Property Management Flashcards
(145 cards)
1
Q
What is an assignment?
A
Tenant transfers legal interest in lease to another tenant. Incoming tenant takes over lease obligations
2
Q
What is a sub-letting?
A
Property is let from another tenant, rather than landlord. Original tenant maintains relationship with landlord, and sub tenant has relationship with sub tenant.
3
Q
What is the difference between an assignment and a subletting?
A
With an assignment, the original tenant is no longer liable under the lease. With sub-letting, original tenant remains liable but creates a new relationship with sub-tenant. Landlord and sub-tenant have no direct relationship.
4
Q
Why sublet rather than assign?
A
- Lease requirment
- Tenant may want to reoccupy in the future
- new party may be of lesser covenant strength.
5
Q
Under what clause are assignments/subletting’s found within the lease?
A
Alienation clause
6
Q
What is a typical alienation clause?
A
Permitted to assign/sublet whole but not part, with LL consent not to be unreasonably witheld.
7
Q
What act relates to consent not being unreasonably with held?
Which part relates to assignments and sublettings?
A
Landlord and Tenant Act 1927
Section 19(1) deals specifically with assignment and subletting, stating that landlord consent cannot be unreasonably witheld or delayed.
8
Q
What should a PM do when they receive an application to assign or sublet?
A
1) Review lease
2) Request undertaking of surveyor and legal costs
3) Check if proposed market rent is same as passing
4) Check effect on investment value of prop
5) Check if incoming tenant will pay rent deposit
6) Provide recommendation to client (approval)
7) Documented by solicitors
9
Q
Why assign rather than sublet?
A
No plans to occupy in the future
Rent too high for you
No longer need unit
10
Q
Aim of LL & T Act 1988?
A
S1 of LL & T Act 1988 states consent must be provided within reasonable timeframe (no delays)
11
Q
What does S18 of LL & T Act 1927 do?
A
Limits the amount of damages a LL is able to recover for breach of repairing covenants
12
Q
How would a tenant register an improvement?
A
Licence to alter
13
Q
Benefit of LtA’s?
A
Protection for LL - requires T to reinstate unit at end of lease, back to how it was originally let
Protection for T - prevents LL from rentalising alterations/improvements at rent review
14
Q
Key RICS publication in regard to alterations?
A
RICS Guidance Note: Licence for Alterations in Commercial Property, 2nd Edition 2013
15
Q
What is the significant of the RICS Guidance Note: Licence for Alterations in Commercial Property, 2nd Edition 2013 ?
A
Best Practice: Standardises the process for handling tenant alterations.
Legal Compliance: Aligns with Section 19(2), Landlord & Tenant Act 1927.
Risk Management: Covers structural impact, valuation, reinstatement, and legal risks.
Clear Documentation: Advises on Licence for Alterations, plans, and approvals.
Professional Standards: Ensures surveyors handle alteration requests effectively.
16
Q
What is the process for completing a licence to alter application?
A
1) Recieve tenant application - must be in writing
2) Assess Reasonableness – Ensure timings and requests are fair.
3) Review & Consult Client – Discuss with landlord and obtain instructions.
4) Obtain Third-Party Input – Insurers, building surveyor if needed.
5) Consider Impact of Works – Rental value, structural implications, warranties, reinstatement.
6) Liaise with Solicitors – Document the LTA properly.
7) Review Permits & RAMS – Ensure compliance before work starts.
8) Final Inspection – Confirm works align with agreement.
9) Tenant’s Legal Rights – If landlord is unreasonable, tenant can apply to court.
17
Q
Different ways that consent to make alterations can be granted?
A
Automatically by lease terms (no consent required)
Formal Licence Deed - used for projects where there are internal changes being made
Simple Letter Licence - less complex project, no solicitor necessarily required
18
Q
Why should an inspection be carried out after completion of tenant works?
A
Surveyor needs to be satisfied that works were carried out to required standards, in line with plans and specifications .
19
Q
What factors need to be considered in an LtA?
