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FLK 2: Property Practice > Topic 9 - Alienation > Flashcards

Topic 9 - Alienation Flashcards

(62 cards)

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1
Q

What is alienation in the context of leasehold interests?

A

Alienation means a disposal of all or part of the tenant’s interest in the lease.

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2
Q

What is an assignment in leasehold terms?

A

Assignment is the transfer of a leasehold interest from an existing tenant (assignor) to a new tenant (assignee).

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3
Q

After assignment, who becomes the landlord of the assignee?

A

The landlord becomes the landlord of the assignee.

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4
Q

What obligations does the new tenant have after assignment?

A

The new tenant is obliged to pay the rent and perform other tenant covenants.

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5
Q

What happens to the assignor’s rights after an assignment?

A

The assignor is no longer entitled to use the premises and generally need not pay rent or perform tenant covenants.

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6
Q

Why might a tenant choose to assign the premises?

A

A tenant may assign if they no longer need the premises or cannot afford the rent.

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7
Q

What is the general requirement for assignment in commercial leases?

A

Commercial leases usually require the tenant to apply to the landlord for consent before assignment.

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8
Q

What is an absolute covenant against assignment?

A

An absolute covenant means that assignment is not allowed.

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9
Q

What is a qualified covenant against assignment?

A

A qualified covenant allows assignment only with the landlord’s consent.

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10
Q

How does s19(1)(a) of the Landlord and Tenant Act 1927 affect qualified covenants?

A

It converts a qualified covenant into a fully qualified covenant, requiring the landlord to act reasonably in withholding consent.

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11
Q

What does s1 of the Landlord and Tenant Act 1988 require regarding landlord consent?

A

It requires the landlord to give its decision on consent within a reasonable time.

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12
Q

True or False: A landlord can refuse consent to an assignment based on personal dislike.

A

False.

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13
Q

What are some reasonable grounds for a landlord to withhold consent?

A
  • Proposed use of the premises
  • Concerns about the assignee’s ability to pay rent
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14
Q

What is privity of contract?

A

The ability of the original parties to a contract to enforce obligations against each other after assignment.

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15
Q

What is privity of estate?

A

The ability of the landlord and tenant for the time to enforce the provisions of a lease against each other.

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16
Q

What did the Landlord and Tenant (Covenants) Act 1995 change regarding liability?

A

It released the original tenant from liability when a new lease is assigned.

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17
Q

What is an authorised guarantee agreement (AGA)?

A

A document where the original tenant agrees to guarantee the obligations of the incoming tenant.

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18
Q

What happens to an outgoing tenant’s liability under an AGA after a subsequent assignment?

A

The outgoing tenant’s liability under the AGA ends.

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19
Q

What is the process for assigning a lease similar to?

A

The process is similar to a freehold transaction.

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20
Q

What is an undertaking for costs?

A

A promise by a solicitor to pay costs, enforceable in court.

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21
Q

What is the tenant’s solicitor responsible for during the pre-exchange phase?

A
  • Applying for consent
  • Preparing the draft contract
  • Deducing title
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22
Q

What is a completion statement in the context of lease assignment?

A

A statement detailing the money due on completion, including apportioned rents.

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23
Q

What is required for a lease to be assigned?

A

The landlord’s consent, unless the lease states otherwise.

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24
Q

What happens on completion of the assignment?

