L&T Flashcards
What is the difference between a lease and a licence?
a lease grants exclusive possession where as a licence gives permission to do something that would otherwise be trespass.
What is the leading case in the matter of lease or licence?
Street v. Mountford (1985)
In what circumstances have you granted (or would you consider granting) a licence?
if I did not want to grant exclusive possession, for example an advertising hoarding.
You are managing property that is going to be redeveloped at some unknown date in the future. What letting options do you have to generate some rental income without giving the tenant security of tenure?
grant a licence, grant a lease contracted out of the 1954 Act.
What is the basic difference between a lease renewal and a rent review
a lease renewal is a statutory procedure (governed by LTA 1954), a rent review is governed by the lease itself.
To what tenancies does the 1954 Act apply?
tenancies where at least part of the premises are occupied for the purposes of running a business and for 6 months or more.
When was the Landlord and Tenant Act last amended?
2003 (Regulatory Reform Order).
Name the tenancies to which the 1954 Act does not apply
– tenancies of less than 6 months, residential tenancies, agricultural tenancies, mining tenancies.
What is a Section 25 notice?
landlord’s notice to terminate a less upon expiry.
When can a landlord service a section 25 notice?
No more than 12 months prior to contractual expiry of the lease, or anything after giving no more than 12 / no less than 6 months notice.
What must a section 25 notice contain?
the premises, the date of proposed termination and the landlord’s ground for refusing the grant of a new lease.
What advice would you give to a landlord client in respect to a lease renewal when the property is significantly over-rented?
do not serve a notice and let the tenant continue to hold over at the passing rent if possible. Other option is to serve the section 25 and agree a new lease, even if on less advantageous terms in order to retain the tenant (good covenant strength, re-letting likely to be difficult).
When is the best time to serve a section 25 notice?
it depends on the landlord’s intention. 12 months may give landlord an idea of tenant motives sooner, and more time to find alternative tenant if needed.
Why would a landlord give 12 months notice when he could give 6 months notice?
to try and have an early understanding of the tenant’s intention. If property is overrented, it may give him the upper hand to get his notice in first.
What action should a landlord take if he/she requires possession of a property at the end of a lease?
– serve a section 25 notice stating their grounds for refusing the grant of a new lease.
What can a landlord do if he cannot get a response from the tenant to his friendly section 25 notice?
make time of the essence by applying to court for a new lease, with tenant responsible for costs if no response within defined period.
What advice would you give to a tenant when a landlord’s section 25 notice is due to expire in two weeks’ times and an agreement for a new lease has not yet been agreed?
depends on the tenant’s intention. If they intend to leave then they can hand the keys back in on expiry or serve a section 27 notice no less than 3 months prior to expiry. If they intend to renew the lease then they should respond to the landlord’s notice stating their acceptance or proposing alternative terms or request an extension under section 29.
Name the grounds under section 30 (1) of the LTA 1954 under which a landlord can obtain possession
a) persistent non-payment of rent;
b) breach of the repair clause;
c) material breach of another clause;
d) landlord can offer appropriate alternative accommodation;
e) landlord can generate more income from the premises by letting as a whole if currently a series of underlettings;
f) landlord wishes to redevelop;
g) landlord wishes to occupy himself
A lease of a shop property is due to expire in 12 months time. You are instructed for the first time by the landlord to negotiate a new lease with the tenant. Explain how you would deal with this instruction.
– I would firstly review the lease to establish if the premises is within the 1954 Act. Issue Terms of Engagement. I would then inspect the premises and then ascertain if the premises is market, under or over rented and report to the client. I would also look for other potential breaches. If the client wishes to negotiate a new lease with the tenant, I would propose serving a section 25 notice with the new terms contained within.
In what circumstances is a tenant entitled to compensation when a landlord successfully opposes a new lease under the 1954 Act?
grounds e, f and g contained within section 30.
How is tenant’s compensation assessed under the 1954 Act?
1x rateable value if the lease is 14 years or less; 2x rateable value if the lease length is 14+ years.
Explain the power that the court has in ordering a new lease.
the courts have the power to grant a new lease (section 29) and agree the terms as sections 32 – 35.
What do you understand a section 34 rent to be?
market rent after expiry of rent-free period, with usual disregards.
What do you understand an interim rent to be?
rent payable whilst landlord and tenant are negotiating (or court) a new lease. Either party can apply for interim rent (RRO 2003).
How is interim rent assessed?
Usually the rent payable under the new lease / open market rent as s34.
