Landlord & Tenant Act Flashcards

(70 cards)

1
Q

Lease?

A

A contract between 2 or more parties that creates a legal interest in land and building

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2
Q

For a document to be a lease it must:

A

Be for a fixed period of time
Grant exclusive occupation
Be at a rent

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3
Q

Lease vs Licence

A

Lease gives exclusive possession for a term at a rent

Licence gives permission to do something otherwise illegal. Personal arrangements that cannot be assigned

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4
Q

Lease vs Licence Case Law

A

STREET vs MOUNTFORD

it does not matter what the document what the document calls itself on the front cover. If, in other respects, the document looks like a lease then it probably is.

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5
Q

What does contracted out means?

A

Excludes the security of tenure provisions of the L&T Act 1954 Part II

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6
Q

“Tenancy at will”

A

Intended for short term occupation, typically where parties are negotiating for a longer term lease.

-Occupied at the will of the LL
-Short term
-Still allow exclusive possession
-Must be careful not to create a periodic tenancy

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7
Q

Assignement vs Subletting

A

Assignment: dispose of the whole lease (pre 1996 Privity of contract, original T remains liable)
AGA introduced by L&T Covenants Act 1995

Subletting: subsiding lease create

Both need permission, usually not unreasonably withheld but usually subject to conditions

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8
Q

“Privity of Contract”?

A

T who is the original T under a commercial lease has always been responsible for the rent and other covenants in the lease throughout the length of the lease, even after he has transferred it to someone else (before 1st Jan 1996)

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9
Q

What legislation ended Privity of contract?

A

L&T Covenant Act 1995 applied to lease from 1st Jan 1996

If lease is assigned then obligations fall only to the assignee and are not passed to the original T

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10
Q

AGA?

A

Authorised Guarantee Agreements

Allow LL, in appropriate circumstances, or where expressed by the lease itself, to require the assigning T to act as guarantor for their assignee (form of protection)

ONEROUS CLAUSE for T

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11
Q

What is a hostile notice from a LL?

A

S.25 notice with grounds in S.30 (A-G)

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12
Q

Break clause and how to account for them in valuation

A

Use Term and Reversion, increase yield slightly, defer for a void period after a break, can allow for cost

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13
Q

Interim Rent?

A

Payable after current lease has ended and the T is holding over. LL or T can apply

Effective from when new lease would have been effective as stated in S.25/S.26 notice (6 month after notice has been served)

Set at Market Rent

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14
Q

Which section of L&T Act describes a qualifying tenancy?

A

S.23

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15
Q

What is a qualifying tenancy under s.23?

A

Not contracted out
More than 6 months
Not a tenancy at will
Not mining nor agricultural
Not a licence
Business tenancy-used mostly for business
Must be in occupation

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16
Q

Which section describes the procedure to exclude security of tenure?

A

S.38A

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17
Q

What is contained in S.28A?

A

1) LL gives warning notice to T that their rights are being waived
2)T must give informal notice if more than n14 days prior to granting lease / formal notice if less than 14 days before granting of lease
3)Lease must endorse contracting out

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18
Q

Security of Tenure?

A

T has right to remain in demise and right to lease renewal

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19
Q

When may tenancies not be protected by the act?

A

-Lease is not a business tenancy
-Tenancy at will
-Lease is a service tenancy
-Tenancy terms inferior to 6 months + T not in occupation for 12+ months
-Lease is contracted outside the act

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20
Q

Which dispute resolution would you use for a RR and LR?

A

RR - Indépendant expert / Arbitrator

LR - Court or PACT

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21
Q

PACT?

A

Professional Arbitration on Court Terms

Launched by RICS Law Society 1997

ADR for lease renewals “delegated” to an indépendant third party who act as an arbitrator / expert. Parties no longer needs to obtain consent from courts.

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22
Q

Advantages of PACT?

A

Parties can control the procedure & Timing
Delay in court lists are avoided
Parties can chose their own 3rd party
3rd party is a specialist in their field
Lower overall costs
3rd party can seek legal advise if necessary

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23
Q

What does a T have a right to at renewal?