A
Nature of works
Improvements
DDA/Equality Act 2010 compliance
H&S
Sustainability
Unlicenced works on review and assignment
Impact on building operations
financial bond
warranties for major works
Dilaps/reinstatement provisions
20
Q
Why is it important to handle applications properly?
A
To ensure the complete licence protects both parties’ interest and proceeds without unnecessary delay
21
Q
What information should be provided with LtA applications?
A
- Scope of works
- Relevant Insurances
- Acceptance of fees
- H&S Risk Assessment - site specific
- Building regulation compliance (if required)
22
Q
What happens if superior landlord consent is required?
A
- Licence may form a tripartite agreement
- Advise tenant that there is potential for increased costs and longer time to process the application.
- Potential for superior landlord to withold consent.
23
Q
What would happen if you discovered unlicenced works on review or assignment?
A
- You may be able to rentalise the unlicenced - depends on precise wording of the lease
- may be able to reject assignment based on unlicenced works
- Breach of lease covenant - potential to forfeit lease
- Retrospective licence
24
Q
How does MEES relate to alterations and your reasoned advice?
A
Where tenant works will or may negatively affect the EPC, it is likely to be reasonable for landlord to withold consent.
25
What are reinstatement provisions?
A provision that ensures the repair of the property so that it is in the same condition, or materially equivalent condition, prior to the works taking place.
26
How does the Equality Act 2010 relate to alterations?
Alterations may be required to allow occupiers providing a service to fulfill the obligations placed on them by the Equality Act 2010.
If works required under legislation, different statutory regime applies.
-Cannot withhold consent irrespective of wording.
- Response given within 42 days
27
What are the core duties of a property manager?
Collection of rent, service charge and other sums
The management of the property
28
What H&S considerations relate to alterations?
The tenants or contractors H&S documents demonstrate that risk assessments and method statements have been produced.
Safe working practices should be adhered to and permits issued
- Asbestos register
- Construction regulations (2007) apply to refurbishments
29
Talk me through the process of a tenant not paying rent and how you would remedy this.
- Contact the tenant - meet on site preferably.
- Before making a further decision, request to see accounts - recommendation will need to be tailored to each scenario.
- Payment plan
- Guarantor (AGA)
- Drawdown on rent deposit
- CRAR
- Statutory demand
- Surrender/forfeiture
30
What would be the process and things to consider when making a payment plan.
- would nee to read their accounts, audited and management to see if this is justified. - would only be suitable if the tenant can actually meet payments
- short term measure
- needs to be agreed in writing.
will be personal to the tenant
31
What should be considered before drawing down on rent deposit?
- Tenant covenant strength - will they be able to top it back up?
- Future debt - if tenant is struggling, may be wise to keep deposit for future debt.
32
Does LL need to give T notice before drawing down on rent deposit?
look to see what it says in the rent deposit deed
33
does the LL have to use rent deposit for arrears?
No can use it at their discretion
34
what are the benefits of drawing down on rent deposits?
- good if tenant only struggling short-term and ll wants to keep tenant in occupation
- provides relief for tenant so they can focus on recovering business
- tenant can top up deposit when more financially stable
35
How would you manage a rent deposit?
- comply with rent deposit deed
- hold funds in separate bank account which is designated as tenant deposits
- Funds need to be protected incase the LL becomes insolvent.
36
How would you check if there is a guarantor in place?
check the lease
37
To pursue a Gaurantor, what section would you serve?
Section 17 notice from the L&T Covenants Act 1995
38
What is the time frame for which a LL can claim against a guarantor?
6 months
39
When can a former tenant be pursued for arrears?
If lease is an old lease and started before 1st January 1996
- Privity of Contract was abolished by LL & T (Covenants) Act 1995
- Before this, any tenant who was original tenant under the lease was responsible for rent and other covenants throughout the term (even if lease had transferred to new tenant)
- or if there is an AGA in place
40
What is privity of contract?
a legal principle stating that only parties who originally signed a contract have rights and obligations under it.
41
What is CRAR?
Commercial Rent Arrears Recovery
42
What did CRAR replace?
