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Property Management Flashcards

1
Q

What are the 2 core duties of a management surveyor?

A
  • Outlines in RICS Guidance Note - Commerical Property Managment England and Wales 2011
  • Collection of rent, Service Charges and other sums owing by occupiers to the landlord from the occupier
  • Management of a property
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2
Q

What is outlined in the RICS Guidance note for Commercial Property Management in England and Wales 2011?

A
  • Guide for best practice for commercial property managers
  • Focuses on how PM’s can be efficient, effective and accountable to their client and comply with law and statute
  • Primary duty of care to landlord - your client
  • Gives advice on key areas, including core duties of rent collection, service charges, managing buildings, H&S and procurement of third-party suppliers
  • Summary of statute law and a model of terms of engagement
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3
Q

Checklist for LTA

A
  1. Read the lease - is the landlord’s approval required for the alteration?
  2. Request a full set of plans and a specification
  3. Obtain an undertaking for the surveyors and legal costs
  4. All alterations need to be documented by a Licence to Alter
  5. Consider the long-term impact on the property - what happens if the tenant defaults?
  6. Consider whether a financial bond would be appropriate to be held by the landlord
  7. Consider reinstatement required at lease expiry
  8. Has the tenant got the necessary planning consent and building regulation approval?
  9. Check Equality Act 2010 and CDM 2015 compliance and there is a RAMS and Method Statement and a Public Liability Insurance in place for the works
  10. Report to the client and obtain instructions
  11. Instruct the Clients Lawyers to prepare Licence
  12. Inspect the completed works to ensure they are as agreed
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4
Q

RICS Professional Statement - Real Estate Management 2016 - 12 principals

A
  1. Act is an honest, fair, transparent and professional manner
  2. Carry out work with due skill, care and diligence and ensure all staff employed have the necessary skills to carry out their task
  3. Ensure that clients are provided with terms of business that are fair and clear, with details of the firm’s complaints handling procedure
  4. Do the utmost to avoid conflicts of interests and where they do arise, deal with them openly and fairly
  5. Do not discriminate unfairly in any dealings
  6. All communications with clients are fair, decent, clear, timely and transparent
  7. All advertising and marketing material is honest and truthful
  8. Any client money is held separately and is covered by adequate insurance
  9. Hold appropriate PII/ errors or omissions insurance to ensure a customer does not suffer loss because of a negligent act
  10. Make clear the identity of your client and ensure all parties are clear of your obligations to each party
  11. Give realistic assessments of selling prices/rents/financial costs having regard to market evidence and using best professional judgement
  12. Ensure all meetings, inspections and viewings are carried out in accordance with the clients wishes having due regard to security and personal safety
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5
Q

RICS Professional Statement - Service Charges in Commercial Property 2018 - 9 mandatory principals

A
  • All expenditure that is being recovered must be in lease terms
  • No more than 100% of the proper and actual costs of the provision or supply of services must be recovered
  • Service charge accounts must show a true and accurate record of actual expenditure within the service charge provided annually to all tenants
  • Apportionment matrix must be provided annually to all tenants
  • service charge moneys (including reserve and sinking funds) must be held in one or or morediscrete (or virtual) bank accounts
  • interest earned on service charge accounts must be credited to the service charge account after appropriate deductions have been made
  • where acting on behalf of a tenant, practitioners must advice their clients that if a dispute exists any service charge payment withheld by the tenant should reflect only the actual sums of the disupuit
  • when acting on behalf on the landlord, you must advise your client that following the resolution of any dispute, any service charge raised incorrectly should be adjusted to reflect the error without undue delay
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6
Q

What would typical lease terms for an industrial unit be?

A
  • 10 year lease
  • 5 year tenants break option with 6 months notice
  • 6 months rent free
  • Open Market rent review in year five
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7
Q

What would typical lease terms for a retail unit be?

A
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8
Q

What would typical lease terms for an office be?

A
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9
Q

What are some of the costs you recommended going in the service charge in Cardiff?

