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Property Law and Practice
Part 1 Revision Notes
Registered title
There are five stages in a property transaction:
1) Pre contract stage – taking instructions
...
Approving the contract
...
Investigating title
...

Mortgages
...

2) Exchange the contracts – this is when the agreement becomes binding
...
Draft it
...
Execute the deed (s)
...
Need to complete pre completion searches – finding out if anything has
changed to the title e
...

5) Post completion – stamp duty
...
Also, register the new proprietor (new buyer) because of change of ownership
...
Need to have previous mortgage(s) discharged
...
1
...
1
...

As per SCS 4
...
2 and SCPC 7
...
2, the buyer’s solicitor will receive official copies of the registered title and title
plan and official copies of any documents referred to in the register and kept by the registrar (unless the document
is to be discharged or overridden at or before completion)
...
SCS 4
...
1 and SCPC
7
...
1 prevent the buyer, after contracts have been exchanged, from raising requisitions on the title deduced to the
buyer before exchange of contracts
...

•

Is the title number correct?

Part A (Property Register) describes the estate:
•
•

Is it freehold or leasehold?
What is the address? Does it match the property wanted by your client? (make sure you also check the plan
provided)
• What covenants/ easements does the property benefit from? Benefit of both positive and restrictive covenants can
pass
Part B (Proprietorship Register) identifies the owner, the class of title and entries which affect the right of disposal:
• What is the class of title? (absolute, leasehold etc)

•
•
•

Who is the owner? Does their description match the seller (e
...
company number, spelling)
Who can transfer the land?
Any charges on the register? What impact will it have? There may be a restriction
...
g
...
Fairly
straight forward but of course will have to check that the mortgage will be discharged upon sale
...
g
...
g
...

If impossible try:
1) indemnity insurance (protect against loss)- involves arranging at the sellers cost an indemnity insurance
policy from a reputable insurance company, where buyer and other successors in title are insured against loss
which results from the breach
...
Unlikely to
be offered for recent covenants (10-15 years) due to increased risk of enforcement
2) obtain retrospective consent of the person with the benefit of the covenant (agree to allow the breach to
occur or vary the covenant)
3) apply to the Upper Tribunal and get the covenant removed- unlikely
4) if consent was already given – need a copy of this
Buyer’s solicitor also needs to make RELEVANT SEARCHES:
Because CAVEAT EMPTOR (buyer beware): need to check for encumbrances, occupiers, physical state, amenities
such as gas, water, development-past future, surrounding environment etc
...
g
...


SO:
1) Enquiries of seller:

This will help you find out the information which the seller is not bound to disclose: boundaries, disputes with
neighbours, planning history
Form: for commercial properties, usually the Commercial Property Standard Enquiries is used
For residential clients, there are many standard form client questionnaires
!!! Of course, never over-rely on standard forms- there may be something important to inquire about which is not
there!!!
Similarly, sometimes you will make additional enquiries about title (Requisitions on title)- e
...
letter raising an
enquiry
If they give false information, they can be liable for misrepresentation
2) Inspection
Purpose
• to check for physical defects (survey);
• to check for accuracy of plans and boundaries;
• to check for rights and easements affecting or benefiting the property;
• to check fixtures and fittings;
• to discover the rights of any occupiers
...
It will disclose all entries in the 12 categories of
local land charges, such as planning permissions, listed buildings, tree preservation orders etc
...
g
...

Con 29o consists of 22 optional extra questions on things such as public paths or byways, pipelines, common land,
town or village greens (where property is or adjoins common land or a village green)
...
If the area is listed in
the Law Society's Coal Mining Directory a search is required
...

The result will reveal the proximity of the property to past and present underground or opencast workings, future
proposals, shafts within 20 metres of the property and any compensation for subsidence already claimed and paid
...
Need to check who owns that
...


9) Environmental searches surveys (including contaminated land and flood risk) can use various companies
In every property transaction (freehold and leasehold; commercial and residential), a practitioner should consider
whether contamination and/or flooding are relevant issues
...

In every property transaction (freehold and leasehold; commercial and residential), a practitioner should consider
whether contamination and/or flooding are relevant issues
...

10) Company search (no specific form-usually using agents) DO THIS BEFORE EXCHANGE AND AFTER!
Against selling company (when acting for the buyer):
If unregistered title:
To check if company exists:
To check company is not subject to winding up proceedings/ appointment of administration/ liquidation
to check that there are no fixed or floating charges which affect the property (fixed charges should also be
revealed in the epitome of title)
...

Against a buying company (when acting for the seller/lender)
to check that the company is not subject to winding up proceedings, appointment of
administrator/liquidator/receiver or has been struck off the register at Companies House; and
to check that the company’s constitution permits it to buy, mortgage, sell and otherwise deal with the
property
...
This is called a Winding-up
Petition search
...

A few points on misrepresentation:
An untrue statement of fact made by one party on which the other relies and which induces it to enter into a
contract
...