Common Law of distress for rent
43
When was CRAR introduced?
Introduced in 2014 by the Tribunals, Courts and Enforcement Act 2007
44
Is there a minimum amount that CRAR can recover?
No minimum amount of arrears required
45
Who is CRAR available to?
Commercial Landlords to recover rent (plus VAT and Interest)
46
What are CRAR timelines?
7 days unpaid rent
7 Days notice
Enforcement agent visits
7 Days before sale of any seized goods
47
Can you change the time frames for CRAR?
Landlord can apply for court to shorten the notice period if it is believed that the tenant will abscond or attempt to hide goods
48
What goods cannot be seized under CRAR?
Perishable goods
Tools of the trade below the value of £1,350
Any good proved to belong to a third party
49
What are tenants rights under CRAR
A commercial tenant has the right to delay the enforcement action once they recieve - they can do this by asking a court to either:
- Grant a delay of execution
- Set aside the enforcement notice
They also have the right to enter into a controlled goods agreement.
50
What is a Controlled Goods Agreement?
A Controlled Goods Agreement (CGA) is used in the CRAR process, allowing a tenant to keep their goods while agreeing to a structured payment plan for rent arrears. If the tenant defaults, the enforcement agent can seize and sell the goods to recover the debt
51
What is a statutory demand?
A formal demand for payment and a preliminary step to pursuing bankruptcy/winding up procedures. Only advisable when there is no dispute over the level of arrears.
- Seen as an aggressive move as it is published in the press.
52
What is the minimum arrears for a stat demand to be served?
Used for debts in excess of £750
53
How long does a tenant have to pay when a stat demand is served?
Tenant has 21 days to pay the arrears
54
What is the process of serving a statutory demand?
- Notice is served and T has 21 days to pay or propose a plan.
- After this time, the landlord can present a winding up petition to the court.
55
What is winding up?
The formal process of closing a company due to insolvency leading to the liquidation of assets and dissolution of the company.
56
What considerations must be made before CRAR?
- Costs - consider costs vs expected recovery
- Relationship with tenant - could lead to a breakdown in relationship, vacancy and loss of income
- Legal compliance - LL's must strictly adhere to the legal requirements of CRAR
57
What is forfeiture?
Forfeiture is a a clause in a lease that allows landlords to regain possession of the lease.
- Either by peaceful re-entry or court action.
58
What is the process of CRAR?
- Make an assessment that the rent is overdue, at least 7 days
- Notice of enforcement - providing at least 7 days to clear the arrears
- Enforcement - if payment is not made then enforcement agents are instructed to attend.
- Take control of goods - enforcement agent takes control of goods.
- Controlled goods agreement.
- If arrears remain un paid, the enforcement agent can sell the goods at auction.
59
When can forfeiture be used?
- when there is a forfeiture clause in the lease
- No notice is required from the LL
60
What are tenants rights under forfeiture?
- Tenants have the right to apply for relief from forfeiture
- Only a court can apply relief
61
What happens when a court applies relief from forfeiture?
Lease is restored as though forfeiture never happened for 6 months
62
How can LL right to forfeit be waved?
- if LL agrees a payment plan with the T
- If CRAR is exercised
- If S25 notice is served under LL & T Act 1954
63
How can a lease be terminated by forfeiture?
- Landlord can peacefully re-enter and change locks
- Court proceedings can commence to recover possession
64
What are the requirements for forfeiture?
Must be a forfeiture clause in the lease
Rent must have been properly demands or received
65
Where could you suggest forfeiture?
- tenant is paying below market rent - would really only do this if you have another tenant to come in.
66
What is surrender?
A mutual agreement between the L and T to terminate the lease and release the tenant from its obligations.
It can be express (via a Deed of Surrender) or implied (through actions, e.g., tenant vacates, landlord takes possession).
Once surrendered, the lease ends immediately, and future obligations cease unless otherwise agreed."
67
Why is it important to look at management accounts as well as audited accounts?
- Audited accounts are submitted 9 months after the year end and so will not show the most up to date state of their accounts
- Management accounts show how the business is doing on a monthly or quarterly basis - these are not audited though.
