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PM Flashcards

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1
Q

Tell me about the Landlord and tenant covenants Act 1995

A
  • Abolished privity of contract
  • Gave Landlords greater scope for setting out grantor conditions
  • Introduced authorised guarantee agreements (AGA). This is when the former tenant can guarantee the most recent assignee.
  • A s.17 can be served within 6 months of the arrears.
  • The code for leasing business premises states that AGAS should not be required as a condition of the assignment, unless at the date of the assignment the proposed assignee and any proposed guarantor is of a lower financial standing or registered overseas.
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2
Q

Tell me about the Landlord and tenant Act 1927

A

This relates to repairs and tenants consent for alterations
If a lease prohibits the tenant to make alterations without landlords consent, this consent CANNOT BE UNREASONABLY WITHED - S.19
If a tenant wants to make improvements they can send the Landlord a notice with the plans and the Landlord has 3 months to respond. If the landlord objects the Tenant can proceed to tribunal and they will grant anything ‘reasonable’. Section 1 of the act may oblige the landlord to compensate the tenant for the improvements.

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3
Q

Tell me about the Law of Property Act 1925

A
  • This relates to tenants breaching their lease
  • A landlord can serve a s.146 notice to a tenant who is in breach of covenant (BUT NOT FOR RENT)
  • The notice must specify the breach and how the tenant can remedy it. This must be served before the landlord forfeits the lease
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4
Q

What is s.18 of the L&T Act 1927

A

Section 18(1) of the Landlord and Tenant Act 1927 is frequently referred to as the “statutory cap on damages”. It places a statutory cap on the amount of damages a landlord can recover from a tenant for breaches of the repairing covenants in a lease.

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5
Q

What is a S.18 valuation?

A

The Landlord’s Section 18 valuation is essentially a comparison of the value of the property in repair against its condition in dis-repair at lease termination.

calculating the difference the value of the landlord’s interest has been reduced on account of the breaches of lease covenant. .

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6
Q

Tell me about the Landlord and tenant Act 1988?

A

If the tenant wants to assign, sublet, charge or part with premises, the consent must not be unreasonably DELAYED.

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7
Q

What is difference between S.146 and S.18?

A
  • S. 146 (Law of Property Act 1925) is statutory route to forfeit lease
  • S.18 Notice (L&T Act 1927) for the damages
  • A Notice to Repair allows the Landlord to go in and do the works themselves, then reclaim money under Jervis & Harris case as debt.
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8
Q

Tell me about the different types dilapidation schedules?

A

Interim - Served by either party with more than 3 years left remaining on the lease
Terminal - served in the last 3 years
Final - Served on or after lease expiry, tenant no longer occupying

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9
Q

Talk me through what options a landlord would have if a tenant was in rent arrears

A

(always read the lease, should interest be charged on late rent, is there a guarantor, is there a rent deposit?)

  1. Court proceedings (put a charge over the property)
  2. Use rent deposit
  3. Pursuing former tenant and guarantors (s.17)
  4. Serving a statutory demand (tenant has 21 days to pay, L declared bankruptcy or winding up, arrears over £750)
  5. commercial rent arrears recovery scheme (CRARS)
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10
Q

What do you know about forfeiture?

A

-A forfeiture clause in the lease allows the landlord to re-enter the property and gain possession for breach of the lease (either by peaceful re entry or begin court action).
-Procedures must be followed and relief to tenant offered
-There MUST be a forfeiture clause in the lease
- Rent must have properly demanded
(Landlords must be careful not to waiver the breach by accepting rent or sending out notices)
-The lease is forfeited when the landlord re enters the property either by physical peaceable re entry or court proceeding to recover possession.
- The tenant has right to relief within 6 months
- If the breach is anything but rent the landlord should serve a s.146 notice.

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11
Q

Talk me through a licence for alterations steps?

A
  1. Read the lease - do they need consent? Noting L&T 1927 consent but not be unreasonably withheld
  2. Ask for a full set of plans and specifications
  3. Obtain an undertaking for professional fees
  4. Check the tenant has got planning consent and building regs
  5. Check Equality Act 2010 and CDM compliance
  6. Are there Risk assessment and method statements (RAMS) in place?
  7. Check the tenant has public liability insurance
  8. Provide a report to your client and obtain instruction
  9. Instruct legal
  10. Inspect the works
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12
Q

What should you consider prior to giving approval to alterations?

