8 - Alienation

Question 1

What is the legal relationship between the original landlord (LL) and original tenant (TT) of a lease called?

Answer 1

Privity of contract.

Question 2

What is the term for the relationship that exists between any current landlord and current tenant who each hold an interest in the same property?

Answer 2

Privity of estate.

Question 3

What is the key date that distinguishes between ‘old leases’ and ‘new leases’ for the purpose of enforcing covenants?

Answer 3

1st January 1996.

Question 4

Under the ‘old system’ for leases, for how long does the original tenant’s liability for lease covenants continue?

Answer 4

For the full duration of the lease term, even after assignment.

Question 5

In old leases, which type of tenant covenants are enforceable by and against successor landlords and tenants due to privity of estate?

Answer 5

Covenants that ‘touch and concern’ the land.

Question 6

What is the effect of the LCTA 1995 on the principle of privity of contract for new leases?

Answer 6

It effectively abolishes it, releasing the original parties from liability for the full lease term upon assignment.

Question 7

Under the ‘new system’ for leases, for how long does the original tenant’s liability for lease covenants continue?

Answer 7

Until they assign. Once they assign, they are automatically released (subject to some exceptions).

Question 8

Under LCTA 1995, when is a tenant NOT automatically released from their covenants upon assignment of the lease?

Answer 8

If the assignment is an ‘excluded assignment’, meaning it was in breach of an alienation covenant (e.g., without landlord’s consent).

Question 9

According to LCTA 1995, s.3, what happens to the benefit and burden of lease covenants when a new lease is assigned?

Answer 9

They are automatically transmitted to the new landlord and new tenant, with the exception of personal covenants.

Question 10

What is an ‘Authorised Guarantee Agreement’ (AGA)?

Answer 10

An agreement where an outgoing tenant guarantees the performance of their immediate successor’s obligations under the lease.

Question 11

If a landlord sues a former tenant under an AGA for a new lease, what remedy is the landlord limited to?

Answer 11

Damages.

Question 12

What is the name of the common law rule that allows a former tenant to recover damages they paid from a defaulting assignee?

Answer 12

The rule in Moule v Garrett (1872).

Question 13

If a former TT (who had given an AGA) is sued by the LL, how can former TT recoup damages paid out?

Answer 13

They should have entered into an express indmenity covenant on assignment.

That said, the rule in Moule v Garrett may allow them to recoup damages.

Question 14

To recover fixed charges from a former tenant (under an old lease or an AGA), what must a landlord serve?

Answer 14

A default notice

Question 15

What is the time limit for a landlord to serve a s.17 LCTA 1995 default notice on a former tenant?

Answer 15

Within 6 months of the fixed charge becoming due.

Question 16

Under s.18 LCTA 1995, when is a former tenant liable for an increased payment resulting from a lease variation made after they assigned?

Answer 16

Only if the variation was foreseeable and anticipated at the time the lease was granted.

Question 17

Under s.19 LCTA 1995, what is a former tenant entitled to if they pay the sum demanded in a s.17 notice in full?

Answer 17

An overriding lease.

Question 18

What is the effect of a former tenant taking an overriding lease under s.19 LCTA 1995?

Answer 18

The former tenant becomes the immediate landlord of the defaulting current tenant, giving them control.

Question 19

In new leases, which type of covenants can a head landlord enforce directly against a sub-tenant?

Answer 19

Only restrictive covenants.

Question 20

What is the general term for a tenant disposing of all or part of their interest in a lease?

Answer 20

Alienation.

Question 21

What is the default position regarding a tenant’s right to assign or underlet if the lease is silent on the matter?

Answer 21

The tenant is free to assign or underlet.

Question 22

How does s.19(1)(a) of the Landlord and Tenant Act 1927 affect a qualified covenant against alienation?

Answer 22

It converts it into a fully qualified covenant, implying a proviso that consent is not to be unreasonably withheld.

Question 23

Under the Landlord and Tenant Act 1988, what three duties does a landlord have when responding to a tenant’s request for consent to assign or underlet?

Answer 23

To give a decision in writing, within a reasonable time, and if withholding consent, to provide written reasons.

Question 24

On what grounds can a landlord reasonably withhold consent for an assignment?

Answer 24

Grounds related to the landlord/tenant relationship, such as justifiable concerns about the assignee’s ability to pay rent.

