Property Management General 2 Flashcards
(21 cards)
What is the purpose of the RICS Guidance Note on Commercial Property Management?
It serves as a guide to best practice for commercial property managers, focusing on efficiency, effectiveness, and accountability to clients while complying with statute law.
Who is the primary duty of care to in commercial property management?
The primary duty of care is to the landlord, the client.
What key areas does the RICS Guidance Note provide specific advice on?
It provides advice on rent collection, service charges, managing buildings, health & safety, and procurement of third-party suppliers.
What does the RICS Guidance Note include regarding statute law?
It contains a useful summary of all relevant statute law and a model terms of engagement.
What is alienation in the context of property management?
Alienation refers to leasing or letting, including the differences between assignment and sub-letting and their impact on investment value.
What does RTL stand for and why is it important?
RTL stands for ‘Read the Lease’ and is crucial for understanding the terms and conditions regarding assignment and sub-letting.
What is the relationship between a new tenant and the landlord upon assignment?
Upon assignment, the new tenant has a direct relationship (privity of contract) with the landlord.
How does the relationship differ in sub-letting?
In sub-letting, the new sub-tenant has a direct relationship with the original tenant and pays rent to them, who then pays rent to the landlord.
What types of alienation clauses can leases have?
Leases can have absolute, open, or restrictive (qualified) alienation clauses.
What is the usual clause regarding landlord’s consent for alienation?
The usual clause is that the landlord’s consent is not to be unreasonably withheld or delayed.
What are some reasons to sub-let rather than assign a lease?
Reasons include lease requirements, part of the demise, profit rent, future re-occupation, or the new party having lesser covenant strength.
What actions should be taken when dealing with an application for consent to assign or sublet?
Actions include reading the lease, assessing the proposed rent, considering investment value effects, and obtaining client approval.
What remedies do landlords have for illegal alienation?
Landlords’ remedies include forfeiture, damages, or an injunction.
What is the Landlord & Tenant (Covenants) Act 1995?
It relates to the assignment of leases, abolishing privity of contract for new leases and giving landlords more scope for setting conditions.
What is an Authorised Guarantee Agreement (AGA)?
An AGA is a voluntary arrangement where the most recent former tenant guarantees the lease obligations of the immediate assignee.
What must be served upon a guarantor within 6 months of tenant defaulting?
A Section 17 Notice must be served to require the former tenant who has entered an AGA to pay the arrears.
How many AGAs can be in place at one time?
There can only be one AGA in place at any time.
What does the Code for Leasing Business Premises 2020 state regarding AGAs?
It states that tenants should seek not to enter into an AGA if the new tenant is financially strong enough or provides a suitable guarantor.
What is the summary of the current legal position regarding AGAs?
G1 may guarantee T1’s obligations in an AGA but cannot directly guarantee 2’s obligations or take an assignment from T1.
What does the RICS Professional Standard state about lease assignments?
Leases should allow tenants to assign the whole premises with landlord consent, which is not to be unreasonably withheld or delayed.
What should leases allow regarding subletting?
Leases should allow tenants to sublet the whole premises and may allow subleases of parts with landlord consent, which is not to be unreasonably withheld.