The Standard Conditions purport to limit the general availability of the remedy
...
1
...
1 (b)
rescission is only possible if:
•
there is fraud or recklessness; or
•
a party would otherwise be obliged to transfer or accept property “differing substantially (in quantity, quality
or tenure)” from what it had been led to expect
...
1
...
1(b) must be read subject to section 3 of the Misrepresentation Act 1967 (as amended by the
Unfair Contract Terms Act 1977)
...
This states that a term must have been a fair and reasonable one to be included having regard to
the circumstances which were, or ought reasonably to have been, known to (or in the contemplation of) the parties
when the contract was made
...

William Sindall plc v Cambridgeshire County Council [1994] 3 All ER 932 – CA held that the answer “not so far as
the vendor is aware” means not merely that the vendor and its solicitor had no actual knowledge of a defect, but also
that they had made such investigations as could reasonably be expected to be made by (or under the guidance of) a
prudent conveyancer
...

When drafting the contract:
•
•

Leave date blank
Contract rate- usually 3-5% above the relevant bank’s rate
...


It is possible to have a contract without using the Standard Conditions
...
Some
common law and statutory rules would apply but there are significant difficulties with a number of these rules so no
solicitor would wish to rely on an open contract
...
The guarantee would not
cover any matters to which the transaction has been made subject (for example in the contract) and any matters of
which the buyer is aware
...

2
...


Seller has the right to dispose of the property; and
will, at his own cost, do all that he reasonably can to give the title he purports to give; and
Seller conveys free from :
i) all charges and incumbrances; and
ii) all other rights exercisable by third parties
other than those which the seller does not and could not reasonably be expected to know about
...


The seller has not himself encumbered the land and also that the seller is not aware that anyone else has
done since the last disposition for value
...

•

The seller is not liable for any matters to which the disposition is expressly made subject and any matters of which
the buyer is aware
...


Exchange of contract: (you’re on seminar 4)
Preparing for exchange?
Finance: They may have all the money
...
They may have a
mortgage offer – monthly payment of capital and interest
...
Throughout negotiations, this would have
been amended
...

What needs to be done before exchange from the buyer’s solicitors perspective?
• Has the buyer arranged for the property to be surveyed and is the survey satisfactory to the buyer?
• Check that replies to pre-contract searches and enquiries are satisfactory
• Are the terms of the proposed contract acceptable? Does the contract include a list of any chattels
being sold or of any fixtures being removed?
• Is the title acceptable? For example, is the property subject to any unsuitable covenants?
•

Are all the financial arrangements in place? Are you sure the buyer can afford to complete
the purchase? 10% deposit – has the client sent to you the sum required?

What is exchange? Each party signs and gives their copy to the other party
...

The Law Society produced 3 formulae for telephone exchange:
• Formula A- one solicitors holds both parts of the contract, an undertaking to send it is given
and then he posts it
• Formula B (most common)- each solicitor has his client’s contract
...
Seller’s solicitor gives
undertaking to send their part of the contract
...

• Formula C- where you have a chain transaction
...
Each solicitor undertakes
to the other that: a) they will continue to hold that part of the contract until the final time
for exchange on the date the formula is used, and b) if the vendor's solicitor so notifies the
purchaser's solicitor by that time, they will both comply with part II of the formula
...
Each solicitor undertakes to the other henceforth to hold the part of
the contract in his or her possession to the other's order, so that contracts are exchanged at
that moment, and to despatch it to the other on that day
...
'Formula C terms' means that
the deposit is held as stakeholder, or as agent for the vendor with authority to part with it
only for the purpose of passing it to another solicitor as deposit in a related property
purchase transaction on these terms

On exchange: 10% is paid (deposit) and the sale becomes binding
...
Risk of property being destroyed also passes to buyer- so buyer should insure the property
...
Transferring the legal estate from seller to buyer- Buyer solicitor drafts the transfer deed (use TR1 form)
...
Checking the title (AGAIN)-The buyer requests completion information
...
g
...
Buyer’s solicitor should also do the required pre-completion searches:
• Land registry check (OS1): search against Title Number &check from date shown in official copies
...
)A
priority period means that the purchase (and any new mortgage) protected by that search has priority
over all other dealings with that title that occur during the priority period
...
Finance- The buyer’s solicitor will complete the buyer’s new mortgage (if instructed by lender) and obtain the
rest of the monies from the lender
...

How is the seller’s mortgage discharged?
What evidence will the buyers require? For registered: a Form DS1- traditional method on paper
...
For Unregistered, the Receipt is endorsed on mortgage deed and executed by the lender
...
So a way around that: The
seller’s solicitors give an undertaking to pay off the mortgage as soon as completion takes place (This is on 5
...
They will forward the evidence of the discharge to the
buyer’s solicitors as soon as received
...