68
What are the two fundamental principles of rent collection?
Accuracy of information provided
Timing of when demands are sent out/rent is collected by
69
Difference between standing order and direct debit?
- Standing order = regular payment set up by payer
- Direct debit = payer authorises the payee to take payments
70
What are the typical lease terms regarding interest on late rent?
2-4% above base rate once arrears are 14 days late and applicable from the due date.
71
How can court proceedings be used to recover tenant arrears?
- LL can obtain court judgement
- High Court Enforcement Officer may then enforce this but need to pay court fees
- Similar to CRAR
- Useful if tenant is solvent - threat may force payment
72
Downsides of court proceedings?
Slower process
Expensive
73
Key considerations when reviewing rent arrear recovery methods?
- What is the chance of reletting the property
- What is the current rent vs market rent
- Vacant possession value and void cost, vs value when let
74
According to RICS Code of Leaving Business Premises, when should AGA's be used?
If assignee is of weak covenant strength, has no guarantor and is not paying a rent deposit.
75
What is a service charge?
An amount tenants pay to cover the cost of providing communal services to a building or the surrounding estate.
76
What legislation do you know that relates to Service charge?
RICS Professional Statement: Service charges in commercial property 1st edition (2018)
77
What are the aims of the Service Charge Professional statement?
Improve best practice, uniformity, fairness and transparency in management and administrations of service charges
Ensure timely issue of budgets and YE certificates
Reduce cause of disputes, and provide guidance on dispute resolution
78
What are the 9 mandatory requirements in the Service Charge Professional Statement?
1️⃣ Lease Compliance – All recoverable costs must comply with lease terms.
2️⃣ No Profit for Landlords – Service charge must only cover actual costs.
3️⃣ Budget Transparency – Annual budgets with explanations must be issued.
4️⃣ Accurate Year-End Accounts – Approved service charge accounts must be shared annually.
5️⃣ Fair Apportionment – A clear apportionment matrix must be provided.
6️⃣ Separate Bank Accounts – Service charge monies (including sinking funds) must be held in discrete accounts.
7️⃣ Interest on Funds – Any interest earned must be credited to the service charge account.
8️⃣ Tenant Disputes (acting on behalf of the tenant) – Tenants should only withhold disputed sums, not the full service charge.
9️⃣ Landlord Disputes (acting on behalf of the landlord) – Landlords must adjust incorrect service charges promptly after dispute resolution.
79
What are the 11 sub sections of the Service Charge Professional statement?
- Service costs
- Allocation and apportionment
- Communication and consultation
- Duty of care
- Financial competence
- Occupier responsibilities
- Right to challenge
- Alternative Dispute Resolution (ADR
- Timelines
- Transparency
- Value for money
- Exclusions
80
What is the responsibility of property managers when issuing service charges?
- Ensure value for money
- Ensure quality services that are regularly reviewed
- Ensure standard of services are monitored
81
What are the timescales for reporting within the service charge professional statement?
- Issue budgets a minimum of 1 month prior to the start of the SC year-end
- Issue reconciliation/ expenditure certificates within 4 months of SC year end
82
What is a budget?
The expenditure estimated that will be incurred in a given service charge accounting period.
83
How can you achieve value for money?
Procure quality service standards - achieve value for money as opposed to cheapest price
Competitive tenders
Formal retendering
84
What is a sinking fund?
A fund set up for paying specific costs that occur occasionally, for example roof repairs
85
What is a reserve fund?
A fund set aside to cover the cost of major works or other significant items of expenditure
- useful for unexpected expenses
86
What is a depreciation charge?
an accounting expense that reflects the gradual reduction in value of an asset over time due to wear and tear, obsolescence, or usage.
depreciation is distributed across the useful life of the property
87
What are the different types of insolvency?
- Administration
- Company Voluntary Arrangement (CVA)
- Receivership
- Liquidation
88
What are the four methods of service charge apportionment?