In what circumstances would you recommend a tenant to serve a section 26 notice?
if the landlord has not served a s25 notice and the tenant wants to renew the lease, especially if arguing for more tenant-friendly terms than the existing lease (ie, overrented). Also if tenant needs security of knowing.
Explain when tenant’s improvements are disregarded at lease renewal.
if the improvements have been carried out in accordance with the lease (landlord’s permission) by the current tenant or a predecessor in title within 21 years.
Explain what action a tenant should take if there are 6 months of the lease remaining and he/she wants to vacate at expiry. The landlord has not served a section 25 notice.
Tenant can hand keys in on expiry, or send 27 notice no later than 3 months prior to expiry.
What are the key elements of the rent review clause?
– machinery, basis of valuation and dispute resolution options.
What is a trigger notice?
notice from either party to inform the other that they intend to action the rent review.
What do you understand by the expression time of the essence?
time is the essence of the contract and so therefore the rent review must be concluded by a certain point as stated in the lease.
What are the two landmark cases in respect of time of the essence
Burnley Borough vs. United Scientific Holdings and Cheapside.
In what circumstances is it likely that time is of the essence?
if the lease explicitly says so.
What are deeming provisions?
wording in the lease to state that if a certain party has not replied to a rent review notice by a certain point, they are ‘deemed’ to have accepted.
What lease terms affect the rent at rent review?
all of them can have an effect.
What assumptions are usually made in determining the rent at review?
open market letting, willing parties, tenant has had benefit of market rent-free period, all lease terms have been complied with, demise fit for immediate occupation.
What is the hypothetical term?
lease term remaining for the purposes of rent review. Often the actual unexpired term or sometimes the original term.
Is the hypothetical term more advantageous to the landlord or the tenant?
usually the landlord (the shorter the lease, the higher the rent) but can depend.
What are the usual disregards?
effect of tenant occupancy, tenant goodwill, tenant improvements.
Where do the usual disregards originate from?
section 34 LTA 1954.
How may a rent review be resolved in L & T cannot reach agreement?
third party determination (arbitrator or independent expert).
What are the differences between an independent expert and an arbtrator?
Cost;
Appeal (arbitrator can be appealed against, IE cannot);
Negligence (arbitrator cannot be subject to a negligence claim, IE can);
Disclosure (arbitrator has power to order disclosure;
IE cannot);
Legislation (arbitrator governed by Arbitration Act 1996; IE governed by lease and RICS guidance);
Evidence (arbitrator uses evidence presented; IE is able to conduct own investigation);
Outcome (arbitrator issues a determination; IE gives an outcome).
What must a Calderbank offer/letter contain?
WITHOUT PREJUDICE SAVE AS TO COSTS. Also needs the date, an offer and a timescale for acceptance (usually 21 days).
A tenant has entered into a full repairing and insuring lease of a property in disrepair. The landlord now requires the tenant to remedy this disrepair. What advice would you give to the tenant?
if the tenant has yet to enter into the lease, I would advise a schedule of condition to minimise the repairing liability. If the tenant has already entered into the lease, he would commission a dilapidations survey and negotiate.
What advice would you give to a tenant wanting to take a full repairing and insuring lease of a property in disrepair but suiting his business?
Get a schedule of condition
What action can a landlord take when a tenant is in breach of repairing covenant?
require tenant to remedy the breach, otherwise the landlord can repair the premises himself and recover costs. Also forfeiture or injunction compelling the work to be carried out.
What action can a tenant take when a landlord is in breach of repairing covenant?
require landlord to remedy the breach, otherwise the tenant can repair the premises himself and recover costs.
What does the Jervis v. Harris case mean to you?
Landlord can enter, carry out work and recover costs as a debt, not as damages
How are damages assessed when a tenant is in breach of a repairing covenant?
diminution in value of landlord’s interest.
How are damages assessed when a landlord is in breach of a repairing covenant?
diminution in value of tenant’s interest.
Explain the provisions of section 18 (1) of the Landlord and Tenant Act 1927
Statutory cap on damages = diminution in value of landlord’s interest
Explain the difference between a schedule of condition and a schedule of dilapidations.
schedule of condition is at the start of the lease to objectively state tenants requirement to yield up/repair. Dilapidations are done partway through or on expiry and are the basis of a landlord’s requirement for tenant to repair or a landlord’s claim against the tenant for breach of repair/yielding up clause.
Explain the difference between an interim and a terminal schedule of dilapidations.
interim schedule is partway; terminal is within last 3 years of lease.
What is a Scott schedule?
recommended format for presenting a dilapidations claim to court; includes tenant’s surveyor’s comments.