A
  1. Does this impact the value of the property in the future
  2. Is a financial bond appropriate?
  3. Is reinstatement required at the end of the lease
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13
Q

What are the three different types of dilapidation schedules?

A

Interim - Served by either party with more than 3 years remaining
Terminal - Served in the last 3 years
Final - Served on or after the lease expiry, tenant not in occupation.

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14
Q

What do you know about dilapidations ?

A

Firstly when dealing with dilaps, read the lease….

  • is there a schedule of condition?
  • Understand each parties repairing obs
  • were any licence for alterations granted

The landlord has two choices
- Ensure the tenant does the necessary works
- Tenant can pay the landlord to do the works
BREACH + LOSS + EVIDENCE = RECOVERY
** the claim is limited to the cost of works or under s.18 of the L&T Act 1927, the decrease in value at the beginning to now.

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15
Q

What are the Landlords options if the tenant is in breach of repairs?

A

There are 4 main options

  • Sere a repair notice. S.146, lays out the breach, the timescale and how to remedy the breach
  • Forfeit the lease, S.146
  • Serve an interim dilaps schedule (building surveyor would prepare)
  • Do the works and recharge tenant (s.18)
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16
Q

What is a schedule of condition

A

This is prepared prior to the commencement of the lease
shows the building in the current state
limits tenants repairing obs
Often recorded with photos on plans

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17
Q

What does the RICS professional statement on service charge aim to implement?

A

RICS professional statement Service charges in commercial property

  • Aims to promote best practice, uniformity, fairness and transparency
  • Ensure timely issue of budgets and year end certificates
  • Reduce causes of disputes
  • Provide guidance to solicitors, their clients and managers of sere charges.
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18
Q

what is the difference between a wayleave and an easement?

A

Wayleave is a temporary right – telecoms company to install and retain their apparatus

Easement is a permanent right – capable of being registered at LR

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19
Q

What is the RICS statement relating to PM?

A

RICS professional statement - Real Estate Management 2016
Outlines principles that share the culture of fairness and transparency
It is mandatory
Is is aimed at both commercial and resi

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20
Q

What are the 12 principles of the RICS Real Estate Management PS 2016?

A
  1. Act in a fair, honest, transparent and professional manner
  2. Carry out work with due skill, care and diligence and ensure all staff are well trained.
  3. Ensure the clients terms of business are clear and has CHP
  4. Avoid Conflicts
  5. Not to discriminate
  6. All communications with clients are fair and transparent
  7. All advertising is honest
  8. All clients money is held separately and insured
  9. Hold PII
  10. Make it clear the identity of your client and ensure all parties are clear of you obligations to each party
  11. Give realistic assessment of selling prices having regard to the market
  12. Ensure all meetings and inspections are carried out in accordance with the clients objectives.
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21
Q

What are the Landlords notice for breach of repairs?

A
  1. Serve a repair notice (s.146)
  2. Forfeit the lease
  3. Serve an interim schedule of dilaps
  4. Do the works and charge the tenant
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22
Q

What is the professional statement relating to PM ?

A

RICS professional statement - REAL ESTATE MANAGEMENT 2016

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23
Q

What are the principles of the RICS professional statement - REAL ESTATE MANAGEMENT 2016

A

12 principles

  1. Act in an honest, fair and transparent manner
  2. carry out with due diligence and skill
  3. Ensure terms of business are clear and have CHP
  4. Avoid conflicts
  5. Dont discriminate
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24
Q

Tell me about s.19 of the L&T 1927 act

A

Any consent for assignment, sublet etc must not be unreasonably WITHELD.