Question 25

What document is typically drafted by the landlord's solicitor to grant formal consent for an assignment or underletting?

Answer 25

A licence to assign or a licence to underlet.

Question 26

Can a LL withold consent for assignment / underletting on grounds of personal dislike against a prospective TT?

Answer 26

No, as this is personal and not related to LL / TT relationship.

Question 27

Can a LL withold consent for assignment / underletting due to concerns about the new TT's ability to pay rent?

Answer 27

Yes, as this relates to the LL / TT relationship.

Question 28

Can a LL withhold consent for assignment / underletting relating to the new TT's proposed use of premises (eg a shopping centre where LL has a policy on mixing different types of shops)?

Answer 28

Yes, as this relates to LL / TT relationship.

Question 29

**Which of the following best summarises the liabilities of the outgoing tenant and incoming tenant for the tenant obligations in the lease after assignment for an old lease and a new lease?** 1. For an old lease, the outgoing tenant remains liable. The incoming tenant automatically becomes liable. For a new lease, the outgoing tenant remains liable. The incoming tenant only becomes liable if it gives an authorised guarantee agreement. 1. For an old lease, the outgoing tenant remains liable, but the incoming tenant only becomes liable for all covenants if it gives a direct covenant to the landlord (otherwise the incoming tenant is only liable for covenants which touch and concern the land). For a new lease, the outgoing tenant is released from liability unless it enters into an authorised guarantee agreement. The incoming tenant automatically becomes liable. 1. For an old lease, the outgoing tenant remains liable. The incoming tenant is not liable unless it gives a direct covenant to the landlord. For a new lease, the outgoing tenant's liability will depend whether the incoming tenant gives an authorised guarantee agreement. 1. For an old lease, the outgoing tenant remains liable. The incoming tenant automatically becomes liable. For a new lease, the outgoing tenant is released from liability unless it enters into an authorised guarantee agreement. The incoming tenant automatically becomes liable. 1. For an old lease, the outgoing tenant is released from liability unless it enters into an authorised guarantee agreement. The incoming tenant automatically becomes liable. For a new lease, the outgoing tenant remains liable, but the incoming tenant only becomes liable if it gives a direct covenant to the landlord.

Answer 29

Correct answer: 2)

Question 30

At pre-exchange for an assignment of lease, what are the LL's solicitor's responsibilities (on top of taking instructions)?

Answer 30

* Confirm receipt of assignment application, set out any requirements * If client wishes to proceed in principle, draft licence to assign and send to TT's solicitors

Question 31

At pre-exchange for an assignment of lease, what are the TT's solicitor's responsibilities (on top of taking instructions)?

Answer 31

* Apply for consent * Prepare draft contract (if applicable) and deduce title * Forward licence to assign to assignee’s solicitor * Answer pre-contract enquiries * Once agreed, engross the contract, obtain TT’s signature, and send engrossment to assignee’s solicitor

Question 32

At pre-exchange for an assignment of lease, what are the assignee's solicitor's responsibilities (on top of taking instructions)?

Answer 32

* Assist TT’s solicitor if anything needed for consent * Review draft contract (if applicable) and investigate title * Review and report on lease * Review licence to assign * Raise pre-contract enquiries and searches * Arrange for assignee to sign contract

Question 33

At the start of a lease assignment, what will the landlord's solicitor typically request from the tenant's solicitor before drafting the licence to assign?

Answer 33

An undertaking for the landlord's legal and surveyor's costs.

Question 34

Which set of pre-contract enquiries is specifically raised by an assignee's solicitor in the assignment of a lease?

Answer 34

CPSE1 and CPSE4 (which are specific to assignment of a lease)

Question 35

If a registered leasehold title is being assigned, what form is the deed of assignment likely to take?

Answer 35

Form TR1 (Transfer of whole of registered title).

Question 36

At pre-completion for an assignment of a lease, what does the LL solicitor do?

Answer 36

Engross licence to assign in triplicate, arrange for LL to execute one copy

Question 37

At pre-completion for an assignment of a lease, what does the TT solicitor do?

Answer 37

* Arrange for TT to execute one copy of the licence to assign * Prepare and send completion statement detailing the money due on completion (e.g. any apportioned annual rent, service charge and insurance rent) * Respond to requisitions on title * Approve deed of assignment and arrange for TT to execute

Question 38

At pre-completion for an assignment of a lease, what does the assignee's solicitor do?

