PP 8 - Grant of lease Flashcards
(22 cards)
What are the three essentials of a lease?
- Exclusive possession
- Fixed or periodic term
- Proper formalities (deed or no deed)
When must a lease be created by deed?
If it lasts over 3 years.
What formalities for a lease 3 years or under?
Can be in writing or orally
What are the key objectives of a landlord in lease negotiations?
Clear rent with no deductions, Tenant repairs and insures, Control over use and assignments.
What are the key objectives of a tenant in lease negotiations?
Use premises as intended, Flexibility (break clauses, assignment), Avoid unfair terms and repair costs.
How to calculate expiry date?
- From and including a date - expires day before that date in final year
- From a date - expires on same date in final year
What is a break clause?
- A provision allowing early termination by landlord, tenant, or both.
- Can be a fixed break date or rolling break
- Landlord prefer longer lease with a break clause instead of shorter leases bc of reversion value
What is a Full Repairing and Insuring (FRI) lease?
A lease where tenant covers rent, repairs, and insurance.
What are four rent review mechanisms?
Stepped rent, Index-linked rent (e.g., RPI), Turnover rent, Open market rent.
* Stepped rent - fixed rent increases over time
* Index-linked rent - adjusted based on inflation (retail price index)
* Turnover rent - adjusted based on tenant’s turnover
* Open market rent review.- usually upwards only; rent based on comparable properties; if market rates have fallen, rent stays the same
What are common rent review assumptions - open market rent?
Premises are vacant, Tenant complied with covenants, Lease terms apply (except rent), Rebuilt if destroyed.
What are common disregards in rent review - open market rent?
- Tenant’s occupation
- Tenant’s goodwill
- Tenant’s voluntary improvements
What is RICS Code of Leasing and who must follow it?
- Promote fairness in lease negotiations and make drafting more efficient.
- RICS members and regulated firms.
- Does not apply to landlords/solicitors unless RICS members.
Name 3 mandatory requirements under the RICS Code.
- Constructive & collaborative lease negotiations
- Unrepresented parties advised to seek legal advice
- Heads of terms must be compliant
What must the tenant and landlord do pre-exchange?
What is an ‘engrossment’ in lease transactions?
The final, signed copy of the lease prepared for execution.
When is an agreement for lease needed?
- Will set out what conditions are needed to be satisfied and by when for completion to take place
- pre-completoin step
What are the key lease pre-completion searches?
- OS1: Lease of whole ; 30 working day priority period, msut register within this period
- OS2: Lease of part ; 30 working day pp
- OS3: Non-registrable lease - doesnt confer priority
What happens at lease completion?
- Tenant sends completion money
- Solicitors date and exchange leases
- Documents sent to each other
What happens at post completion?
- Landlord’s solicitor sends summary of lease provisions to the landlord
- Tenant’s solicitor arranges to submit and pay SDLT/LTT return
- Tenant’s solicitor registers the lease if necessary
When is a lease registrable at the Land Registry?
- > 7 years → Must be registered
- 3-7 years → Not registrable but can be registered
- Up to 3 years → Cannot be registered
What forms are used for lease registration?
- AP1: If landlord’s title is registered
- FR1: If landlord’s title is unregistered
- Certified lease copy submitted
What must a tenant’s solicitor do post-completion?
- Submit SDLT/LTT return
- Register the lease (if >7 years)
- Receive official copies of leasehold title
