Underletting Procedure Flashcards
In an underletting transaction, whose title is primarily investigated by the undertenant’s solicitor?
A. The original developer’s title
B. The landlord’s freehold title
C. The undertenant’s title
D. The tenant’s leasehold title
D. The tenant’s leasehold title
Explanation: The undertenant takes a lease from the tenant, not the landlord, so the leasehold interest is what needs to be investigated.
What is typically annexed to an agreement for underlease?
A. A draft of the underlease
B. A service charge schedule
C. A copy of the landlord’s freehold title
D. An indemnity covenant
A. A draft of the underlease
Explanation: The agreement for underlease normally includes the agreed form of underlease as an annex to prevent further negotiation later.
What search should be conducted before underletting part of a registered leasehold title?
A. OS3
B. OS1
C. OS2
D. Local authority search
C. OS2
Explanation: OS2 is used for leasehold transactions involving part only. OS1 is for the whole leasehold interest; OS3 is not a priority search.
What is the role of the landlord’s solicitor before completion of an underletting?
A. To register the lease
B. To collect service charge
C. To draft and circulate the licence to underlet
D. To execute the underlease
C. To draft and circulate the licence to underlet
Explanation: The landlord’s solicitor manages the licence to underlet and ensures the terms comply with the headlease.
A tenant is underletting a unit for 4 years. Their own lease has 4 years and 3 days remaining. What is the maximum term the underlease can be for?
A. 4 years and 2 days
B. 4 years and 3 days
C. 4 years
D. 5 years
A. 4 years and 2 days
Explanation: The underlease must be for less than the tenant’s remaining term — even by a single day
Sarah, the tenant, underlets to Tom. Tom breaches a covenant. The landlord wants to enforce the lease directly against Tom. What would enable this?
A. Privity of estate
B. A direct covenant in the licence to underlet
C. An Authorised Guarantee Agreement (AGA)
D. Privity of contract
B. A direct covenant in the licence to underlet
Explanation: Without privity, the landlord cannot enforce covenants against the undertenant unless a direct covenant is provided.
A tenant is underletting during a downturn. The lease requires underleases to match the headlease rent. What problem may occur?
A. Landlord must renegotiate
B. Undertenant must increase rent
C. Tenant may struggle to find an undertenant
D. No problem arises in this scenario
C. Tenant may struggle to find an undertenant
Explanation: In a falling market, requiring market-high rents makes subletting unattractive and commercially unviable.
A tenant’s lease contains a qualified covenant against underletting of whole. What is the effect?
A. Underletting is prohibited
B. The landlord must draft an AGA
C. The tenant must get planning permission
D. The landlord must give consent reasonably and without delay
D. The landlord must give consent reasonably and without delay
Explanation: A qualified covenant is upgraded by statute to a fully qualified covenant, triggering duties under the Landlord and Tenant Act 1988.
Which of the following does not have privity of contract or privity of estate in a standard underletting?
A. Landlord and undertenant
B. Tenant and undertenant
C. Landlord and tenant
D. Tenant and landlord
A. Landlord and undertenant
Explanation: No legal relationship exists between landlord and undertenant unless a direct covenant is expressly created.
When must the underlease be dated?
A. At the time of OS1 search
B. After SDLT is paid
C. At the point of licence negotiation
D. On completion, when parties agree to complete
D. On completion, when parties agree to complete
Explanation: The licence to underlet and the underlease are dated and completed at the same time, when all parties confirm readiness.
A lease is silent on underletting. What does this mean?
A. The tenant cannot underlet
B. Underletting is allowed without consent
C. Underletting requires a deed of variation
D. The lease is voidable
B. Underletting is allowed without consent
Explanation: If a lease is silent, the tenant may underlet freely. Restrictions must be express to be enforceable.
Why is an OS3 search used in underletting?
A. To register the lease
B. To check priority of transaction
C. To confirm adverse entries on a short lease
D. To satisfy a mortgage lender
C. To confirm adverse entries on a short lease
Explanation: OS3 is used to check recent changes on a non-registrable (short) lease. It does not give priority.