Answer 38

* Arrange for assignee to execute one copy of the licence to assign * Obtain funds from assignee needed to complete as per completion statement * Raise requisitions on title * Raise pre-completion searches * Draft deed of assignment

Question 39

What does TT's solicitor prepare for the assignee to deal with payment?

Answer 39

A completion statement. This involves calculating what proportion of the rents due under the lease are attributable to TT and the assignee

Question 40

What pre-completion searches must an assignee complete?

Answer 40

An OS1 must be carried out if the lease is **registered**

Question 41

If the lease is not registrable, does a pre-completion search have to be completed for assignment?

Answer 41

No.

Question 42

If assignment of a lease is of part, should the assignee's solicitor use OS2 search?

Answer 42

No, an OS1 search is always used if the lease is registered (i.e. is already registered or has more than 7 years left to run)

Question 43

On completion of assignment, what does the assignee, LL and TT do?

Answer 43

* Assignee’s solicitor sends the TT’s solicitor the completion monies * LL’s solicitor, TT’s solicitor and assignee’s solicitor agree over the telephone to complete and date the licence to assign * TT’s solicitor and assignee’s solicitor agree over telephone to complete and date the deed of assignment

Question 44

After an assignment completes, what must the assignee's solicitor send to the landlord's solicitor and what other post-completion steps must be completed?

Answer 44

A formal notice of assignment. The assignee's solicitor must also: * Arrange to submit SDLT / LTT return and pay appropriate tax if necessary * Register assignment at Land Registry if necessary (i.e., if lease is already registered or has more than 7 years left to run)

Question 45

When is it necessary for the assignee's solicitor to register the assignment at Land Registry?

Answer 45

if lease is already registered or has more than 7 years left to run

Question 46

If lease is registered, on assignment what must be drafted?

Answer 46

Deed of assignment on form TR1

Question 47

**Which of the following statements about pre-completion searches is correct?** 1. An OS2 search should be carried out for an assignee of a 5 year lease of part. 1. An OS2 search should be carried out for the assignee of a 10 year lease of part. 1. If the landlord's title is unregistered, a Central Land Charges search should be carried out on assignment. 1. An OS1 search should be carried out for the assignee of a 5 year lease. 1. An OS1 search should be carried out for the assignee of a 10 year lease.

Answer 47

Correct answer: 5) A 10 year lease would be registered, and so an OS1 search should be carried out against the assignor's leasehold title.

Question 48

What is the fundamental difference between an assignment and an underletting?

Answer 48

In an assignment the tenant disposes of their entire interest, whereas in an underletting they grant a new, shorter lease and remain the tenant.

Question 49

What is the crucial requirement for the term of an underlease?

Answer 49

It must be for a shorter term than the tenant's own lease, even if only by one day.

Question 50

Following an underletting, does the original tenant (now the intermediate landlord) remain liable to the head landlord?

Answer 50

Yes, the tenant remains liable for all covenants in their own lease.

Question 51

Why might a tenant want to underlet premises?

Answer 51

* They are not using all of the premises, and it is possible to underlet the part they are not using * They do not need the premises at the moment, but are likely to do so in the future * They cannot find a willing assignee, but can find a willing under-TT

Question 52

If lease is silent on underletting, can the tenant underlet?

Answer 52

Yes.

Question 53

If there is a qualified covenant against underletting in the lease, can the tenant underlet?

Answer 53

Yes, and the covenant will be upgraded to a fully qualified covenant meaning that LL cannot unreasonably withhold consent

Question 54

When considering whether consent has been unreasonably withheld, what is the fundamnetal difference with assignment and underletting?

Answer 54

One difference to assignment is that the lease covenants regulating underletting do not talk in terms of conditions and circumstances on which consent may be reasonably withheld This is because s.19(1A), which allows consent for covenants to assign to be restricted by circumstances / conditions, does not apply to underletting

Question 55

Why will a landlord usually require a direct covenant from an undertenant in the licence to underlet?

Answer 55

Because there is no privity of contract or estate between the landlord and the undertenant.

Question 56

Can an AGA be obtained for an underlet?

Answer 56

No, this is only relevant to assignments.

