Leases

Question 1

What is a lease?

Answer 1

A legal agreement calling for the user to pay the owner for the use of an asset.

Question 2

What is a license?

Answer 2

More informal than a lease that grants the right to use the property of another party.

Question 3

What is the difference between a lease and a license?

Answer 3

Lease is formal agreement that grants tenant exclusive occupation for specified time with rent and other obligations.
License is permission to use a space under agreed terms, typically with the landlord retaining greater rights over the property.

Question 4

What is an onerous lease clause?

Answer 4

Whereby the clause imposes significant or burdensome obligations on the tenant which can lead to unfair or costly terms.
E.g. high penalties for default and excessive use restrictions.

Question 5

What is an alienation clause?

Answer 5

Allows a tenant to assign, sublet or share their leased property whilst also providing landlords control over these actions.

Question 6

What is assignation?

Answer 6

Specific form of alienation whereby one party transfers their entire lease interest to another party who then assumes all lease obligations.

Question 7

What is a keep in clause?

Answer 7

Legal obligation for a tenant to maintain the property in a specified condition.

Question 8

What is a calderbank letter?

Answer 8

Formal offer or settlement made by one party to another in order to settle a legal dispute - encourage negotiation and resolution without going to trial.
- without prejudice except as to costs - cant be used in court to determine fault but can be used to discuss legal costs.

Question 9

What is sale and leaseback?

Answer 9

Financial agreement whereby owner sells their asset and immediately leases it back from the purchaser which allows seller to free up capital whilst still using the asset.

Question 10

What is time of the essence?

Answer 10

Stipulates when something has to be done or not done by - e.g. failure to trigger mechanism for rent reviews in time stipulated may mean to right to increase amount payable is lost.