Property Management Flashcards

Question

What are tenants rights under forfeiture?  

Answer 1

Tenant has the right to apply for relief from forfeiture   Can only apply to Court as they are only one that can grant it   If they grant it, lease is restored as though forfeiture never happened  

Answer 2

Demanding rent that is due in advance, for example, will usually waive the right to forfeit Accepting rent after the landlord becomes aware of a breach will also waive the right to forfeit Negotiations can also have the effect of waiving the right to forfeit where those negotiations relate to the breach If LL agrees payment plan with T  If CRAR is exercised   If S25 notice is served under LL & T Act 1954 

Answer 3

Landlord can peacefully re-enter and change locks   Court proceedings can commence to  recover possession 

Answer 4

The audited accounts might be a year or so out of date, because you submit these 9 months after year end  Management account shows how business is doing on monthly or quarterly basis  

Answer 5

Accuracy of information provided   Timing of when demands are sent out / rent is collected by  

Answer 6

Standing order = regular payment set up by payer, and payer has control  Direct debit = payer authorises the payee to take payments  

Answer 7

2-4% above base rate 14 days after due date 

Answer 8

LL can obtain court judgement   High Court Enforcement Officer may then enforce this but need to pay court fees  Similar to CRAR  Can be useful if tenant is still solvent as threat of going to Court may prompt payment!  However - slower process, more expensive etc  

Answer 9

Chance of re-letting the property   Current passing rent vs market rent (market conditions)  Vacant possession value and void cost, vs value as let 

Answer 10

Service charges in commercial property, 1st edition (2018)

Answer 11

An amount that tenants pay to cover the cost of providing communal services to a building or the surrounding estate

Answer 12

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 

Answer 13

Recover expenditure in line with lease terms   Recover no more than 100% of costs  Annually provide budgets and explanatory notes   Annually provide service charge accounts (showing actual figures)  Annually provide service charge apportionment schedule   Service charge money to be held in separate bank account  Interest must be credited to SC account  When acting for tenant, advise that if disputing payment then withhold the amount in dispute 

Answer 14

One being VALUE FOR MONEY: The manager should procure quality service standards to ensure that value for money is achieved at all times. The aim is to achieve effective, value for money service rather than merely the lowest price Costs should be transparent Management fees must be on a fixed basis

Answer 15

Issue budgets, including comments and matric, minimum 1 month prior to start of SC year Issue reconciliation / expenditure certifications, with explanations, within 4 months of SC year-end

Answer 16

The expenditure estimated that will be incurred in a given service charge accounting period

Answer 17

procure quality service standards - achieve value for money as opposed to cheapest price Competitive tenders Formal re-tendering

Answer 18

Ensure value for money   Ensure quality services that are regularly reviewed   Ensure standard of services are monitored  

Answer 19

A fund formed by periodically setting aside money for the repair or replacement of wasting assets' e.g. periodic maintenance such as roof repairs needed every 5 years 

Answer 20

A fund set aside to cover the cost of major works or other significant items of expenditure  Useful for unexpected expenditure

Answer 21

Measure of the wearing out or reduction in life of an asset  Depreciation distributed across the useful life of the property (rather than taking one larger deduction the year you buy or improve the property) 

Answer 22

Floor area  Fixed percentages   Weighted floor area (typical in shopping centre)  RV 

Answer 23

Fees are set on a fixed price basis rather than being calculated as a percentage of expenditure - usually a fixed fee subject to annual review or indexation A % is not appropriate as it is considered to be a disincentive to the delivery of value for money Code states that the cost of collecting rent should be excluded from the service charge management fee

Answer 24

Check the alienation provisions in the lease Normally assignment is permitted with LL consent not to be unreasonably withheld or delayed Subletting of the WHOLE is usually permitted (not part)

Answer 25

Assignment means that the tenant no longer has any obligation under the lease (unless there is an AGA) and has no direct communication with the landlord - Tenant transfers legal interest in lease to another tenant. Incoming tenant takes over lease obligations.  Subletting is when the tenant creates another lease below theirs. They will receive income from the sub-tenant but will still be responsible for paying the landlord. - Lease property from tenant, rather than Landlord. Original tenant maintains relationship with Landlord, and sub-tenant has relationship with original tenant. Difference: With assignment, original tenant is no longer liable under the lease. With sub-letting, original tenant remains liable but creates new relationship with sub-tenant. Landlord and sub-tenant have no direct relationship. 