The seller’s solicitor has to:
•
•

discharge any mortgages in accordance with any undertaking given on completion; and
account to the seller for any remaining monies
...
If the buyer has created a mortgage on the property, that also has
to be registered at the land registry; and

• any mortgage by a company borrower must be registered at Companies House within 21 days of its creation
...
This is done
by filing a land transaction return (Form SDLT 1) and by paying the SDLT within 30 days of the effective date
(usually completion)
...

The certificate has to be sent to the land registry with the application for registration of title
...
If the
mortgage is not registered at Companies House in time it is void (so far as any security on the company’s property is
conferred by it) against a liquidator/administrator and any creditor (see s
...
e
...

•
First registration – within two calendar months of completion
...
If the requisitions are not
answered satisfactorily the land registry will
•
•
•

cancel the application
return the paperwork to the applicant’s solicitor and
the application loses its priority
...
Abstract of title- summary of all relevant deeds and documents- not really used
2
...

A ‘good root' is a document which:
• is at least 15 years old
• deals with the whole legal and equitable interest; and
• contains a sufficient description of the property (so if there is reference to a plan but that is not provided, that’s
an issue); and
• casts no doubt on the title
...
This is because both the buyer’s solicitor at the
time/ bank would have looked at the past 15 years
...
It
is less ideal where it was a gift since this would not have been investigated
...
Alongside the
conveyances of sale, the epitome could include:
• Existing mortgages
• Discharged mortgages- need proper evidence that it’s been discharged
• Grants of Probate/Letters of Administration- where house passed by will
• Assents by Personal Representatives
• Powers of attorney [a deed under which the donor of the power appoints someone (the attorney) to act on
his behalf]- where owner hasn’t dealt with property
It is also good practice to include documents of record such as marriage and death certificates, as well as old
land charge search certificates
...
(but generally the buyer cannot
require evidence prior to the root unless:
•
•
•

Where a deed in the epitome is executed under a pre-root power of attorney
Where a deed in the epitome refers to a description or plan in a pre-root deed
Where a deed in the epitome refers to covenants in a pre-root deed without giving full details

The buyer’s solicitor should also check the correct stamping of the document
...
Penalties and interest may be due to HM
Revenue and Customs
...
(need a circle one as well a
PD stamp)

Also check that the deed was validly executed
...
115
•
•

Executed by mortgagee
Receipt must name the payer
• The payer must have been the owner i
...
(person entitled to the equity of redemption) at the date of the
payment-

Building Society mortgages
•
•

These may be receipted as above or by a receipt prescribed by the Building Societies Act 1986
...


Pre-contract searches
Always do:
1
...

• The official search certificate is conclusive in favour of a buyer
...
g
...
g
...
Enquiries of seller:
This will help you find out the information which the seller is not bound to disclose: boundaries, disputes with
neighbours, planning history
Form: for commercial properties, usually the Commercial Property Standard Enquiries is used
For residential clients, there are many standard form client questionnaires
!!! Of course, never over-rely on standard forms- there may be something important to inquire about which is not
there!!!
Similarly, sometimes you will make additional enquiries about title (Requisitions on title)- e
...
letter raising an
enquiry
If they give false information, they can be liable for misrepresentation

3
...
Local Land Charges Search: LLC1
This is done to identify land charges registered against the property
...

5
...
g
...

Con 29o consists of 22 optional extra questions on things such as public paths or byways, pipelines, common land,
town or village greens (where property is or adjoins common land or a village green)
...
Index map search: (SIM)
Check whether the property (or part) is:
• Already registered
• Currently being registered
• Subject to a caution against first registration
7
...
If the area is listed in
the Law Society's Coal Mining Directory a search is required
...

The result will reveal the proximity of the property to past and present underground or opencast workings, future
proposals, shafts within 20 metres of the property and any compensation for subsidence already claimed and paid
...
Need to check who owns that
...

14) Environmental searches surveys (including contaminated land and flood risk) can use various companies
In every property transaction (freehold and leasehold; commercial and residential), a practitioner should consider
whether contamination and/or flooding are relevant issues
...

In every property transaction (freehold and leasehold; commercial and residential), a practitioner should consider
whether contamination and/or flooding are relevant issues
...

15) Company search (no specific form-usually using agents) do this pre-contract and pre-completion
Against selling company (when acting for the buyer):
If unregistered title:
To check if company exists:
To check company is not subject to winding up proceedings/ appointment of administration/ liquidation
to check that there are no fixed or floating charges which affect the property (fixed charges should also be
revealed in the epitome of title)
...

Against a buying company (when acting for the buyer/lender)
to check that the company is not subject to winding up proceedings, appointment of
administrator/liquidator/receiver or has been struck off the register at Companies House; and
to check that the company’s constitution permits it to buy, mortgage, sell and otherwise deal with the
property
...
This is called a Winding-up
Petition search
...


Completion is the same as in registered
...
Can I act for both the seller and the buyer of a property?
2
...
5), despite not being a “rule”, is pretty clear
...
6 or 3
...

