Leases Flashcards
Essential ingredients of a lease
Exclusive possession
Fixed term (or periodic)
Formalities for registering lease
Up to 3 years - no need or registration
3- 7 years - deed, but does not need to be registered (but can be)
Over 7 years - deed and must be registered by notice on charges register. If land is unregistered, this triggers compulsory registration.
What is a full repairing and insuring lease
Any costs of repair or insurance met by tenant, directly or indirectly.
Rent paid is clear of deduction.
Institutional landlords will insist on FRI lease
Key features of FRI lease
Rent - payable quarterly by standing order, reviewed to open market upwards only.
Insurance - LL insures and recovers premium from T.
Repair - T responsible for repairing property at own expense, but not for insured risk unless insurance payout is withheld due to T’s actions.
Service charge - LL provides services and recovers cost from T
When will 1 year lease from and including 10 July expire?
9 July
When will 1 year lease from 10 July expire?
10 july
types of break clause
Specified date or rolling break (eg any time after certain date)
If lease is of a whole property, what is T responsible for the repair of?
Interior, exterior and structural
If lease is of a part of a property, what is T responsible for repair of?
Interior only.
LL will repair common areas and recover £ from T by way of service charge
What is a full repairing obligation?
To keep premises in good repair.
If premises are not in good repair (even if they were not at term commencement date), T is responsible for repairing.
T should obtain survey
What is a qualified repairing obligation?
Keep premises in good repair but not better than they were at start of lease.
Not usually included in FRI leases. Schedule of condition should be provided
What should T ensure is excluded from repairing obligations when taking lease of new property?
Inherent structural defects, otherwise responsible for repair of any that arise during lease term
Rent in commercial FRI lease
-Expressed as yearly figure payable quarterly
- FRI lease will state rent is payable in advance of quarter, eg pay before 1 Jan for Q1
- rent will be apportioned if T takes lease part way through a quarter
Types of rent review
Stepped - increase in specified increments
Turnover rent - based on turnover
Index linked rent
Open market rent review
How is rent reviewed in open market rent review
LL and T can try to agree rent. If they cannot, appoint a specialist valuer who assumes certain matters and disregards others to reach new rent payable.
