PLP: Structure and Content of a Lease Flashcards
(29 cards)
Define a lease
The grant of the right to exclusive possession of land for a determinate term less than that which the grantor holds, creating a leasehold interest and a reversion for the landlord.
What are the three essential ingredients of a legal lease?
1) Exclusive possession; 2) A fixed or periodic term; 3) If over three years, creation by deed.
What is exclusive possession?
The tenant’s right to exclude all others—including the landlord except for agreed entry rights—from the demised premises.
What distinguishes a fixed-term tenancy from a periodic tenancy?
Fixed-term: set start and end dates (e.g. five years). Periodic: automatically renews at intervals (e.g. monthly) until ended.
When must a lease be executed by deed?
If the term exceeds three years. Leases of three years or less may be made orally or in writing.
What is the landlord’s reversion?
The interest that returns to the landlord at the end of the lease term, giving the landlord possession of the premises again.
Why do institutional landlords insist on FRI leases?
To ensure insurance, repairing costs, and service obligations are borne by tenants, keeping rent ‘net’ and preserving reversion value.
Name three key landlord objectives in lease negotiations.
1) Ensure premises are insured; 2) Ensure premises are kept in repair; 3) Control alterations, use, and assignment.
Name three key tenant objectives in lease negotiations.
1) Use premises for intended purpose; 2) Appropriate term length; 3) Flexibility to assign, alter, or break the lease.
What is a break clause?
A contractual provision allowing landlord, tenant, or both to terminate a fixed-term lease early on specified terms and dates.
Why might a 10-year lease with a tenant break at year 5 be preferable to a 5-year lease?
Because tenants often forget to exercise breaks; landlords value the longer reversion and potential rent continuity.
What is ‘annual rent’ in a commercial FRI lease?
The basic market rent expressed yearly but paid quarterly in advance, often alongside service charge and insurance contributions.
List four common rent review mechanisms.
1) Stepped rent; 2) Index-linked rent; 3) Turnover rent; 4) Open-market rent review (upwards only).
In an open-market rent review, what are ‘assumptions’ and ‘disregards’?
Assumptions: hypothetical lease terms taken as given. Disregards: tenant actions or improvements ignored to achieve fair market rent.
What is the effect of a fully qualified rent review clause?
Landlord must act reasonably when consenting to tenant’s improvements or when setting rent under review, balancing fairness.
What does a full repairing obligation require?
Tenant must keep premises in good repair and put them into good repair if they fall below that standard, including structural and exterior works.
How does a qualified repairing obligation differ?
Tenant must keep premises in the same state of repair as at lease start, evidenced by a schedule of condition, but not improve them.
Why must tenants exclude inherent or structural defects from their repairing obligation?
Because such defects arise from construction, not tenant use, and tenants need protection against latent faults and service-charge liability.
Who insures the demised premises in an FRI lease of part?
The landlord insures the whole building and recovers a proportionate share of the premium from each tenant via service charge or ‘insurance rent.’
Name three ‘insured risks’ typically covered in a commercial lease.
Fire, storm/flood, explosion, subsidence, riot, malicious damage, impact by vehicles or aircraft, bursting pipes, etc.
What duty does section 19(2) LTA 1927 impose on qualified alteration covenants?
Converts a consent-required covenant into one where landlord must act reasonably if tenant’s proposed works constitute improvements.
What are the three covenant types regulating tenant alterations?
Absolute (no alterations), qualified (alterations allowed with landlord’s consent), fully qualified (consent not to be unreasonably withheld).
When must a tenant obtain a licence for alterations?
Whenever the lease requires landlord’s consent for alterations; the licence sets out the scope, standards, consents, and reinstatement obligations.
Under section 3 LTA 1927, how can a tenant carry out absolute-covenant improvements?
Serve notice of intention; if landlord objects, apply to court for permission showing works add value, suit the property, and don’t harm landlord’s other land.