Solicitors who consider whether they can act for both parties in a client conflict (normally a buyer/seller or a
borrower/lender situation) will therefore have to ask themselves two crucial questions:
6

(a)

Am I faced with a true conflict? E
...
do their interest differ, will your ability to give independent advice be
fettered, is there an imbalance in bargaining power

(b)
If so, can either of the exceptions in O(3
...
7) still allow me to act?
Substantially common interest / competing for the same objective
...


If acting for buyer and seller- how will you stay independent where say discussing the contractual rate- should it be
high 6% above rate or ‘reasonable-4%
...
This is acknowledged in IB(3
...
You can act where:
• The mortgage is a “standard mortgage” defined as one provided in the normal course of the lenders
activities, where a significant part of the lender’s activities consists of lending, and where the mortgage is on
standard terms
...

Undertakings
The Code says an undertaking is: a statement given orally or in writing and need not include the word undertaking
made by you
...
Given to someone who relies on it that you will do/ cause something to be
done, or refrain from doing something
O(11
...

Giving an undertaking is a serious matter
...
):
1
...
1
...
1 (b) rescission is only possible if:
• there is fraud or recklessness; or
• a party would otherwise be obliged to transfer or accept property “differing substantially (in quantity,
quality or tenure)” from what it had been led to expect
...
Damages- If there is no fraud but there is a ‘material difference’ in the property described and the property
itself, the innocent party is entitled to damages (if they can prove it)
...
g
...

However, the “innocent” party cannot treat the contract as repudiated by the breach
...
2/SCPC 10
...
The position differs depending on whether the SCS or the SCPC are used (in either
case, it is still possible to claim damages if a party's actual loss exceeds the compensation paid, although credit must
given for any compensation already paid)
...
2 is that, if either party defaults and delays completion, the defaulting party must pay compensation to the
“innocent” party
...
Interest will be the contract rate set out in contract (if no contract rate, then the Law
Society’s interest rate)
...

For what period is interest payable?
The shorter of:
• the period of default under the contract by the party paying compensation; and
• the period between the contractual completion date and the date of actual completion (every day
counts irrespective of whether it is a working day)
...
3, only the buyer can be liable to pay compensation (where the seller defaults and completion is
delayed, the buyer's remedy is a damages claim only)
...

What is interest payable on? The purchase price less the deposit already paid
For what period is interest payable?
The period between the contractual completion date and the date of actual completion, although the seller cannot
claim compensation for any period during which the seller itself was in default (SCPC 9
...
2 also provides that, if the
money is not received by 2 pm, then completion is not deemed to have taken place until the next working day)
...

Explain the procedure and documentation concerning the grant of a lease when acting for a landlord or a
tenant
...


Explain the need to investigate a landlord’s title
...


Apply the concepts of privity of contract and privity of estate to a given set of facts
...

Identify the difference between a new tenancy and an old tenancy and apply the Landlord and Tenant
(Covenants) Act 1995
...


Identify key clauses in a lease
...


provide advice on the effects of a covenant in a lease against alterations;

1
...
g
...
Must complete a statement
outlining premiums, rent or service
charges that need to be paid in
advance
...


Prepare for completion

Completion

Post-completion matters (& comply
with any undertakings given on
completion)

Post-completion matters
(SDLT and registration of title)

Important aspect of the procedure to grant a lease
Defining what is being let
The lease needs to define the exact area to be let
...

The contractual termination date

=
=

the length of the lease
...


Drafting the lease
Landlord’s solicitor drafts the lease at the start of the transaction and then offers it to the tenant – landlord wants to
control the terms of the lease as much as possible
...
2 of the Law of Property (Miscellaneous Provisions) Act 1989,
that is, be:
•
•
•

In writing
Signed by seller and buyer and
Incorporating all of the expressly agreed terms

It will be drafted using the SCS or the SCPC
...
SCS 8
...
3/SCPC 11
...
3 only take effect on exchange of contracts so best practice is to ensure that title has
been investigated before exchange
...
2
...
2
...
This means that the
landlord must deduce title to the freehold just as if the freehold were being sold, by means of official copies if the
freehold is registered or by means of an epitome going back at least 15 years if the freehold is unregistered
...

Exchange
Same usual – Law Society Formula A, B or C
Pre-Completion Procedure
Landlord’s solicitor:
Draft lease needs to be on a final copy with all amendments etc added in
...

This ‘engrossment’ needs to happen twice i
...
two copies need to be made
...
This
must be sent at least 5 working days before completion
...


Tenant’s solicitor:
Pre-completion searches need to be carried out as usual e
...
if the title is registered do an OS1 Search or if the
landlord is a company do a company search
...

Completion
The lease is a deed and therefore must comply with the formalities set out in s
...
On completion the tenant receives the “original” lease, executed by the
landlord and the landlord receives the “counterpart” lease, executed by the tenant
...
The tenant has the original lease
executed by the landlord setting out its rights and obligations
...

