A property owner wants to let an occupier use their premises for 18 months. The occupier needs to move in immediately, but the owner wants to avoid security of tenure under the Landlord and Tenant Act 1954. What should the owner do?
The owner should give the occupier less than 14 days’ notice to contract out of the 1954 Act, have the occupier make a statutory declaration before an independent solicitor, and then grant an 18-month lease. This allows quick occupation while ensuring the lease does not attract security of tenure.
A landlord grants a business tenant a six-month lease of commercial premises with an option to extend for another six months. The premises will be used as a restaurant, and no agreement to contract out of the Landlord and Tenant Act 1954 has been made. Does the tenant benefit from security of tenure under the Act?
Yes, because the tenancy contains a provision for extending the term beyond six months.
A tenant leases a retail shop for selling sports shoes, with the lease defining Permitted Use as “use as a retail shop for the sale of sports shoes within Class E(a).” The lease also states:
“The tenant must not use the Premises other than for the Permitted Use.”
The tenant now wishes to sell home exercise equipment which also falls within Class E(a). Can the tenant proceed with this new use?
The landlord can agree to vary the lease to allow the change of Permitted Use, but is under no obligation to do so.
A law firm plans to lease office space in England for five years, paying a premium at the start and annual rent. How is Stamp Duty Land Tax (SDLT) payable in respect of this lease?
The law firm may have to pay SDLT on both the premium and the net present value of the rent if certain thresholds are exceeded. Payment and the SDLT1 return must be submitted within 14 days of completion of the lease.
What searches and enquiries should a solicitor carry out to determine who is responsible for maintaining a riverbank adjoining a property being purchased?
The solicitor should raise enquiries with the Canal and River Trust to identify responsibility for maintaining the river bank and make specific pre-contract enquiries of the seller to learn about past maintenance and any related costs.
A client has recently completed a legal lease of a shop for a term of 3 years. The solicitor has not yet taken any post-completion steps. The client has heard the landlord is planning to sell the freehold to the shop and is concerned as to whether a buyer of the freehold would take subject to the lease. The freehold title is registered. The client is not yet in occupation of the shop. Should any post-completion steps be taken to protect the client’s lease?
No, as the lease is an interest that will override any sale of the freehold.
A solicitor is acting for two clients (the buyers) in the joint purchase of a property, the title of which is an unregistered freehold, from a sole owner (the seller). The buyers are purchasing with the aid of a mortgage. The solicitor is also instructed to act for the lender in the transaction.
Which of the following searches should the solicitor undertake prior to completion?
Land Charges search (K15) against both the seller and the buyers.
Is the tenant entitled to request and apply for a tenancy under section 26 of the Landlord and Tenant Act 1954, given that the lease expires in three months and the tenant has breached several covenants?
Yes, because this is a business tenancy that is not covered by any of the exceptions to the 1954 Act.
A tenant who is occupying property for business purposes will be afforded security of tenure by the 1954 Act (unless caught by any of the exclusions - of which non appear relevant on the facts).
A buyer is purchasing a freehold property with registered title. The Charges register of the title includes a positive covenant and the Proprietorship register includes the following wording:
“The transfer to the proprietor contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof.”
Should the buyer be required by the seller to give an indemnity covenant?
Yes, because the seller gave an indemnity covenant when it bought the property and will want to ensure the ‘chain of indemnity’ is continued so the buyer will be liable to the seller in contract for any breach of the positive covenant.
A landlord’s tenant (a recruitment agency) has failed to pay three months’ rent under a 10 - year lease. The lease was originally granted to an insurance company, then assigned (with consent) to an accountancy firm, which later assigned it to the recruitment agency and entered into an authorised guarantee agreement (AGA). Who can the landlord sue for the unpaid rent?
The landlord can sue the recruitment agency and the accountancy firm, but not the insurance company. Under the Landlord and Tenant (Covenants) Act 1995, former tenants are automatically released upon assignment, except where they have entered into an AGA, which keeps them liable. The landlord must serve a section 17 notice on the accountancy firm within six months of the rent falling due.