A
  • Management Fees
  • Facility Manager Fee
  • Help desk/call centre
  • Risk assessments and audits
  • Health and safety remedial works
  • security guarding
  • Cleaning of common areas
  • Utilities for common areas
  • M&E repairs and maintenance
  • External maintenance, repairs and landscaping
  • Engineering and building insurance
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10
Q

What cannot be recovered through the service charge?

A

Improvements

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11
Q

What are the different methods of apportionment?

A
  1. Floor area
  2. Fixed Percentage
  3. Rateble value - difficult if these change or get appealed no longer advised
  4. Weighted floor area - such as a department store in a shopping centre
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12
Q

How can you benchmark service charge costs?

A

Global Estate Measurement Code for Occupiers (MSCI) for commercial property occupiers

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13
Q

What must be included in a rent review memo?

A
  • Name of landlord and tenant
  • Address of the property
  • Date of the lease and rent review
    -Confirmation of new rent agreed
  • Signed and dated by both parties
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14
Q

How often should fire doors be inspected?

A

6 months - for common areas
12 months - for sole occupancy

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15
Q

What is a letter licence?

A
  • A licence drafted internally and approved by the landlord that documents minor alterations
  • Details works to be done, reinstatement, date, property and both landlord and tenant signatures
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16
Q

Why did the landlord wish to instigate service charge?

Setting a service charge budget, Cardiff

A
  • they were selling the property as an investment
  • were no longer going to be in possetion of a large propotion of the building
  • wanted to recover costs
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17
Q

Before the sale, was there any recomended works?

Setting a service charge, cardiff

A
  • any improvments to the building for the sale were not put through the service charge
  • service charge included sums ongoing maintence including life saftey systems, communal area energy and cleaning
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18
Q

If a tenant was not paying their rent what would you do?

A
  • Go to premesis to meet tenant (establish if they are trading/ minor reason for delay in payment)
  • Check to see if hold a rent deposti (will have a rent deposit deed - issue is rent deposits often have to be topped up by tenant if used)
  • Check the lease for a guarentor (if guarntor then pay rent they can take overididing contract)
  • Serve a statutory demand
  • CRAR
  • Forfiture
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19
Q

What RICS document could you refer to in order to understand more about service charge?

A

RICS Professional Statement – Service Charges in Commercial Property 2018

20
Q

What RICS Documents are there regarding property managment?

A
  • RICS Guidance Note – Commercial Property Management England and Wales 2011
  • RICS Professional Statement – Real Estate Management 2016
  • RICS Professional Statement – Service Charges in Commercial Property 2018
21
Q

What is the difference between lease and licence and case?

A
  • Street v Mountford (1985)
  • Lease provides occupier with estate in relevant land – licence is a permission to make it lawful for them to use the land
  • A lease can be assigned – a licence is normally a personal right that cannot be assigned
  • A lease cannot be terminated until either break clause or expiry – a licence can usually be revoked at any time
22
Q

What are the 4 requirments of a lease?

A
  • Exclusive possession
  • Payment of rent
  • Duration for a specified term
  • If 3 or more years, terms must be in writing, signed and registered as a deed.
23
Q

What is a service charge?

A
  • Charges to tenants of multi-tenanted properties or estates of costs incurred by the landlord to maintain and manage the property. Specifically what can be covered will be outline in the lease.
24
Q

What should you do if the lease is silent if rent should be paid in advance or arrears?

A
  • Sury v Cole – rent will be payable in areas
25
Q

How can you pursue rent from a sub-tenant?

A
  • Section 81 notice under the Tribunals, Court and Enforcement Act 2007.
26
Q

Headlines of options for rent recovery?

A
  • visit property
  • payment plan
  • use rent deposit
  • CRAR
  • Exsisting guarentors
  • Subtenant (S. 81 Tribunals, Court and Enforcement Act 2007)
  • AGA or pre 1st Jan 1995 previous tenants (S.17 landlord and tenants (covenants) act 1995
  • statutory demand
  • forfiture
  • court proceedings
27
Q

What is CRAR?