Post-Completion
Tenant’s solicitors
SDLT is payable both on the premium and on the rent
...
This is calculated using a complicated formula and you are not required to
know the details of this
...
(For
info: Until the Land Registration Act 2002 came into force new leases only had to be registered if they exceeded 21
years)
...
The Land
Registry will create a new title for the tenant
...

If the landlord's title is already registered:
•
•

the grant of the new lease ranks as a "disposition" of the landlord's title and registration of the new lease
should take place within the priority period of the land registry search, which will have been obtained
against the landlord's title prior to completion; and
the Land Registry will automatically put a notice of the lease on the charges register of the landlord's title
...
Only the lease will be registered
...

Assuming that the landlord's title was investigated on the grant of the lease and can therefore be deduced to the
Land Registry, the new lease will be registered with absolute title
...
The disadvantages of good leasehold
title are:
•
•

no guarantee of the validity of the lease; and
any incumbrances on the landlord's freehold title are not shown
...


For these reasons many tenants and mortgagees will not accept good leasehold title
...

Prescribed clauses
On 19 June 2006 the Land Registry introduced standard clauses (called “Prescribed Clauses”)
...

The prescribed clauses are for ease and clarity of registration
...

Acting for a Mortgagee
The solicitor for the tenant (buyer) may also be acting for the tenant’s mortgagee, as on a freehold sale
...

The mortgagee is likely to insist on absolute title
...
This will ensure that the landlord will serve on the mortgagee notice of any
forfeiture proceedings issued against the tenant
...

3
...

The position before 1 January 1996 – “old leases”
Privity of contract – the relationship between the parties to a contract
Privity of estate – the relationship between the two parties who currently hold/ own the lease, the relationship of
the current landlord and current tenant
These two doctrines are best seen through an example:
Exercise 1
Consider this sequence of events:
1994 – the landlord, L, lets premises to the tenant, T, for 25 years
...

2004 – L assigns its interest (“the reversion”) to a new landlord/reversioner, R
...

Privity of estate between the two parties ends when the parties cease to enjoy the
relationship of landlord and tenant
...

Note:
When discussing leases the term “privity of contract” is often used to mean just the
relationship between the original tenant and the original landlord
Privity of contract between the original landlord and the
original tenant lasts for as long as the lease does
...
3

Licences to assign
As will be explained in the vodcasts dealing with “How to assign a lease”, the landlord’s consent is almost
always needed before an assignment of a commercial lease can take place
...
This will be between the landlord, the existing tenant and the proposed
assignee
...
This introduces a further element of
privity of contract
...


Returning to Exercise 2

L

T

→ A1

→

A2

→

A3
A3 goes into liquidation and

Stops paying the rent

We can add in the privity of contract created by the licences to assign
...

They would all have given direct covenants to L to observe the provisions of the lease
...

This rule has been modified for leases granted after 1
...
96 – see below

The Landlord and Tenant (Covenants) Act 1995 (“the 1995 Act”)

Applies to leases granted on or after 1 January 1996 “new leases”
The 1995 Act abolished the continuing “privity of contract” liability of original tenants to landlords
...
However upon assigning the lease the current tenant is released from the benefit
and burden of the tenant covenants (s
...
3) 1995 Act
This is subject to the assignor getting…
Authorised Guarantee Agreements
Section 16 of the 1995 Act introduced the concept of the “authorised guarantee agreement” (AGA)
...
The
outgoing tenant can be asked to guarantee the performance of its assignee
...
The landlord can ask for an AGA to be provided:
- if it is reasonable to do so
- for non-residential lease only: if it is a condition of the lease
Section 22 of the 1995 Act inserts a new section, s19(1)A, into the Landlord and Tenant
Act 1927
...
In particular, you can assume that all such leases include a pre condition
that the outgoing tenant provides an AGA
...
e
...

Who could L sue?
L

T

→ A1

→

A2

→

A3
A3 goes into liquidation and
Stops paying the rent

Answer:
Can sue current tenant and A2 (due to AGA) but no more due to new privity rules
Note that the 1995 Act only applies to leases granted after 1995 not to leases assigned
(sold) after 1995
...

You need to know both sets of rules because there remain in existence leases created prior to 1 January
1996
...
g
...
That notice must be served within 6 calendar months of the fixed charge falling
due (if not, the landlord loses the right to pursue the former tenant for that fixed charge)
...


Section 19
In the event of the former tenant paying the full amount of any fixed charge required to be paid under a s
...
The practical effect is that the former tenant
becomes the landlord of the current (defaulting) tenant and can therefore forfeit the lease and make use of
the premises by either occupying or sub-letting

N
...


These sections apply to both old and new leases
...

