases?
NO - this is why rent review clauses are so important.
[Commercial leases]
Rent review will normally be the greater of:
1) Existing rent
2) Open market rent
RENT REVIEW CAN ONLY INCREASE - CANNOT DECREASE
[Commercial leases]
What if there is a dispute at to what the open market rent is in rent review?
The lease will normally have a clause stating that the matter will go to an EXPERT or an ARBITER (in both cases this individual is almost always a chartered surveyor).
[Commercial leases]
If open market rent goes to an ARBITER, is there a right of appeal?
There is a limited right of appeal from an arbiter’s decision to the CoS.
[Commercial leases]
If open market rent goes to an EXPERT, what happens and is there a right of appeal.
An expert carries out a professional valuation of his own (usually cheaper) - the danger is that the expert reaches an amount that neither party wants.
There is no appeal from the decision of an expert.
[Commercial leases]
What happens if the date for rent review has passed and nothing has happened?
The English courts have taken the view that there is a rebuttable presumption that time was not of the essence (United Scientific Holdings Ltd v Burnley Borough Council [1978])
[Commercial leases]
United Scientific Holdings Ltd v Burnley Borough Council [1978]
Rebuttable presumption that time was not of the essence in relation to missed rent review dates.
[Commercial leases]
Charterhouse Square Finance v A&J Menswear 1998
[ENGLISH CASE]
The lease contained a provision setting out the consequences of failing to adhere to an agreed time limit. It was held that this demonstrated the parties intended a strict enforcement of the time limit so the presumption (that time of rent review was not of the essence) was rebutted.
[Commercial leases]
Visionhire Ltd v Britel Fund Trustees Ltd 1991
[SCOTTISH AUTHORITY FOLLOWING THE ENGLISH CASES]
Rent review intimated, but then time was allowed to pass. Lease therefore permitted tenants to intimate their own rental proposal. Held that tenant’s right in the circumstances to propose rent rebutted the presumption that time was not of the essence. Landlord had therefore lost the right to review.
[Commercial leases]
What happens in the case of failure to trigger the review process for a lengthy period?
You may be personally barred from enforcing the rent review - i.e. held to have waived your right to enforce the rent review:
(Banks v Mecca Bookmakers (Scotland) Ltd 1982)
[Commercial leases]
Banks v Mecca Bookmakers (Scotland) Ltd 1982
Landlord missed rent reviews by between 1 and 2 years. During this time the landlord continued to collect the rent at the existing rate. The landlord was held to have waived the right to review.
[Commercial leases]
What is a service charge clause?
This imposes on the tenant a proportion of the costs of dealing with the wider building (“common parts” of the building) for things like refuse collection, security, heating, etc.
[Commercial leases]
What is a “sweeper clause”?
This encompasses any other service which the landlord may reasonably provide from time to time.
[Commercial leases]
Marfield Properties v Sec of State for the Environment 1996
No objective definition of common parts - depends on the property in question.
[Commercial leases]
Can the apportionment of service charges be challenged?
Yes - Mars Pension Trustees v County Properties & Developments 2000.
[Commercial leases]
What is the landlord’s hypothec?
It is ⁃ The landlord’s hypothec is a security over moveables kept on the subjects (the landlord can sell the moveables to pay the rent). The rent covered is any rent unpaid but due (s 208(8)
It only applies to commercial leases (under the Bankruptcy and Diligence etc (S) Act 2007 s 208).
[Commercial leases]
What moveables are covered
Invecta et illata owned by the tenant (ordinary moveables brought in by tenant in the premises).