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25
How has Covid affected CRAR and forfeiture?
Until 25 March 2022 the Coronavirus Act 2020 means landlords cannot use CRAR for rent arrears during the pandemic. Landlords cannot forfeit the lease for rent arrears during the pandemic.
26
What is the time limits relating to CRAR?
7 days notice | 7 days of unpaid notice
27
What are the drawbacks of using CRAR?
- Because you’re giving the tenant 7 days notice, they could clear the property, then you have no goods to recover - Can only use for rent, not service charge etc
28
What is CRAR?
It is a statutory procedure which allows landlords of commercial premises to recover rent arrears by taking control of the tenant's goods and selling them. (like baylifs)
29
What consideration did you have in terms of the equality act with their alterations?
Disabled access, not discriminating any of the protected characteristics.
30
If the tenant hadn't sough landlords consent how could this affect them?
The landlord could include the improvements in the next rent review and charge for the improvements.
31
How did you check the building was CDM compliant a lincombe barn?
I ensure that if the works were to take longer than 30 days or have more than 20 workers that HSE were informed. (F10 form) I ensured they had the correct risk assessments and planning to ensure the safety of everyone during the construction.
32
How can you protect your client from poor workmanship during tenants repair?
Could ask the tenant to give the landlord a financial bond | Include a reinstatement clause
33
What is the RICS professional Statement relating to Service Charge?
RICS Service charges in commercial property 1st Edition
34
What items are usually included within a service charge budge?
?? | - Repairs
35
What is a service charge budget?
A forecast of anticipated expenditure
36
Who is responsible for the service charges if the property is void?
The Landlord?
37
What is a sweeper clause?
Most leases include this, it allows the landlord to charge for not only the listed services but any miscellaneous services that might be provided.
38
What is the usual arrangements for service charge.
1. The budget is agreed with the tenant prior to the commencement of the service charge year. 2. Quarterly bills are based on the estimate 3. Annual accounts are prepared a the year end 4. Balancing payments are made at the end of the year upon presentation of audited accounts
39
How much can owners/managers seek to recover?
No more than 100% of the proper and actual costs of the provisions or supply of services
40
How should service charge payments be kept?
in one or more discrete bank accounts
41
What should you do with interest earned?
Must be credited to the service charge account
42
What happens when a dispute arises in relation to service charge?
Landlord should be advised that any charged raised incorrectly should be adjusted to reflect the error without delay. Tenant should be advised that any payment withheld should reflect only the actual sums in the dispute
43
How is service charge apportioned?
Will state in the lease, options below; Most common way is by floor area. Fixed % RV can be used but not advised, as difficult if RVS change or appealed Weighted floor area - retail (similar concept to zoning)
44
What is a schedule within a service charge
Each 'schedule' is allocated to different tenants. Because each tenant may pay a different %.
45
Can you name a commonly used benchmarking indices used by property managers?
JLL - office service charge analysis report (OSCAR)
46
What is a sinking fund?
Its a fund formed by periodically setting aside money for the replacement of a wasting asset ( new plant equipment, lifts etc)
47
What is a reserve fund?
Set up to meet the anticipated future costs of regular maintenance and upkeep of a building (cleaning, redecoration etc)
48
What are the timescales of CRAR?
- For rent only (no min amount) - MIN of 7 days unpayed rent - L gives T 7 days notice - Enforcement agent visits - 2 clear days - Rentry to seize goods - 7 days before sale of goods
49
What is a disadvantage of CRAR?
- only used for rent arrears (not service charge/other payments) - tenant has 7 days notice, could clear property
50
What does the Jervis V Harris case mean to you?
Its a clause within a lease which allows the landlord to enter the property to carry out outstanding works and recharge the tenant. MUST BE IN THE LEASE.
51
What are the landlords options when a tenant fails to comply with their repairing obligations?
- Serve a repair notice (s.146) - Law of property act 1925 - Forfeit the lease - Serve an interim schedule of dilaps - Do the works themselves and charge the tenant (must have a clause allowing them to do this, the recharge is not compensation for the breach but reimbursement for the works)
52
what is an effective FRI lease?
When the landlord is responsible for repairs and recharges this through the service charge.
53
Tell me about forfeiture?