Question 57

A tenant has a 10 year lease with 7 years left to run. The lease is for four floors of a city office tower. There are no break clauses. The lease contains a qualified covenant against underletting of part or a permitted part, being one or more of the four floors. **In which of the following scenarios would underletting not be an appropriate option?** 1. The tenant does not need the premises for the next two years and has found someone willing to occupy for that time. 1. The tenant's business has downsized, and it is only using three of the four floors. It has found someone willing to occupy the other floor. 1. The tenant's business has moved to another premises, except for a small team, and it is only using one of the four floors. It has found someone willing to occupy two of the floors, but has not yet found anyone for the other. 1. The tenant does not need the premises but cannot find an assignee. 1. The tenant wishes to be released from its repairing obligation.

Answer 57

Correct answer: 5) Underletting does not release the tenant from its repairing obligation (although it can in turn require the undertenant to comply with it).

Question 58

**Which of the following statement correctly describes the liabilities of the tenant and undertenant for the tenant's lease obligations to the landlord following an underletting?** 1. The tenant will remain liable and the undertenant will be liable if the undertenant gives a direct covenant to the landlord. 1. The tenant will only remain liable if it is an old lease, and the undertenant will be liable if it gives a direct covenant. 1. The tenant will remain liable and the undertenant will be liable automatically if it is a new lease. 1. The tenant remains liable to the landlord, but the undertenant cannot be made liable to the landlord because of privity of estate. 1. The tenant will remain liable if it gives an authorised guarantee agreement and the undertenant will be liable if it gives a direct covenant.

Answer 58

Correct answer: 1) The tenant remains in a landlord/tenant relationship with the landlord. The undertenant will only be liable to the landlord if it gives a direct covenant (but it will be liable to the tenant as its immediate landlord).

Question 59

A tenant of the whole of an office block under an FRI lease intends to underlet one floor to an advertising agency. **Which of the following is likely to be a permissible term for an underlease?** 1. The remainder of the term of the tenant's lease plus three days. 1. For as long as the tenant contracts its advertising work to the undertenant. 1. The remainder of the term of the tenant's lease less three days. 1. The remainder of the tenant's term. 1. On a monthly periodic tenancy.

Answer 59

Correct answer: 3) This is a certain term, and is less than the tenant's term.

Question 60

At pre-exchange for underletting, what are the LL's solicitors repsonsibilities (save for taking instructions)?

Answer 60

* Consider application to underlet * If LL is happy in principle, request undertaking for costs and issue draft licence to underlet to TT’s solicitor

Question 61

At pre-exchange for underletting, what are the TT's solicitors repsonsibilities (save for taking instructions)?

Answer 61

* Apply for consent to underlet * Prepare draft underlease and, if relevant, agreement for underlease * Review draft licence to underlet and send copy to under-TT * Deduce title and respond to any queries on title * Answer pre-contract enquiries * Once agreed, engross the agreement for underlease, obtain TT’s signature and send counterpart to under-TT’s solicitor

Question 62

At pre-exchange for underletting, what are the under-TT's solicitors repsonsibilities (save for taking instructions)?

Answer 62

* Review draft underlease and agreement for underlease and amend as required * Review draft licence to underlet * Investigate title and raise any queries on title * Raise pre-contract enquiries and searches * Arrange for under-TT to sign counterpart underlease

Question 63

For the consent application to underlet, can the LL request that TT pay for costs (lawyers and surveyor fees)?

Answer 63

Yes, LL solicitor usually requires TT solicitor to give an undertaking for costs

Question 64

How will the underlease be drafted?

Answer 64

The TT solicitor drafts the underlease. The underlease may be a full form lease (which will look similar to TT’s own lease) or it may be a lease by reference (which incorporates sections of TT’s lease by reference)

Question 65

Under-TT will carry out investigations, searches and enquiries. How does TT deduce its title if it has a lease over 7 years?

Answer 65

TT need only provide an official copy of its registered leasehold title

Question 66

Under-TT will carry out investigations, searches and enquiries. How does TT deduce its title if it has a lease is for 7 years or less?

Answer 66

TT will need to provide an official copy of LL’s freehold title together with a copy of the lease

Question 67

At pre-completion for underletting, what are the LL's solicitors repsonsibilities?