Nevertheless, the structure approaching a question like this (where it asks what the position of a tenant is when they
want to make alterations):
1
...
Look in the lease for sections related to ‘Alterations’ (may be called something else but something
similar) and check how many levels of consent are needed
...
g
...
Whether the landlord could refuse consent
a
...

b
...

c
...

d
...
What conditions the landlord could attach to its consent
a
...
Section 19 (2) allows the landlord to charge the tenants any reasonable professional/legal fees
incurred in connection with the consent
c
...


Part 4 Revision Notes
1
...
analyse and provide advice on the consequences of failing to comply with covenants in a lease; and

3
...


1
...
g
...
e
...
E
...

However, if duty to repair falls on tenant – the case of Proudfoot v Hart states that you must put it in repair and not
just do quick fixes i
...
paper over the cracks
...
This would need to be agreed on by the parties
b) There is some damage to the walls in one of the offices caused by recent flooding
Which clauses should I be looking at?
Since a part of the property is damaged DEFINE WHAT PROPERTY IS VIA CLAUSE IN THE LEASE
Since repair is topic CHECK THE REPAIR CLAUSES TO FIND OBLIGATIONS OF EITHER PARTY
This disrepair was caused by some insurable risk CHECK LANDLORD DUTY TO INSURE AND USE OF INSURANCE
MONEY
Who is responsible for xyz duty according to the clause I am looking at?
Navigate through the clauses methodically and find out who is responsible
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E
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E WHEN SHOULD IT BE REDECORATED
This is to do with the property and so DEFINE WHAT THE PROPERTY IS
Who is responsible for xyz duty according to the clause I am looking at?
Through navigating the clauses in the lease it should be apparent
Check which part of the property is to be decorated by either the landlord or the tenant
What is the extent of that obligation?
Check if there are any additional conditions that need to be met when redecorating
f)

The landscaped areas in the common parts of the estate are overgrown and full of weeds

Which clauses should I be looking at?
Define key terms from definitions such as the ‘estate’ and ‘common parts’ if possible
Check the tenants/landlords covenants to maintain these areas
Who is responsible for the xyz duty according to the clause I am looking at?
Through navigating the clauses it should become apparent
What is the extent of that obligation?

Who pays for the maintenance of this?
It can be paid either by the landlord completely, the landlord via the service charge or the tenants responsibility
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e
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When there is non-payment of rent
Sue for debt action claim against the tenant
Use Commercial Rent Arrears Recovery (CRAR) – only rent can be recovered
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The rent due must exceed a set of minimum of 7 days rent i
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it must have been due for over 7 days
Must give notice and must be given enforcement agent
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TO FORFEIT FOR ARREARS OF RENT
The landlord needs to make a formal demand for rent, unless the lease states that rent is payable whether or not
formally demanded and most modern leases do
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Commonly it is once the rent is in arrears for 21
days
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To effect it – peaceful re-entry (changing the locks) or Court Order
Be careful not to waive your right to forfeiture –essentially cut off all communication with tenant and end that
relationship
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146 (2) LPA 1925 – applying to the court for relief
In respect of non-payment of rent it will always be granted if they pay their arrears – essentially show the court that
default will not happen again
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146 (4) LPA 1925
If relief is granted the effect will be that the subtenant becomes the direct tenant of the landlord, and the original
tenant drops out of the picture
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To persuade the court – the subtenant should be proactive and show the court that default of payment will not
happen again e
...
pay a deposit
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Breach of any other covenant
Sue for damages as a loss has been suffered – so sue for loss and diminution (section 18 (1) Landlord and Tenant Act
1927)
Forfeiture for any other breach of the provision
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Section 146 (1) Law of Property Act 1925
States that before forfeiting for breach of any other covenant in the lease the landlord must serve a notice (a s146
notice)
•

Specifying the breach;