A

Same terms as previous lease or market practice to max 15 years
O’May test : some terms unless good reason

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24
Q

S.23?

A

Business Tenancy

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25
S.24
Comes to an end via provisions of At. Tenancy will continue until either party serves notice
26
S.24 (A)
Interim Rent
27
S.25
LL ends tenancy -6-12 months before expiry -Friendly or Hostile
28
S.26
T ends tenancy and request new -6/12 months before expiry If LL wants to oppose, then has to serve a counter notice in 2 months specifying grounds
29
S.27
T ends Tenancy 3 months notice
30
S.28
renewal of tenancies by agreement (in writing)
31
S.29
Order by court for new tenancy court orders regarding the grant of new tenancies or termination of current tenancies. Specifically, it outlines situations where the court can be asked to grant a new tenancy and terminate the existing one, or to terminate the existing tenancy without granting a new one.
32
S.30
Ground for opposition A - Breech of repair B - Persistent delay in paying rent C - Other substantial breach generally concerning their use or management of the property, or another breach of their lease. It will, however, exclude minor breaches, e.g. a minor breach of use which has been rectified. The court will also consider the action taken by the landlord in relation to the breach or breaches in question. D - Suitable alternative premises (non fault, no compensation) E - Uneconomic subdivision (Sub-let - LL can let whole for more than one part) // Non fault F - Demolition // Non fault G - Owner to occupy. LL must have owned the property for 5years - // Non fault
33
S.37
Compensation under section 37 of the 1954 Act, if the landlord obtains possession on section 30 grounds E, F or G then they must pay compensation for disturbance to the tenant. This is equivalent to the rateable value if the tenant has been in occupation for less than 14 years, or twice the rateable value if the tenant has been in occupation 14 years or more.
34
Compensation for non fault grounds - how much and which grounds?
<14 years occupation = 1 x RV > 14 years occupation = 2 x RV Grounds E,F & G
35
36
S.38
“Health Warning” Tenancy to be outside the Act under section 38, the parties can contract out of the 1954 Act. This means that the tenant will not have security of tenure or the right to a new lease at expiry. Some landlords may wish to do this to ensure they can secure vacant possession of a property in the future, without recourse to the act. Sometimes an ex-act lease can be negotiated at a lower rent, which would be of benefit to a tenant only wishing to occupy a property for a short length of time. The parties can contract out in one of two ways. The standard procedure is to have a simple declaration signed by the tenant with a 14-day cooling-off period, while the accelerated procedure entails them signing a statutory declaration – sworn in front of a solicitor or commissioner for oaths – within 14 days of the lease commencing. The lease should include specific wording confirming the agreement to exclude security of tenure.
37
Types of RR mechanisms
Turnover Rent - The core principle is that the rent is tied to the tenant's business revenue. During rent reviews % uplift RPI Fixed Open market
38
Calderbank letter
From diverse case Calderbank VS Calderbank 1975 Can achieve earthly resolution of a dispute and prevent court escalating The leasing party will have to pay the other sides recoverable carts “Without prejudice sa as to costs” A Calderbank letter, also known as a "without prejudice save as to costs" settlement offer, is a letter that contains a settlement offer in a legal dispute. It's named after the case of Calderbank v Calderbank. The key feature is that the offer is protected from being revealed to the court during the main proceedings, but it can be used to inform the court's decision on costs at the end of the case.
39
Part 36 Offer
From Civil Procedures Rules (CPR) Can be issued at any times after proceedings issued Can be withdrawn in writing They are more tempting for other side as you will pay their costs Open for 21 days Lease renewal Part 36 offers are formal settlement offers made during civil court proceedings in England and Wales. They aim to encourage parties to settle disputes early and can have significant costs consequences if rejected. If a party refuses a reasonable Part 36 offer and doesn't do better at trial than the offer, they may have to pay the other side's costs and potentially interest as well.
40
S.19 L&T Act 1927