Answer 26

If market rent is higher than passing rent, then tenant could get profit rent  If they wish to reoccupy in the future

Answer 27

Check the lease Get an undertaking for Landlord costs from the assignee What is the covenant strength of the proposed assignee/subtenant? What is the proposed rent, more than, same, less than? Are there reasonable grounds to refuse consent? (could be for covenant strength, tenant mix reasons) L&T Act 1988 means approval cannot be unreasonably withheld and you need to deal with the application PROMPTLY Subject to agreement a Licence for Assignment/Subletting will need to be drawn up Consider what is the impact on the investment value of the property?

Answer 28

Came into force 1st Jan 1996 replacing PRIVITY OF CONTRACT (Privity of contract meant the original tenant was on the hook throughout the length of the lease) - so the Covenants Act removed these ongoing liabilities Deals with assignments ONLY (not subletting's) Brought in AGA's (Authorised Guarantee Agreements) to protect the Landlord Applies to only 1 assignment so if the assignee then assigns again to a new tenant you will lose the original covenant To pursue a former tenant under the Covenant's Act a S17 notice must be served within 6 months of the arrears. If the former tenant settles the arrears then an overriding lease can be created. The code for leasing business premises says that and AGA should not be a condition of the Assignment UNLESS the proposed assignee is of a weaker covenant.

Answer 29

If assignee is of weaker covenant strength, does not have a suitable guarantor and does not pay a suitable rent deposit 

Answer 30

Have a thorough understanding of the relationship between landlord and occupiers Understand all relevant documents, such as leases and licences Maintain a database to record financial position of occupiers Put payment processes in place, clear for occupiers Have a mechanism in place to notify any default in payment or dispute over payment Have a process to promptly purse defaults Have a process to forward client money to the landlord

Answer 31

You should submit rent demands in a timely manner and ensure they are clear and understandable by tenants → relevant taxation should be included in the demand

Answer 32

You should ensure you have efficient systems to monitor rents collected → issue standard letters chasing arrears → keep client informed

Answer 33

By ensuring you/your firm are registered with the RICS Client Money Protection Scheme - A scheme that reimburses landlords and tenants should an agent misappropriate rent, deposits or other client funds

Answer 34

Monthly exercise that formally documents the agreement of the bank statement balance to the total of Client money held → Showing cashbook, ledger, and bank statement balances, with any reconciling items clearly explained

Answer 35

Keep records and accounts that show all dealings with Client money and demonstrate that all Client money held by the firm is held in a Client money account Complete regular account reconciliations and demonstrate these are reviewed by a principal Ensure that overdraw balances are prevented by the firms systems and controls, if these do occur, investigate immediately Publish written procedures for handling Client money → make this available Have appropriate systems and controls to ensure transfer or withdrawal of Client money, in accordance with instructions from the Client

Answer 36

RICS PROFESSIONAL STANDARD Dilapidations England and Wales (2016)

Answer 37

Entitles the Landlord to get the property back in the same condition as it was handed over to the tenant in

Answer 38

Review the repairing obligations in the lease to see if it is a FRI The lease will confirm if there is a schedule of condition (If the property is leased to a tenant in poor condition, the tenant will want a record of the condition so they are not made to put in back in Better condition than when they signed the lease) - normally a written and photographic record. If a Schedule of DILAPIDATIONS is served it can be negotiated by the tenant, once agreed, the tenant can either do the works themselves OR pay an agreed amount for the Landlord to do the work. Landlord is permitted to carry out the works themselves and recharge the tenant if agreed - there is a clause in the lease which allows this: Jervis vs Harris.

Answer 39

Interim Schedule: served during the lease (min 7 years) but normally where there is AT LEAST 3 YEARS remaining on the lease - either by the landlord or tenant - refer to the Leasehold property repairs act) Terminal Schedule: Served within the last 3 years of the lease Final Schedule: Served at lease expiry or after the tenant has vacated the property

Answer 40

The costs of the works OR the diminution in value (in accordance with S18 L&T Act 1927)

Answer 41

If the building is going to be redeveloped

Answer 42

LTA is an ‘extension’ of the original lease and so will be considered at lease end → if required to reinstate to original condition, it will be included within dilaps works/settlement

Answer 43

Insolvency Act 1986

Property Management Flashcards

(68 cards)