Property Management Flashcards
(43 cards)
What notice can be used to pursue a former tenant or guarantor?
Section 17 - L&T 1995
Can forfeiture be implied?
No - must be an express covenant in the lease
RICS guidance on service charge?
Service charges in commercial property, professional statement - 1st edition (September 2018, wef April 2019)
What is the main change of Service charges in commercial property statement (September 2018)?
Mandatory not just best practice
What is a sinking fund?
An amount of money set aside to cover any major work which is needed on a property in the future
What is the purpose of a sinking fund?
To periodically set aside money for the replacement of a wasting asset
What is the RICS guidance note?
Commercial property management in England and Wales 2nd Edition October 2011
What does the Commercial property guidance note state?
Property manager has two core duties:-
1. The collection of rent, service charge and other sums
2. Property management of the property.
What are the remedies for non-payment of rent?
- Statutory demand
- Arrange a meeting and potentially discuss a payment plan.
- Draw down on deposit
- Chase guarantor for payment
- CRAR
- Forfeiture
What would be the point in arranging a meeting?
- to establish the reason
- to see if the tenant is still trading
- assess trading performance
How would you pursue a guarantor?
Serve a S17 Notice under L&T Covenants Act 1995 within 6 months.
Can the guarantor take responsibility of the lease if they make payment?
They can take and overriding lease meaning they become the direct tenant of the landlord and immediate landlord of the defaulting tenant.
What section in the lease states a guarantor?
An AGA.
When did the AGA come into place?
The L&T Covenants Act 1995 brought about AGA’s abolishing Privity of Contract.
What is Privity of Contract?
The original tenant remained liable for payment of rent no matter how many times the lease had been assigned.
What is Statutory demand?
This is the written demand for payment of rent and is often a quick and inexpensive method.
What is CRAR?
Commercial Rent Arrears Recovery.
The statutory procedure which allows LL’s of commercial premises to recover rent arrears. This involves enforcement agents recovering goods to the value of debt owed.
How would you commence CRAR?
By serving a 7 day notice informing the tenant that enforcement officers will attend in the event of non payment.
Does it have to be 7 days?
This can be shortened via an application to Court if there is reason to believe the tenant will pack up and leave.
What goods can enforcement agents sieze?
Goods belonging to the tenant that have a value on their balance sheet.
What is forfeiture?
Allows the LL to terminate the lease when a tenant is in breach of their obligations.
How does forfeiture differ from non payment of rent to other breaches?
For example if the breach was for a repairing obligation, then the LL must serve a S146 Notice under the Property Law Act which should give the tenant 6 months to remedy the breach.
For non payment of rent the LL can forfeit on the period within the lease (usually 21 days)
What would you assess when considering a payment plan?
Good/bad covenant will depend on the length to repay.
Review management and audit accounts. Management being more up to date and accurate.
What is the guidance on service charge?
Service Charges in Commercial Property UK 1st Edition September 2018 (wef April 2019)