- Floor area
- Fixed percentages
- Weighted floor area (typical in shopping center)
- RV
89
What are the implications for Landlord when a tenant goes into administration?
- company is protected from action being taken by moratorium.
- Rent due can be claimed from the administrator
- Administrator may seek LL consent to assign lease
90
What is a moratorium?
a temporary legal suspension preventing creditors from enforcing debts
91
What are the implications for landlord when tenant goes into liquidation?
Landlord can deduct finds from rent deposit
Landlord can seek court order from termination of lease
Landlord can forfeit lease
Landlord can consent to assignment of lease to new tenant
92
What is liquidation?
Liquidation is the process of closing a company, selling its assets, and repaying creditors
93
What are the different types of liquidation?
Compulsory liquidation - court ordered
Creditor's voluntary liquidation - for insolvent companies that cannot pay their debts, directors decide to close the company before being forced to (compulsory)
Member's voluntary liquidation - for solvent companies, shareholders decide to close the company down
94
What is administration?
a formal insolvency process where an administrator takes control of a company to rescue the business, restructure debt, or maximise returns for creditors
95
What is receivership?
Receivership is an insolvency process where a secured creditor appoints a receiver to take control of and sell assets to recover outstanding debts. Unlike administration, it does not protect the company and is focused solely on repaying the lender.
96
What is repack administration?
Allows the directors of a company to buy out and retain elements of the business which are trading well and placing the remainder in administration
97
If a tenant becomes insolvent, what is the usual procedure?
1. Check the lease
2. Is there a rent deposit to draw down
3. Are there guarantors to pursue?
4 Contact the administrator and register a claim for the arrears
5. Make sure the property is secure
6. Inform the insurers
98
What happens to the keys to a property under the insolvency procedure?
1. You cannot ACCEPT the keys back from the tenant as this will constitute a surrender of the lease.
2. You can TAKE the keys back for health and safety/insurance purposes - subject to this being in writing, usually via a key holding letter that states
'this is for the purposes of security and does not constitute as a surrender of the lease'
99
What is a Tort notice?
A legal document issued under the Torts (Interference with Goods) Act 1977 to notify a former tenant or third part that goods left on the premises must be collected within a specified period.
It provides legal protection to the landlord before disposing of or selling the items.
100
What are the two tests for corporate insolvency and what legislation dictates them.
- Cash flow insolvency test - whether the company can pay its debts as they fall due
- Balance sheet insolvency test - whether its liabilities exceed its assets
Section 123 of the Insolvency Act 1986
101
What is the aim of the LL & T Act 1988?
Section 1 of the Act states that consent must be provided within a reasonable timeframe (no delays)
102
What is the aim of the LL & T Act 1927?
Section 19 - states that consent must not be unreasonably withheld
Section 18 - limits the amount of damages a LL is able to recover for breach of T repairing covenants
103
What does it mean for consent to be unreasonably withheld?
The Landlord has a duty to consent unless it is reasonable not to do so
- duty of providing reasonableness lie with the landlord
- duty to respond within a reasonable period
104
What do you understand about the L&T covenants Act 1995?
- Abolished privity of contract
- Introduced AGA's
105
What do you understand about Section 17 of the L&T Act 1995
Under Section 17, the landlord must serve a formal notice within six months of a default if they wish to recover arrears from a former tenant or guarantor — otherwise they lose the right to pursue them."
✅ The notice must:
Be in writing.
Be served within 6 months of the date the arrears became due.
Specify exactly what’s owed.
106
What are the requirements of a section 17 notice
✅ The notice must:
Be in writing.
Be served within 6 months of the date the arrears became due.
Specify exactly what’s owed.
107
What was the impact of Coronavirus Act 2020 for LL rent recovery?
- Protected businesses during the pandemic
- Prevented LL's from forfeiture or CRAR
- Measures expired 25th March 2022
108
What is the Occupiers Liability Act 1957?
- Regulates duty of care
- Imposes duty of care on persons occupying or in control of any premises in relation to visitors.
109
What was the Commercial Coronavirus Rent Act 2022?
