PP 9 - Lease structure and content

Question 1

What does ‘demise’ refer to in a lease?

Answer 1

The part of the building covered by the lease and leased to the tenant.

Question 2

Who is responsible for repair in a lease of whole?

Answer 2

The tenant, including interior, exterior, and structure.

Question 3

Who is responsible for repair in a lease of part?

Answer 3

Tenant repairs the interior; landlord maintains common areas (e.g., halls, lifts).

Question 4

What is a full repairing obligation?

Answer 4

• Required by an FRI lease
• Requires tenant to put and keep premises in good repair — tenant should get a survey.

Question 5

What is a qualified repairing obligation/covenant?

Answer 5

Tenant must repair but not improve beyond original condition, evidenced by a Schedule of Condition.

Question 6

What are the limitations of repairing obligations?

Answer 6

Tenants repair or replace, but are not responsible for full renewal (structural) or rebuilding.

Question 7

Should tenants be liable for inherent/structural defects in new buildings?

Answer 7

No — these should be excluded from tenant obligations and service charges.

Question 8

Who insures the property in a commercial lease?

Answer 8

The landlord insures and recovers costs from tenants as insurance rent.

Question 9

How is insurance rent typically split?

Answer 9

Lease of whole → Tenant pays 100%
Lease of part → Proportional share via service charge

Question 10

Is the tenant liable for insured risks?

Answer 10

No — unless the damage is caused by the tenant’s negligence.

Question 11

Give examples of typical insured risks.

Answer 11

• Fire
• Flood
• Storm
• Explosion
• Subsidence
• Riot
• Earthquake
• Vehicle impact

Question 12

If a lease is silent on alterations, what can the tenant do?

Answer 12

Alter freely, subject to the doctrine of waste — cannot reduce the value of the premises.

Question 13

What are the types of alteration covenants?

Answer 13

• Absolute – No alterations allowed
• Qualified – Consent required, landlord can refuse consent without reason
• Fully qualified – Consent required, but landlord cannot unreasonably withold consent

Question 14

Alternations - statutory conversion?

Answer 14

Yes, under LTA 1927, qualified covenants are converted to a fully qualified covenants.

Question 15

What can u do with absolute covenant against alterations?

Answer 15

• Tenant should serve notice on landlord of intention to carry out improvements
• If landlord objects, tenant can apply to court which will give permission if:
  improvements add to letting value; are reasonable and suitable; will not diminish value of any other landlord’s property
• If landlord doesnt obkject in 3 monthsthe tenant may go ahead

Question 16

What is a Licence for Alterations?

Answer 16

• Used where there is a qualified covenant for alternations.
• If landlord agrees to alterations, consent is documented in Licence for Alterations.

Question 17

What is the purpose of a user clause?

Answer 17

To restrict how the tenant can use the premises.

Question 18

What are the levels of control in change of use clauses?

Answer 18

• Absolute – No change
• Qualified – Change allowed with landlord’s consent
• Fully qualified – Consent not to be unreasonably withheld

Question 19

Does statute upgrade user clauses?

Answer 19

No — s19(3) LTA 1927 does not convert user clauses.

Question 20

What is required when a tenant changes use under planning law?

Answer 20

• Planning permission
• Regulatory approval (e.g., betting licence for Sui Generis)

Question 21

Best practices for user/alteration clauses under RICS Code?

Answer 21

• Limit restrictions to protect property value
• Use fully qualified covenants for non-structural/internal alterations
• Reinstatement clause should be clear in heads of terms