•

Requiring it to be remedied (if capable of remedy); and

•

Requesting compensation for the breach (if required)
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The courts have stated that: “An important purpose of the s146 procedure is to give even tenants who have hitherto
lacked the will or the means to comply with their obligations one last chance … before the landlord [forfeits]”
A s146 notice is needed when claiming damages for lack of repair (see 4
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146 notice is NOT required for forfeiture for non-payment of rent
A s
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Where theres 3 years left to run on a 7+ year lease must serve s
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If the lease was less than 7 years or had less than 3 years still to run then peaceful re-entry is possible
Jervis v Harris Clause – known as a self-help remedy
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i
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not sue for damages and so it becomes a debt action
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If tenant is not doing something you want them to do then get an order for specific performance
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Tenant:
Relief from forfeiture – applying to the court for relief
In respect of non-payment of rent it will always be granted if they pay their arrears
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146 (1) notice gives time for tenant to remedy
breach and should be okay after this
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Imagine it is now November 2019
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Draw a diagram to illustrate the various interests and dealings in Unit 1
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2
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Advise Crown who it can pursue for
those rent arrears and what procedure(s) (if any) it would first have to go through
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This is done via Section 3 LTA 1995 which states that on sale or lease the benefit/burden of all covenants are
automatically transferred (so includes payment)
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Crown can also Use Commercial Rent Arrears Recovery (CRAR) against Leyland – only rent can be recovered
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The rent due must exceed a set of minimum of 7 days rent
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Then seize goods of the tenant
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Pursuing Transit Leasing plc:
First identify the type of lease it is – this is a ‘new lease’ as it was made on or after 1/01/1996
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HOWEVER, THIS IS SUBJECT TO TRANSIT GETTING…
An ‘Authorised Guarantee Agreement’ under Section 16 LTA 1995 given by Transit when assigning which gives a
guarantee to the landlord (Crown) that they would be liable
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So, Crown can only get back the rent in arrears from March 2020 and June 2020 but not December 2019 because the
6 month period has been passed
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3
...
Advise Global I
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Systems Limited (“Global”) on how this action
would impact on its underlease dated 29 October 2019 and what, if anything, Global could do about it
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The sub tenant can apply via s
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Have to convince the court that default of payments will not happen
again
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To do so, a surveyor would come in and look at the property and search for comparables (property that is similar to the one in question) and assess value
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An example: have a bare office and 5 years later tenant improved it by adding xyz to add value
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This would
be unfair on tenant as they paid for it
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Another example: windows fall into disrepair
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It does not matter who’s obligation it is to repair that window, either way – they can seek specific performance at any time to force other party to carry out the repair
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But next day after
rent is reviewed the window is repaired – it would be disproportionate
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Also – as the actual tenant
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So when considering a rent review situation look at whether the market rent will increase or decrease depending on the facts and whether a hypothetical tenant would be
attracted to that property (would they pay less or more for the lease)
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A diagram (filled with certain scenarios) is below to show
what to state/apply/consider
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Even if it is,
it can be rebutted by simply specifying review dates within the
terms of the lease
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Third step:
Who reviews the rent? Again this will be in Clause 6
Fourth Step: What should the Tenant:

It can be agreed (usually in writing) between the parties
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If
arbitrator does not decide then President of Surveyors will
decide
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The decision can be
appealed via judicial review -expensive but very thorough
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Also, there is no
appeal process although the expert owes a duty of care
(negligence)
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If the property is destroyed – would it be fair/unfair on the tenant if there is an ‘assumption’ that when reviewing rent it will be as if it is still built?
This would be fair on the tenant because:
If in 2017 the property is destroyed, and value of rent is decreased; and rent review is scheduled for 2022
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Instead better to assume the property is fully restored so landlord is protected from loss of rent over years
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2
...
This is because if rent review occurs and does take into account these
factors, it would naturally go down
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3
...

4
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What would be the effect on the rent at rent review if the following disregard were included in the Lease:
“ 6
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2
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This is unfair on the tenant because it does not reflect correctly
the restrictions which he is subject to and he has to pay a high rent despite of that i
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worst of both worlds
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If it cannot refuse
consent, can it impose conditions which would have to be fulfilled before consent is given?
First step would be to look at clause 11 of the lease – there will usually be an ‘absolute covenant’ that completely prohibits any assignment/sublease (this is clause 11
...
3)
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This is not relevant for this lease because Clause 11
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19 (1A)

Then, the following clauses will usually be conditions that need to be met for the purposes of granting the consent e
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no arrears of rent/getting an AGA/assignment not
being to something within the same group of companies (shell companies that would have 0 assets to pay rent thus avoiding a debt action)/requirement of a guarantor
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Section 16 1995 Act – this is where the outgoing/assignor tenant guarantees the performance of the covenants the assignee is now bound to
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Essentially landlord should:
Give written notice within a reasonable time
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g
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The landlord is not entitled to refuse consent to an assignment on grounds, which have nothing to do with the relationship of landlord and tenant
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It is in each case, a question of fact, depending on all the circumstances, whether the landlord’s consent is unreasonably withheld
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This is good for the landlord because a breach of the sublease will effectively be a breach of the headlease since they are on the same terms and so there are two routes to
pursue
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First the diagram below will show the relationships between the parties involved in the lease transaction:

Part 6 Revision Notes

Procedure for Court Application to counter the refusal of a renewal:
The tenant can apply to the court via Section 24 LTA 1954 and ask for the determination of the terms of a new lease therefore challenging the landlord’s
opposition to a lease renewal so long as:
A section 25 notice opposing the grant of a new lease has been delivered
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Application Deadline:
The court application must be made by the end of the ‘statutory period’
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Therefore, the application must be made before the 11 February 2018
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Further extensions can then be agreed upon in the same
way – as per Section 29B (2) and (3) LTA 1954
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According to 56
...
This Part 7 procedure is a standard particulars of claim and claim form
detailing what Kevin regarding the new terms of his lease and the counter-arguments to the landlords use of
Grounds (a) and (f) of Section 30(1) LTA 1954
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4 and 3
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4 The claim form must contain details of –
(1) the property to which the claim relates;
(2) the particulars of the current tenancy (including date, parties and duration), the current rent (if not the
original rent) and the date and method of termination;
(3) every notice or request given or made under sections 25 or 26 of the 1954 Act; and
(4) the expiry date of –
(a) the statutory period under section 29A(2) of the 1954 Act; or
(b) any agreed extended period made under section 29B(1) or 29B(2) of the 1954 Act
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5 Where the claimant is the tenant making a claim for a new tenancy under section 24 of the 1954 Act, in
addition to the details specified in paragraph 3
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Court Orders
If the Court agrees with the Landlord then the tenancy will continue until the court has finally disposed fully
with the application and this could be 3 months and 21 days after the court makes the order
...
For this, the parties should set out
the terms of a tenancy –here, the important issue will be about the rent payable under a new lease as the rent
per annum should drop from £27,000 to £24,500 per annum
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As per Section 32 LTA 1954 – the court can decide as to the property which should be included in the lease
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This should be something that may be of concern to Kevin since he wants a new 20 year lease
so agreement should be sought after here
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This
will be decided as a matter of valuation rather than the courts own discretion
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As per Section 35 – the court can decide on ‘other terms’ of the lease
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Importantly, since the landlord is currently using the redevelopment ground under S
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While the new tenancy terms are being renegotiated – the tenant can apply for interim rent order which is based on
the market rent
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Advise Crown who it can pursue for those rent
arrears and what procedure(s) (if any) it would first have to go through
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Leyland can be sued as there is liability under section 3
of the Landlord and Tenant (Covenants) Act 1995 (the “1995 Act”) between it and Crown
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NB Crown could use CRAR (Commercial Rent Arrears Recovery) to recover the unpaid rent
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The remedy is Human Rights compliant
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GLOBAL I
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SYSTEMS LIMITED (“GLOBAL”)

Global cannot be sued as there is no direct relationship between it and Crown
...
Although Pothas did enter into an authorised guarantee
agreement under section 16 of the 1995 Act following the assignment to Transit Leasing PLC (“Transit”) (Document 3
in the case study), this guarantee ceases to have effect following the subsequent assignment by Transit to Leyland
...
3
of the lease dated 29 March 2012 (Document 1 in the case study) and see note 2 at the bottom of the case study
index)
...

As rent constitutes a “fixed charge” under section 17(6) of the 1995 Act, Crown would need to serve default notices
on Transit within 6 months of each quarter day under section 17(2) of the 1995 Act
...

If Transit receives a default notice and pays up, it has 12 months to ask Crown to grant to it an overriding lease under
section 19 of the 1995 Act
...

Question 3
Imagine that, instead of suing for the rent arrears, Crown is considering using those arrears as a ground for
forfeiting the headlease dated 29 March 2011
...
T
...

As a matter of common law, if a headlease is forfeited, any underleases ‘fall away’ as well
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The court
has a discretion whether to grant relief and on what terms
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[For information only:
Under clause 12
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Global could therefore claim damages
against Leyland for breach of that covenant (we do not know whether Leyland is worth suing)
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Global is now concerned about the amount of rubbish that has recently accumulated on the common parts of the
Durham Park estate (caused by Crown’s decision to remove the communal refuse bins)
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This is a breach by Crown of a covenant in the headlease (see clause 15
...
5 of the lease dated 29 March 2012)
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However, under clause 12
...
Global could therefore ask Leyland to take action on its behalf against Crown for Crown’s failure to comply
with its covenant in the headlease
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It will also look at, in a situation where you can renew the lease, how to renegotiate terms and rent
payment etc
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Here, the tenancy should
comprise a property where is carried for the purposes of a business
...
e
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25 notice or the tenant gives a S
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Now move on to the Section 25 Notice itself:
Remember that the lease cannot be brought to an end before the contractual termination date but can be brought
to an end at any time afterwards
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The notice must be given by the competent landlord – this is someone who has a reversionary interest (either the
freehold interest or has a superior lease) AND that interest will not be coming to an end within 14 months (as per
S
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This means that original tenants who gave an AGA cannot be a landlord
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There must be sufficient notice
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25
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25 Notice provided he wants a new tenancy and the landlord is refusing
it?
It is essential for the tenant, through the solicitor, to make the court application within the time limit – which is the
date specified on the s
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The time limit can be extended by agreement with the landlord and tenant as per
S
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If renewal is accepted by the court how long will the lease be?
The maximum term the court will order is 15 years
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It is payable from the earliest date for termination of the
tenancy specified in the S
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It is usually calculated on the basis of a yearly rent where the landlord is opposing renewal
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What must the landlord show in order to successfully oppose the grant of a new tenancy?
The landlord, as part of the S
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The tenant may be entitled to compensation
The tenant can only receive compensation if the landlord solely opposes on the no fault grounds which are grounds
e, f and g
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