Came into force on 25 March 2022 to deal with rent arrears accrued during mandatory COVID-19 business closures.
It protected ‘ring-fenced’ rent debt and introduced a binding arbitration process, allowing either party to apply to resolve disputes fairly.
The aim was to encourage negotiation and avoid enforcement action where arrears arose through no fault of the tenant
110
What is the Corporate Manslaughter and Corporate Homicide Act 2007?
Companies can be found guilty as a result of serious management failure/ gross breach of duty of care.
Fines can be unlimited
111
What are your duties under the Corporate Manslaughter and Corporate Homicide Act 2007?
- You owe a duty of care to take reasonable care of persons safety
- Duty of care to the systems of work and equipment used by employees
- Duty to the conditions of worksites and other premises.
- Duty of care to product or services supplied to customers.
112
What is a PM's responsibility when managing a vacant building?
✅ Notify insurer and follow vacant property conditions
✅ Carry out regular inspections (e.g. weekly)
✅ Secure the building (seal letterboxes, alarm if needed)
✅ Maintain the building fabric (essential repairs)
✅ Inform council (for empty rates relief)
✅ Isolate utilities and take meter readings
✅ Health & safety compliance – GRA, FRA, WRA
✅ Ensure asbestos management in place if applicable
113
What are the implications of the Insurance Act 2015?
- Key law which introduced more accountability for insurers
- Introduced new responsibility to policy holders to provide all relevant information and aim to reduce claims
114
Are Insurance premiums taxed?
Yes - Insurance Premium Tax
115
What are the options available to a LL when a T is not fulfilling repairing obligations?
🔹 Serve a Section 146 Notice (Law of Property Act 1925) – warning of forfeiture if breach not remedied
🔹 Serve an interim schedule of dilapidations
🔹 Carry out the repairs themselves (if lease allows) and recharge the tenant
🔹 Claim damages for breach of lease
🔹 Apply to court to compel tenant to carry out repairs
🔹 Lease may allow entry to carry out and recover costs
116
What must be included in a notice to repair?
✅ Details of the repairing breach
✅ The timescale for the tenant to remedy the breach
✅ The action the landlord will take if the tenant fails to comply
117
What is the leading case law for LL right to re-enter property to undertake repairs?
- Jervis vs Harris
- Gives LL right to pursue remedy against defaulting tenants to ensure premises are kept in good condition.
118
In what circumstances can the Jervis and Harris clause be used?
- When tenant is solvent
- When LL wants to carry out repairs themselves
- When LL wants lease to continue
- Where threat of entry may compel tenant to do work themselves
119
Difference between covenant being absolute/qualified/ fully qualified?
- An absolute covenant prohibits an action completely
- A qualified covenant allows action with landlord consent
- A fully qualified covenant adds that consent must not be unreasonably withheld or delayed
120
How do you hand over a SC account upon a sale or change of managing agents?
Complete an interim service charge reconciliation.
121
What is a cost undertaking?
Undertaking by one person to pay costs of another.
122
What does TUPE stand for?
Transfer of Undertakings (Protection of Employment) Regulations 2006
123
What is warranty?
Written guarantee promising to repair/replace item within set time period.
124
What does TUPE do?
TUPE protects employees when their employment transfers to a new employer, such as during a business sale or a change in service provider. It ensures continuity of employment terms and conditions
125
What is a duty of care deed?
Provides lenders with greater protection for their loans when lending in relation to property that is rented out and managed by an agent.
126
What is the RICS Commercial Property Management in England and Wales (2nd Edition) 2011?
Provides best practice guidance for managing commercial properties.
Core duties include rent and service charge collection, property maintenance, and tenant management.
127
How can you pass on costs of insurance to tenants?
Insurance costs can be passed to tenants where permitted by the lease, usually as a direct recharge. The RICS Insurance for Commercial Property Managers Guidance Note (2011) provides best practice on this
128
What is public liability insurance?
Provides cover against compensation claims for injury to the public or property damage
129
Why is effective occupier liaison important?