A

Commercial Rent Arrears Recovery

min 7 days unpaid rent
7 days warning notice
enforcement agent visits
2 clear days follow
re-entry of enforcement agent to seize goods
7 days before sale of goods
fees specified on entry notice

28
Q

What is a statutory demand for rent arears?

A

Arears over £750
only use if level of arears is undisputed
Tenant has 21 days to pay if not landlord can present to court bankruptcy for individual and winding up for company
If court proceedings successful landlord would only be unsecured creditor.

29
Q

what is forfiture of a lease for rent arears?

A

– last resort and only if expressly permitted within the lease
- Allows landlord to peacfully renter property and gain possession for breach of lease
- Tenant has 6 months to claim relief from forfeiture if arears are paid.

30
Q

What must a landlord serve for forfiture for breach other than non-payment of rent?

A

LL required to serve a S146 Law of Property Act 1925 with details of breach and how should be remedied

31
Q

What clause in a lease alows a landlord to enter a proeprty to carry out repairs?

A
  • Jervis v Harris clause
32
Q

What is a Jervis v Harris clause?

A
  • A clause permitting the landlord to enter the property and carry out repairs when a tenant is failing to do so. Landlords can then recover costs from the tenant as debt rather than damages
33
Q

What is a PPM?

A
  • RICS Professional Standard Planned Preventative Maintenance 2022
  • Maintenance that is performed purposely and regularly to keep the structure and fabric, facilities, plant and equipment of a building in satisfactory operating condition.
  • Inspection detection and correction of failures before they occur and where they present before they develop into major defects
  • Usually prepared to cover 5-10 year maintenance periods
34
Q

3 stages of a PPM?

A
  • Cyclical maintenance – regular activities such as servicing plant, health and safety maintenance and redecoration
  • Preventative maintenance – dependant on condition survey prepared by Building Surveyor. Forecasts future repair needs and plans timetable for undertaking work. Such as replacing single glazed with double glazed, upgrading facilities services and refurbishment work.
  • Responsive maintenance – initiated by the building occupier e.g. repairing leek unblocking drains
35
Q

Are refurbishment works covered by the service charge?

A
  • Refurbishments often cover elements of both repairs and improvements.
  • Where refurbishment beyond normal repair or maintenance this element is met by owner.
36
Q

Who do property managers owe a duty of care to?

A
  • Their client
  • To manage the property and to the occupiers
37
Q

What are the necessary time scales for budgets and reconciliations?

A
  • 1 month prior to service charge year for budgets
  • 4 months after service charge year for reconciliation
38
Q

What are the fundimenatals for rent collection?

A
  • Accuracy of information
  • Timing
39
Q

What is the difference between IRI & FRI terms?

A
  • FRI terms tenant is responsible for repairing and insuring the property
  • IRI terms landlord is responsible for structural repair and maintenance and all maintenance of common areas and exterior. This is recovered through a service charge. Landlord also responsible for building insurance but this is recharge to tenant.
40
Q

What is value for money?

A
  • Optimal use of resources to acheive intended outcome
  • Optium means most desirable possible given expressed of implient restrictions or contrainsts
  • Not about acheiveing lowest initial price
41
Q

Difference between a sinking and reserve fund?

A
  • Sinking fund formed by periodically setting aside money for the replacement of a waiting asset (e.g. roofing, heating, air conditioning plant and equipment
  • Reserve fund formed to meet anticipated future costs of maintenance and upkeep to avoid fluctuations in the amount of service charge payable each year – cover large items of unforeseen expenditure
41
Q

How much was the service charge?

Drafting a service charge budget. bristol

A

86p

42
Q

Why did the service charge inrease?

Drafting Service Charge Bristol

A
  • Increased contract costs
43
Q

What was the service charge set at?

A

£12.48?

44
Q

What are the differnt forms of insolvency?

A
  • Administration – administrators appointed to rescue insolvent company
  • Receivership – administrative receiver appointed by creditors to release assets to repay debt
  • Company Voluntary Agreement -voluntary agreement with creditors as to how depts will be settled

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