A
  • Completion monies are sent
  • License to assign is executed
  • Deed of assignment is completed
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25
What types of searches are conducted during the assignment process?
* CPSE1 enquiries * CPSE4 enquiries specific to lease assignment * Pre-completion searches
26
What is the role of the assignee’s solicitor upon completion?
Arranges to submit SDLT or LTT return and pay appropriate SDLT or LTT if necessary. ## Footnote SDLT refers to Stamp Duty Land Tax and LTT refers to Land Transaction Tax.
27
What is underletting?
A form of alienation where the tenant grants an underlease to an undertenant without passing its leasehold interest entirely. ## Footnote The underlease must be for a shorter term than the original lease.
28
What obligations remain with the tenant after underletting?
The tenant remains liable to the landlord for rent and other obligations under the lease.
29
Why might a tenant choose to underlet?
If: * they are not using all of the premises * they do not need the premises at the moment but may in the future * they cannot find a willing assignee but can find a willing undertenant.
30
What happens if a lease is silent on underletting?
The tenant is free to underlet.
31
What is a qualified covenant against underletting?
A covenant that allows underletting only with the landlord's consent.
32
What is privity of contract?
The ability of the original parties to a contract to enforce obligations against each other, even after the contract has been assigned.
33
Between which parties does privity of contract exist?
* Between the landlord and tenant * Between the tenant and undertenant.
34
What is privity of estate?
The ability of the landlord and tenant for the time to enforce provisions of a lease against each other.
35
What is a common instance of underletting?
A leaseholder of a flat underletting it on an assured shorthold tenancy.
36
What happens during the pre-exchange step of underletting?
Landlord's solicitor considers the application to underlet and issues a draft licence to underlet.
37
What must the term granted by the underlease be compared to the tenant’s lease?
Must be less than the remaining term of the tenant’s lease, even if only one day less.
38
What is included in the completion statement during underletting?
Details of money due on completion, including apportioned annual rent, service charge, and insurance rent.
39
What does the landlord’s solicitor do at completion of underletting?
Agrees to date and complete the licence to underlet.
40
What is the purpose of a licence for assignment or underletting?
To provide the landlord's consent, typically required to be in deed form for safety and formality.
41
What key factors must a landlord consider when withholding consent?
The ability of the undertenant to pay rent and perform lease obligations.
42
What is the potential risk for landlords regarding underletting?
The undertenant may become the direct tenant of the landlord.
43
What is the difference between 'underletting' and 'subletting'?
Terminology is interchangeable; both refer to granting a lease to an undertenant.
44
What must the underlease contain in relation to the tenant’s obligations?
Must contain obligations no less onerous than those in the tenant’s lease.
45
What is an OS1 search?
A search carried out against the tenant's registered leasehold title when the underlease is of the whole tenant’s interest.
46
What occurs if the underlease is not registrable?
An OS3 search may be carried out against the tenant’s interest.
47
What must the undertenant’s solicitor do during the pre-completion steps?
Arrange for the undertenant to sign the counterpart underlease.
48
What is a direct covenant in the context of underletting?
A covenant given by the undertenant to the landlord in the licence to underlet.
49
What is the purpose of a licence in the context of leasing?
To ensure that the landlord does not inadvertently consent to something they did not intend ## Footnote A licence formalizes tenant covenants and variations to the lease.
50
What is a typical time limit included in a licence for consent?
Three months ## Footnote This time limit helps avoid uncertainty for the landlord regarding the completion of the transaction.
51
What are the obligations in a licence to assign compared to a licence for alterations?
There are comparatively few obligations in a licence to assign ## Footnote A licence for alterations contains numerous obligations about the work to be carried out.
52
What does a licence for assignment of an old lease require from the undertenant?
A direct covenant to comply with the tenant covenants in the tenant's lease ## Footnote This covenant typically lasts for the remainder of the lease term.
53
Is a direct covenant to the landlord necessary for the assignment of a new lease?
Not strictly necessary, but the landlord may want it ## Footnote This is to ensure compliance with lease obligations.
54
What is required from the undertenant in the case of an underletting?
A direct covenant to observe lease obligations ## Footnote This is necessary due to the lack of privity of contract or estate.
55
What happens to liability under the covenant if the undertenant lawfully assigns the underlease?
Liability under the covenant will end ## Footnote This applies as a new underletting creates a new lease.
56
What may an outgoing tenant provide when giving an authorised guarantee agreement?
It may be contained in the licence to assign or as a standalone deed ## Footnote This agreement outlines the outgoing tenant's responsibilities.
57
What common provisions are included in both licences to assign and underlet?
* Consent for limited time * Tenant agrees to pay landlord’s costs * Assignee of an old lease covenants directly with the landlord * Assignee of a new lease may covenant with the landlord * An underlessee will covenant directly with the landlord ## Footnote These provisions ensure clarity and compliance in the leasing process.
58
What is a unique requirement for licences to assign new leases?
Tenant guarantees assignee’s performance of tenant obligations ## Footnote This is known as an authorised guarantee agreement.
59
What must the assignee or tenant do following an assignment or underletting?
Give the landlord formal notice within a month ## Footnote This is to inform the landlord of the completed transaction.
60
What is a charge in the context of leasing?
A tenant may create a charge over their lease, similar to a freeholder charging their interest ## Footnote This is often done when taking a mortgage.
61
What does sharing occupation generally allow in commercial leases?
Sharing with group companies without creating an underlease ## Footnote This is beneficial as it allows the landlord to enforce covenants against the tenant.
62
What does the 2020 Code for Leasing Business Premises state about tenant's rights?
* Tenants should be allowed to assign or underlet with landlord’s consent not unreasonably withheld * Tenants should be allowed to share with group companies without consent * Tenants should be allowed to charge the lease to a bank without consent ## Footnote These provisions aim to protect tenant rights and facilitate business operations.

FLK 2: Property Practice (10 decks)

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