Level One Flashcards
(36 cards)
What is a lease?
The tenant has exclusive possession of the property and can generally use and alter it as they see fit, as long as it doesn’t breach the terms of the lease.
What is a licence?
The landlord retains greater control over the property and may place restriction son how the occupier can use it.
Name a few differences between commercial lease and licence?
- Licences do not provide the same security that a lease would because either party can terminate a licence on 1 weeks’ notice.
- Leases grant exclusive possession of the property whereas a landlord can enter the property at anytime under a licence.
- Licences are used for a specific purpose, such as to carry out alterations to a property.
- Licences do not grant any other rights to use the property and the person with the benefit of it will not own the property in any way, they are simply given permission to use it.
- Leases create a legal interest, whereas licences do not.
- Leases can be assignable, whereas licences are personal to one individual and cannot be transferred.
What is an assignment?
The transfer of a lease to another party.
What is sub-letting?
Legally, you are still a tenant of the property. Responsible for all commitments contained in your lease. Letting the space to another tenant. The landlord doesn’t have a legal contract with the subtenant.
What is an authorised guarantee agreement?
An AGA is an agreement which places an obligation on an outgoing tenant to guarantee the performance by the new tenant or “Assignee” of the tenant covenants contained in the lease.
If the Assignee fails to perform the tenant covenants in the lease (which include payment of rents and repair obligations) the AGA allows the landlord to pursue the outgoing tenant under the terms of the AGA.
Where would you come across a licence over a lease?
Co-Working Spaces
Why might a licence be more attractive to a tenant
- Flexibility
- Immediate Occupation
- Lower Capex
- Quickly Agreed
- Don’t necessarily need lawyers
What risks does a licence represent to a tenant?
- Quick termination (no security of tenure)
If you were advising a client who is disposing space, when would you recommend a sublease over an assignment?
- When client wants to keep part of the property for their own occupation
- Looking to grow, but wants to sublease part until they have grown (flexibility)
- Under rented and you could achieve a profit rent
- May want to recommend if assignment requires an AGA
If you were advising a client who is disposing space, when would you recommend an assignment over a sublease?
- Mitigating liability (unless AGA in place)
- For the whole property
You have examples of both offices and retail, are there many differences in the leasing process when dealing with the two asset classes?
The process is the same in terms of viewing, negotiating terms, agreeing HOTs, instructing solicitors etc
but terms will obviously differ, i.e offices have CAT A contributions which you don’t get for retail, rent frees differ, etc
What are the principles of the Estate Agents Act 1979
Clarity as to the terms of agency
Honesty and accuracy
Agreement and liability for costs
Openness regarding personal interest
Absence of discrimination
Legal obligation to tell the client about offers received
Keep clients’ money separate
What are some key points from the Estate Agents Act 1979?
- Specify all costs/fees in advance in writing
- Itemise all payments
- Specify nature of agency and selling rights to be agreed - sole selling or sole agency / sole joint agency or multiple agency
- Advise clients of any services available to applicant
- Disclosure any personal interest
- Personal interest should be declared in heads of terms
- Offers / interest - you can only tell the truth
- handling clients’ money
- Procedure to follow when offers are received promptly and in writing
What are the key differences between sole agency and joint agency?
Sole agency means one agent has the exclusive right to market the property, while joint agency involves two or more agents working together, often splitting commission. Sole agency may result in a more focused approach, but joint agency can increase exposure and competitive efforts.
In your experience, when would a client benefit more from joint agency than sole agency?
having local and national agents
How do you manage communication between multiple agents when involved in a joint agency arrangement?
- Regular meetings
- Shared documents
- Establish roles
- Transparency
How does the Estate Agents Act (1979) and the Misrepresentation Act (1967) impact your work in leasing and letting?
The Estate Agents Act regulates how agents operate, ensuring transparency and preventing conflicts of interest. The Misrepresentation Act ensures that any information I provide, especially in marketing materials, is accurate and not misleading, or I could be liable for misrepresentation.
How do you handle a situation where a client has unrealistic expectations in terms of rent or lease terms?
I manage client expectations by presenting clear evidence from comparables and market research, explaining how current market conditions affect rental levels or terms. I maintain a transparent and educational approach to ensure the client understands why certain expectations may need adjustment
What are the penalties of the Estate Agents Act 1979?
Policed by National Trading Standards Estate and Letting Agency Team
Negative licencing - right to be estate agent can be taken away and not granted
Act allows for prohibition or warning order to be made against an agent
Prohibition order stops an agent practising
Warning order less punitive - gives an agent a written warning not to undertake the action again
Usually only around 10-12 orders are issued a year
Can be against individual or practice and cost can be awarded
What is the difference between the Misrepresentation Act 1967 and the Consumer Protection Regulations 2008?
The consumer protection regulations relate to potential buyers and vendors and extend duty owed not just to clients but to potential clients, viewers and buyers to give accurate information.
Agents must declare all they know about the property and not exert pressure on potential buyers/ lessees
During whole agency letting process
The misinterpretation act
Applies for mis statements or false statements or misinterpretation made during the pre-contractual enquiries by agent.
What are the principles of the consumer rights act 2015/
- Letting agents must display a summary of their charges both in the office and on their website for letting and management of property
Penalty is up to £5,000 for each breach
What are the requirements for marketing signage?
Town and Country Planning (Control of Advertisements) regulations 2007:
* Planning consent required for commercial boards over 2 sq m and 2.3 V board – only 1 per building
* Must not project more than 1m from face of building and not above 4.6 m from ground
* Also need planning consent for: boards erected on listed buildings
Must have owners approval
What does the Land Registration Act provide?
All new leases granted for more than 7 year or existing leases sold or assigned with 7 years left must be on land reg with a lease plan