** there must be a forfeiture clause in the lease This allows the landlord to end the tenancy for breach of covenant by peaceful re-entry or court proceedings - Rents must have been properly demanded (landlords need to be careful not to accept any payments after the breach as this could waiver the forfeit) - The tenant has rights of relief from the court within 6 months. - If the breach is anything but non payment of rent, then a s.146 notice must be service.
54
What are the two core duties for the PM under the RICS guidance note?
- The collection of rent, service charge | - Management of the property
55
What are the remedies for non payment of rent?
- Speak to the tenant / go see them (site visit - are they trading? if they are not trading you wouldn't use CRAR) - Payment plan? - Check to see if there is a rent deposit - Is there a guarantor? Check the lease. S.17 of the L&T covenants act 1995, within 6 months of arrears - Statutory demand, first step in the winding up process of, T has 21 days to pay the rent - CRAR - Forfeit (must be a clause in the lease)
56
If the guarantor does pay of any rent arrears for a tenant, what right does it give them?
They have a right to take a lease over that property.
57
Is there a way of shortening the 7 day CRAR notice?
Yes, you could go to court to get a court order to reduce the 7 days
58
What can the enforcement agent seize in CRAR?
- non perishable items - they cannot forceably enter the premises - Items must belong to the tenant and only within the leased area
59
Why is it important to look at the management accounts as well as the audited accounts?
- Audited accounts might be a year and half/year out of date | - management accounts will give you a clearer view of how business is doing on current basis
60
Why would a tenant rather sublet than assign?
1. if the MR is higher than the passing rent (profit rent) | 2. more control, might want to take the lease back
61
Whats a reasonable ground to refuse consent to assignment?
if their covenant strength is not good | if the use is not in line with lease
62
whats the purpose of dilapidations?
Entitles the landlord to get the property back in the same condition as it was handed over.
63
what is the RICS document re Property Management?
RICS professional statement - Real Estate Management 2016
64
Name some principles under the RICS professional statement - Real Estate Management 2016
- Act in an honest, fair, transparent and professional manner - Do not discriminate - All advertising to be truthful and honest - Clients money held separately and appropriate insurance
65
what is the RICS guidance note on commercial property management?
- outlines best practice - Primary duty of care is to your client - Gives advice on PMs duties, such as rent collection - Gives model terms of engagement
66
What are some reasons to sublet rather than assign?
1. Requirement of the lease 2. part of the premises not a whole 3. If the MR is higher than passing rent ( profit rent) 4. If the tenant wants to re-occupy in the future 5. if the sub tenant is of lesser covenant strength
67
What actions should you take for a request to assing/sublet?
- Read the lease - Will tenant give undertaking for fees? - Will it have an impact on the property - what are the proposed terms? - Is the proposed rent higher than passing rent? - AGA? - rent deposit - seek clients approval with your recommendations
68
Tell me what you would do re dilapidations?
- Read the lease, understand each parties repairing obligations - Check to see if any licences for alterations were granted
69
What are the landlords options re dilaps?
- Tenant does the works - Landlord does the works and claim from tenant (either cost of works or s.18 of the L&T 1927 the diminution in value of the property without the works)
70
Definition of repair?
- Repair is not an improvement
71
What is the leading case law regarding landlords carrying out repair and re charging the tenant?
- Jervis v harris - Must be a clause within the lease - Claims are for the sum spent not compensation
72
What are the forms of insolvency?
Administration Administrator is appointed by creditors to rescue an insolvent company - helps enable them to achieve objectives laid down by statute. (directors powers cease) Receivership The companies assets will usually be sold to pay debts. A administrative receiver is appointed Company voluntary agreements (CVA) Voluntary agreement with creditors how to pay debts Voluntary liquidation Winding up of a company
73
What do you do if your tenant is insolvent?
- tell your client - Consider taking legal action - Read the lease, is there a rent deposit or guarantor? - make early contact with administrator/receiver - Check the amount of money owed - Inform insurers - submit a claim for arrears if still occupied - Consider schedule of dilaps - Check position of empty rates - Re let building
74
What are the aims of the RICS professional statement - Service charges in commercial property 2018
- Improve standards and promote best practice - Ensure timely issue of budgets and end of year certificates - Reduce disputes - Guidance to solicitors, clients and mangers of service charges in the negotiation, drafting and operation of leases.
Property Management
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