Provisions as to covenants not to assign without licence or consent E.g if there is an assignment clause then it has to be reasonably withheld Qualified Covenants: Section 19 applies to leases containing covenants (agreements) that restrict the tenant from assigning (transferring), underletting (subletting), charging (mortgaging), or parting with possession of the premises without the landlord's consent. Implied Duty: These covenants are subject to a proviso that the landlord cannot unreasonably withhold their consent to the actions outlined above. Improvements: Section 19 also addresses covenants against making improvements to the premises without the landlord's consent, and similarly, the landlord is obligated not to unreasonably withhold consent. Reasonableness: The key concept here is "reasonableness." The landlord must consider the request in good faith and not use unreasonable grounds to refuse consent.
41
L&T Act 1927 (Alterations)
Sets out that a LL cannot unreasonably withhold consent for alterations LL can still ask for - Payement if property value decreases, is damaged or neighbourhoud LL property decrease in value - Legal fees - Full reinstatement unless value increased
42
Compensation under the L&T Act 1927
- Improvements which carry the entitlement to compensation are those which added to the letting value of the holding =/= T’s own F&F - Claim for compensation only if no objection was raised or if LL raised objection but ruled out by court - Max comp is the net addition to the value of the holding as a whole / Direct result of the improvement / reasonable costs of carrying out the improvement at termination of the tenancy - Cannot contract out of the compensation provision - Rarely arises because most leases have obligation for T to yield up in same condition as start
43
L&T Act 1988
Adding to 1927 Act
44
L&T Act 1995?
Abolishes the Privity of Contract from Jan 1996
45
S. Franses Ltd VS The Cavendish Hotel Ltd 2017
Looked at motivation behind LL wanting to redevelop under s.30 (F). Redevelopment launched to evict the tenant. SC finds that a LL has to prove a firm and settled intention to carry out the work
46
Canary Wharf (BP4) TI Ltd VS European Médecine Agency 2019
Looked at Brexit and whether this would frustrate the lease. High COurt ruled they had to pay rent and pay the covenants
47
Dispute resolution VS Alternative Dispute Resolution
ADR is used to avoid litigation - Cheaper and quicker - More Flexible - Confidential - Specialist can be involved rather than judge
48
What is litigation?
Taking legal action through court, defined by the Civil Procedure Rules (CPR) as a public process -> It is not possible to preserve confidentiality
49
How does a 3rd Party process work?
- Surveyors representing parties become expert witnesses with duty to court - They must submit a treatment of truth - They must submit the main facts upon which they rely - Submit a joint statement as agreed facts - Parties submit their representations which are scrutinised by other parties - Arbitrator or indépendant issue final determination
50
How does a 3rd party process work?
- Surveyors representing parties become expert witnesses with duty to court - They must submit a treatment of truth - They must submit the main facts upon which they rely - Submit a joint statement as agreed facts - Parties submit their representations which are scrutinised by other parties - Arbitrator or indépendant issue final determination
51
Independant Expert
Has a duty of investigation No right of appeal. In very limited circumstances the court may set it aside if the decision is based on misrepresentation Can be liable for damages by negligence
52
Independant Expert
Has a duty of investigation No right of appeal. In very limited circumstances the court may set it aside if the decision is based on misrepresentation Can be liable for damages by negligence No power of disclosure No relevant legislation so acts within as informal procedural timetable Outcome is called a determination Power over their own costs RICS Guidance Note - Independent Expert Determination 2016
53
Arbitrator
Act on evidence submitted Limited right of appeal: point of law, serious irregularity, or omission Not liable for negligence (cannot be sued) Outcome is called an award Power over the costs RICS Guidance Note - Surveyor Acting as Arbitrators in commercial property rent review 2013
54
Arbitrator
Act on evidence submitted Limited right of appeal: point of law, serious irregularity, or omission Not liable for negligence (cannot be sued) Outcome is called an award Power over the costs RICS Guidance Note - Surveyor Acting as Arbitrators in commercial property rent review 2013