✅ Builds a strong landlord–tenant relationship
✅ Ensures occupiers know who the Property Manager is and how to contact them
✅ Helps resolve issues quickly and efficiently
✅ Encourages occupiers to cooperate with landlord requirements
130
What are health and safety / fire obligations as a PM?
To ensure there is a current GRA and FRA, and that these are renewed annually.
131
What is involved in third party procurement?
- Contractor needs to be on approved supplier list
- Must tender works - 3x contractors
- Contractor must be Safe Contractor Accredited (accreditation scheme that recognises an organisations capabilities for health and safety)
132
What insurance is a LL typically required to have under leases?
Insurance against damages to the proerty e.g. loss of rent, Public Liability Insurance
133
What is death by negligence?
When a person is liable for the death of another due to negligent conduct.
134
Why is rateable value not viewed as an appropriate method of service charge apportionment?
It doesn’t reflect the tenant’s actual benefit from the services. It may result in disproportionate charges and is not considered fair or transparent.
135
What is a PPM?
Planned preventative maintenance - it involves scheduled, proactive maintenance to ensure compliance, extend asset life, and avoid costly reactive repairs
136
What are the benefits of a PPM?
✅ Preserves the property’s condition
✅ Avoids unplanned failures and reactive maintenance costs
✅ Adds long-term value to the asset
✅ Assists with health & safety compliance
137
What are the 3 possible stages of PPM?
PPM typically involves:
- Regular maintenance
- Planned preventative works based on a timetable,
- Responsive maintenance for urgent issues.
138
What are 12 mandatory requirements for members set out in RICS Professional Statement, Real Estate Management 3rd Edition 2016?
✅ Conduct business honestly, fairly, and transparently
🛠️ Carry out work with skill and due diligence
📝 Provide clear terms of engagement to clients
⚖️ Avoid and properly handle conflicts of interest
🚫 Do not discriminate
💬 Ensure communications are fair, clear, timely, and transparent
📢 Ensure all advertising and marketing is honest
💷 Hold client money in separate accounts
🛡 Ensure PII (Professional Indemnity Insurance) is in place
📃 Clearly define scope of work to all parties
💡 Give realistic pricing assessments (buying/selling/rental)
👥 Conduct inspections and meetings in line with client wishes
139
What is the purpose of dilapidations?
Entitles the landlord to get the property back in the same condition as it was handed over to the tenant in.
140
What is the process of dilapidations?
🔍 Check lease repairing obligations
– See if it’s a Full Repairing and Insuring (FRI) lease.
📸 Check for a Schedule of Condition
– Protects tenant from returning the property in better condition than they received it.
🧾 Serve a Schedule of Dilapidations
– Can be negotiated; tenant can either:
Do the works themselves, or
Pay an agreed sum for the landlord to do the works.
🧰 Landlord may carry out works
– If agreed in the lease, LL can do works and recharge tenant.
– Supported by Jervis v Harris case (debt claim, not damages).
141
What are the three forms of dilaps schedules?
🧾 Interim Schedule:
- Served during the lease term
- Typically where 3+ years remain
- Can be served by landlord or tenant
- Governed by Leasehold Property Repairs Act 1938
📅 Terminal Schedule:
- Served in the last 3 years of the lease term
🚪 Final Schedule:
- Served at lease expiry or after tenant vacates
142
What is the claim of dilapidations based on?
The cost of works
OR
The reduction in value (in accordance with s18 of the L&T Act 1927)
143
In what circumstances can you not serve a schedule of dilapidations?
If the building is going to be redeveloped
144
How do dilapidations relate to alterations?
- Alterations made under an LtA become part of the lease obligations
- If the lease requires reinstatement, the cost of putting the property back to its original condition may be included in the dilapidations claim.
- These works would appear in the schedule of dilapidations and form part of the settlement at lease end.
145
How should management fees be calculated under the RICS Professional Statement (Service Charges)?
Fixed price basis, not as a % of expenditure.
Typically fixed fee, subject to annual review or indexation.
% fees are discouraged as they disincentivise value for money.
Rent collection costs must be excluded from the service charge management fee.