Answer 67

Engross agreed form of licence to underlet and circulate for execution and obtain LL’s execution to licence to underlet

Question 68

At pre-completion for underletting, what are the TT's solicitors repsonsibilities?

Answer 68

* Prepare original and counterpart underlease, obtain TT’s signature to original and send counterpart to under-TT for signature * Prepare and send completion statement, detailing the money due on completion (e.g. any apportioned annual rent, service charge and insurance rent) * Obtain TT’s execution to licence to underlet

Question 69

At pre-completion for underletting, what are the under-TT's solicitors repsonsibilities?

Answer 69

* Arrange for under-TT to sign counterpart underlease * Obtain funds from client needed to complete as per completion statement * Raise pre-completion searches * Obtain under-TT’s execution to licence to underlet

Question 70

If it is an underletting of the whole of the lease, what pre-completion search is carried out?

Answer 70

OS1 against the TT's registered leasehold title

Question 71

If it is an underletting of part of the TT's lease, what pre-completion search must be carried out?

Answer 71

OS2 search is carried out against the appropriate part of TT’s registered leasehold title

Question 72

When must an OS3 search be carried out?

Answer 72

**Where the underlease is *not* registrable**, an OS3 search may be carried out against TT’s interest to check whether any adverse entries have been made since the date of the last copy of the TT’s title register

Question 73

At completion, what do the parties do for an underlet?

Answer 73

* The parties’ solicitors agree to date and complete the licence to underlet * The under-TT’s solicitor sends TT’s solicitor the completion monies * The TT’s solicitor and under-TT’s solicitor agree over the telephone to complete and date the executed underleases that they are holding * The TT’s solicitor and under-TT’s solicitor send the completed original and counterpart underleases to each other

Question 74

If an underlease is granted for a term of more than seven years, what post-completion step is required?

Answer 74

The underlease must be registered at the Land Registry.

Question 75

**On an underletting of an FRI lease, which of the following statements is most accurate regarding the necessary documentation?** 1. The landlord's solicitor drafts the licence to underlet and the tenant's solicitor drafts the underlease and transfer TR1. 1. The tenant's solicitor drafts the licence to underlet and the undertenant's solicitor drafts the underlease. 1. The landlord's solicitor drafts the licence to underlet and the undertenant's solicitor drafts the underlease. 1. The landlord's solicitor drafts the licence to underlet and the underlease for the tenant's approval. 1. The landlord's solicitor drafts the licence to underlet and the tenant's solicitor drafts the underlease.

Answer 75

Correct answer: 5)

Question 76

The tenant of a restaurant business wishes to underlet the premises to a cousin. **In which of the following circumstances would an agreement for underlease not be necessary?** 1. The parties are ready to complete the underlease but the consent application has been delayed. 1. The undertenant only wants to take the underlease as part of a sale of the tenant's business. 1. The tenant and undertenant want to commit to the underlease, but only if the tenant complies with a recent hygiene improvement notice. 1. The tenant and undertenant want to commit to the underlease, but in the case of the undertenant, only if it can get an alcohol licence. 1. The parties are ready to complete the licence to underlet and underlease.

Answer 76

Correct answer: 5) If the parties are ready to complete, there is no need for the agreement for underlease.

Question 77

An undertenant is taking the remaining 8 years of a tenant's term under an FRI lease of a warehouse. The underlease is for half of the warehouse floor space. **Which is the correct pre-completion search for the undertenant's solicitor to carry out?** 1. OS3 searches against both the landlord's freehold title and the tenant's leasehold title. 1. An OS2 search against the tenant's leasehold title. 1. An OS1 search against the landlord's freehold title. 1. An OS2 search against the landlord's freehold title. 1. An OS1 search against the tenant's leasehold title.

Answer 77

Correct answer: 2) As the underlease is of part of the premises, an OS2 search of part should be carried out against the tenant's leasehold title.

Question 78

What document will a licence to assign / underlet typically be in?

Answer 78

A commercial lease will typically require consent to be given by deed

Question 79

In a licence to assign an old lease, what covenant will the landlord require from the assignee?

Answer 79

A direct covenant with the landlord to comply with the tenant's covenants in the lease.

Question 80

Why is a direct covenant from an assignee in a licence to assign a new lease not strictly necessary from a legal perspective?

Answer 80

Because s.3 LCTA 1995 provides for the automatic transmission of the benefit and burden of covenants.