55
Arbitrator or Expert for a LL in a context of rising/falling market?
Falling market: arbitrator is preferable Rising market: Expert is preferable Vice versa in a Tenant position
56
RICS Guidance Notes on Experts and Arbitrators
- Surveyor acting as arbitrators in commercial property rent review 2013 - Independent Expert Determination 1st Edition 2016
57
RICS Guidance Notes on arbitrators and expert
- Surveyor acting as arbitrators in commercial property rent review 2013 - Independent Expert Determination 1st Edition 2016
58
LL’s Right in case of forfeiture
Allow a LL either to apply to the court to retake possession of the property following a breach of lease by T
59
Absolutely VS Qualified Covenant
Absolute is a prohibition against doing something Qualified is okay with LL’s consent
60
S146 Notice L&T 1925
LL serves a S146 notice in case of breach from T in the covenant of the lease
61
Jarvis VS Harris 1996
A lease which contain a property
62
Adverse Possession
Process by which a person who is not the legal occupier of the land can become the legal owner through possession of land for a specified time Before 2003: 12 years After 2003: 10 years
63
Wayleave
A temporary right and receives an annual payment. Cannot be. Automatically transferred
64
Easement
Permanent right and receives capital payment. Can be registered on LR Prescriptive right can be gained if 20 years of continuous and uninterrupted use is proven NOT a permissive right (where LL grant rights to public to the land)
65
What Legislation amended the procedure for contracting out?
Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 >14 day notice = simple declaration <14 days notice = statutory declaration
66
RR Process
1 Conflict and ToE 2 Establish Client objectives 3 Review lease 4 Check time limits for review/notice requirements 5 Inspect and measure 6 Comparables 7 Value to specified basis 8 Report to client and agree strategy 9 Negotiate 10 Settle/refer to 3rd party 11 Document and instruct socilitors 12 Invoice 13 Note next lease event
67
RR usual assumption
Hypothetical letting Open Market Willing parties Fit for immediate occupation and use VP Assumed terms User RR Date Rental Basis Subject to other lease terms
68
RR usual disregard
T’s occupation Rent free for fit out Goodwill T’s improvement where consent obtained (Ponsfied VS H:S aerosoft)
69
Case law on how to agree lease renewal terms
O’May VS City of London Real Property co Ltd (1983) On the expiry of a five-year lease, the landlord proposed a new five year term. However, the proposed new lease transferred various obligations (as to repair and other services of the premises) to the tenant in return for a small reduction in rent. These proposals created a 'clear lease', resulting in the landlord's interest in the premises becoming more valuable. Dismissing the landlord's proposals, the Court of Appeal held that: any departure from the terms of the current lease must be fair and reasonable in all the circumstances; and the burden of persuading the court to change the terms of the current lease on its renewal is on the party proposing the change. The tenants contended that the terms of the existing tenancy, which provided that they should pay a proportion of the heating and lighting expenses of the common parts, should be retained while the landlords proposed a 5-year 'clear lease' whereby the fluctuating costs of the landlords' obligations for maintenance, repair, redecoration and service of the common parts and the structure and exterior of the building would be borne by the tenants. Even though the landlords offered a corresponding reduction in rent, the House of Lords refused to impose more onerous service charge provisions on the tenants. In so doing, their Lordships gave important general guidance as to the proper application of section 35(1) of the 1954 Act:
70
Case Law on Break Clauses
M&S vs BNP Paribas 2014 Court held that pro-rata rent rebate is not implied in lease In Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another [2014] EWCA Civ 603, the Court of Appeal considered whether the tenant that exercised a break should be refunded rent and other payments for the period after the break date. The Court of Appeal overturned the High Court’s decision and held that in the absence of an express provision in the lease requiring the landlord to refund any rent payable under the lease by the tenant in respect of a period after the tenant has exercised the break clause, there can be no implied term requiring the landlord to do so.