Question 81

What is the term for a tenant creating a charge over their leasehold interest, similar to a mortgage on a freehold property?

Answer 81

Charging the lease.

Question 82

Why do many long residential leases not require landlord's consent for an assignment?

Answer 82

Because they are treated more like a freely transferable asset, akin to a freehold.

Question 83

What is the primary purpose of requiring a tenant to give 'notice of dealing' to a landlord after assigning a long residential lease?

Answer 83

So the landlord knows to whom they should address ground rent demands.

Question 84

According to the 2020 Code for Leasing Business Premises, what type of alienation should leases generally allow for the whole of the premises?

Answer 84

Assignment or underletting with landlord's consent not to be unreasonably withheld or delayed.

Question 85

In a lease assignment transaction, whose solicitor is responsible for drafting the deed of assignment (TR1)?

Answer 85

The assignee's solicitor.

Question 86

In an underletting transaction, whose solicitor is responsible for drafting the underlease?

Answer 86

The tenant's (soon-to-be sub-landlord's) solicitor.

Question 87

When is an 'agreement for underlease' generally not necessary?

Answer 87

When all parties are ready to complete the licence to underlet and the underlease simultaneously.

Question 88

On a lease assignment, what document details the apportionment of rent and other sums due between the tenant and assignee on completion?

Answer 88

The completion statement.

Question 89

What is the legal effect of an Authorised Guarantee Agreement (AGA)?

Answer 89

The outgoing tenant guarantees the performance of the lease covenants by their immediate successor in title only.

Question 90

**Which of the following is not a function of a licence to assign an old lease?** 1. To obtain a covenant from the tenant to pay the landlord's costs. 1. To require the assignee to give notice once the assignment has taken place. 1. To obtain a direct covenant from the new tenant. 1. To formally grant the landlord's consent. 1. To set out the credit checks and references that will be required of a prospective tenant.

Answer 90

Correct answer: 5) These will be carried out as part of the consent application, but as they will be done before the licence to assign is completed, they would not usually be referred to in the licence itself.

Question 91

**Residential conveyancers do not often deal with licences to assign. Why not?** 1. Because consent to assignment of a residential lease is conferred automatically by statute. 1. Because the cost of a licence to assign would be disproportionate in a residential context. 1. Because most long leases do not require landlord's consent to an assignment. 1. Because a licence to assign can only apply where the proposed assignee is not paying the tenant a premium. 1. Because residential conveyancers do not deal with assignments of lease.

Answer 91

Correct answer: 3)

Question 92

You act for an individual landlord who has received an application to underlet one of their units to a sole proprietor. The sole proprietor has a successful business, plenty of capital and excellent tenant references and credit score. However, the landlord knows the sole proprietor from a club that they both belong to, and they have had a falling out. For that reason alone, the landlord does not want to grant the consent. **How do you advise the landlord?** 1. The landlord cannot unreasonably withhold consent, but given that the underlessee might end up being the direct tenant of the landlord, it is reasonable to take their personal relationship into account as it might make their business relationship unworkable. 1. The landlord can unreasonably withhold consent as it is only a qualified covenant. 1. The landlord is required to act reasonably if withholding consent, and personal feelings are not a reasonable ground for withholding consent. The landlord will likely have to give consent within a reasonable time. 1. The landlord is required to act reasonably if withholding consent, and personal feelings are not a reasonable ground for withholding consent. The landlord may, however, stall for time and hope that the proposed underletting falls through. 1. The landlord cannot unreasonably withhold consent, but it is reasonable to withhold consent to a sole proprietor as their covenant strength is less than a company's.

Answer 92

Correct answer: 3) This is a qualified covenant against underletting (the landlord’s consent is required), which is automatically upgraded to a fully qualified covenant (s19(1)(a) Landlord and Tenant Act 1927). Furthermore, the landlord must make a decision within a reasonable time (s1, Landlord and Tenant Act 1988). As the prospective underlessee has good covenant strength, and the landlord's only objection is their personal relationship, it is likely that the landlord will have to give consent within a reasonable time.

Question 93

A tenant has a registered lease dated before 1 January 1996. The tenant is assigning the lease to an assignee. The landlord has consented to the assignment and has asked you to draft the relevant documentation. **Which one of the following is the correct list of the documents that will be need to be prepared for execution?** 1. Licence to assign and TR1 1. Licence to assign and deed of assignment. 1. Licence to assign, authorised guarantee agreement and TR1 1. Licence to assign, authorised guarantee agreement and the lease. 1. Licence to assign and the lease.

Answer 93

Correct answer: 1) A licence to assign is needed to document the landlord’s consent. As the lease is registered, the assignment will need to be documented by way of Land Registry's standard transfer deed TR1. An assignment is the sale of an existing lease, not the creation of a new lease. There will be no new lease granted to the assignee.

Question 94

A 20 year lease is dated 1 July 2010. The tenant when the lease was granted was a clothes shop. The clothes shop lawfully assigned the lease to a bookstore and entered into an authorised guarantee agreement (AGA). The bookstore, two years later, lawfully assigned the lease to a dry cleaners and entered into an AGA. The dry cleaners still occupy the premises under the lease. The dry cleaners are struggling to pay their rent and the landlord wants to know who it can pursue for the rent arrears. **Which one of the following is the most accurate list of those the landlord can pursue for the rent arrears?** 1. The clothes shop only. 1. The dry cleaners only. 1. The clothes shop and the dry cleaners. 1. The bookstore and the dry cleaners. 1. The clothes shop, the bookstore and the dry cleaners.

Answer 94

Correct answer: 4) The dry cleaners are the current tenant and are liable to pay the rent. The bookstore gave an AGA to the landlord in respect of the dry cleaners when they assigned to the dry cleaners. The landlord can therefore claim from the bookstore under the AGA. The original tenant (the clothes shop) will not have any original tenant liability as this is a new lease. The clothes shop’s AGA only covered the bookstore whilst they were the tenant.

Question 95

You act for an assignee taking the remaining 3 years of a 10 year term. The assignment is about to complete. The immediate landlord of the current tenant is the freeholder. **Which pre-completion searches should you undertake?** 1. An OS1 search of the landlord's freehold title (or if the landlord's title is unregistered a central land charges search against the landlord's name for the landlord's period of ownership) and an OS1 search against the tenant's leasehold title. 1. An OS3 search as the assignment is for 3 years and therefore not registrable. 1. An OS2 search of the relevant premises against the landlord's freehold title. 1. An OS1 search of the landlord's freehold title (or if the landlord's title is unregistered a central land charges search against the landlord's name for the landlord's period of ownership), but as there is only 3 years left on the lease, no search against the leasehold. 1. An OS1 search of the tenant's leasehold title.

Answer 95

Correct answer: 5) As the original lease was over 7 years, it would have been registered. It is the tenant's title that the assignee is interested in.

Question 96

A tenant, A Ltd, has applied for consent to assign a five year lease to the assignee, B Ltd. The lease is dated after 1 January 1996. **You act for the landlord, who has asked you to advise who would be liable for the obligations of the lease after the assignment. How would you advise?** 1. The incoming tenant provided that they give a direct covenant to the landlord to observe the obligations of the lease. 1. The incoming tenant if the landlord requires an authorised guarantee agreement; otherwise the outgoing tenant retains liability. 1. Both the outgoing tenant and the incoming tenant as it is a new lease. 1. The outgoing tenant unless they enter into an authorised guarantee agreement, and the incoming tenant automatically on taking the assignment. 1. The outgoing tenant if they entered into an authorised guarantee agreement, and the incoming tenant automatically on taking the assignment.

Answer 96

Correct answer: 5) This is a new lease, and therefore liability shifts automatically from the assignor to the assignee on assignment. The outgoing tenant will only be liable if they have given an authorised guarantee agreement, but the incoming tenant will become automatically liable on assignment.

Question 97

A 20 year lease is dated 1 July 2010. The tenant when the lease was granted was an antiques shop (A). A lawfully assigned the lease to a bookshop (B) and entered into an authorised guarantee agreement. B, two years later, lawfully assigned the lease to a clothes shop (C) and entered into an authorised guarantee agreement. C still occupies the premises under the lease, but is struggling to pay its rent. **Whom can the landlord pursue for the rent arrears?** A. B and C B. A and C C. A only D. C only E. A, B and C

Answer 97

Correct answer: A When giving an AGA, only the new TT and the one giving the AGA will be the ones who LL can sue. Anyone before that in the chain won't be liable just because they gave an AGA.