What is the difference between Beneficial Joint Tenants and Tenants in Common?
The key difference between tenants in common and beneficial joint tenants lies in ownership rights and inheritance: tenants in common own distinct shares of the property, while beneficial joint tenants share equal ownership with automatic rights of survivorship.
A landlord owns a property let to a business on a 10-year lease due to expire in just over six months. The landlord, who bought the property 4.5 years ago, wants to serve a section 25 notice opposing a new tenancy because they intend to occupy the property themselves. The tenant missed one rent payment last year but has otherwise been reliable. On which ground(s) should the landlord rely?
The landlord is unlikely to rely on ground(b) but could rely on ground(g).
Ground(b) - persistent delay in paying rent - does not apply because the tenant only missed one payment - there has been no persistent failure.
Ground(g) - landlord’s intention to occupy - is available since the landlord will have owned the property for five years by the termination date stated in the s25 notice, even though not at the date of service. Therefore, the landlord can rely on ground(g) and not ground(b).
Two weeks ago, a developer client completed the purchase of an unregistered freehold property at market value. The client did not consult a solicitor on the purchase but made appropriate enquiries of the seller, obtained a clear Land Charges search from the Central Land Charges Department in Plymouth and inspected the property prior to completion. There were no signs of occupation at the time of inspection. The client has now discovered that the seller’s sister claim that she provided the deposit for the purchase of the property (not by way of gift or loan) and she is claiming an interest in the property. She says she occupies the property. Will the client be bound by the sister’s interest in the property?
No, because although the sister has an interest under an implied resulting trust, the client was a good faith purchaser of the property without notice of the sister’s interest.
The client will be equity’s darling, a bona fide purchaser for the value of the legal estate without notice of the trust interest. Notice may be actual, imputed or constructive. The client had no actual notice, was not represented so did not have imputed notice and made appropriate enquiries and inspections of the property so cannot be fixed with constructive notice. (Had they noticed signs of occupation when inspecting and made no further enquiries, this could have amounted to constructive notice).
A solicitor is acting for the prospective tenant of an office block. The solicitor is asked to advise the tenant on whether any of the assumptions or disregards in the draft lease should be deleted.
Which of the following statements best describes what the tenant’s solicitor would like to see deleted from the draft rent review provisions?
An assumption that the landlord has complied with all of its covenants in the lease.
The tenant will not want an assumption that the landlord has complied with its covenants, as if the landlord has not (for example) repaired the roof when it should have done, the tenant could pay rent on the basis that those repairs have been done. So, this provision should be deleted.
A client acts for a landlord of a three-storey office block, which is currently occupied by a tenant under a ten-year lease granted five years ago. The tenant has decided to relocate its business and wishes to assign the unexpired residue of the lease. The lease contains a fully qualified covenant against assignment.
Which of the following best describes the position in respect of the assignment?
The landlord must not unreasonably withhold or delay its consent to the assignment of the lease.
The assignment covenant in the lease is expressed to be fully qualified. This means the tenant may assign the lease with the landlord’s consent, which must not be unreasonably withheld and which must not be unreasonably delayed.
A tenant is negotiating a renewal of its lease with the landlord. The tenant is a high-street retail company specialising in pre-prepared frozen gourmet meals. Its business is growing strongly. The landlord and tenant have agreed that the new lease will have a term of 12 years.
The landlord is insistent that the new lease makes provision for rent review. The previous lease contained a rent review clause linked to the tenant’s turnover. The tenant believes that the high-street rental market will likely fall over the next 12 years given the general trend of increasing competition from online retailers. The tenant’s main objective is to ensure it does not end up paying a lot more rent than competitors who may take leases in the future when the rental market has fallen.
From the tenant’s perspective, which of the following types of rent review provision is the most appropriate to include in the new lease?
Open market rent review.
The aim of an open market rent review is to determine the rent which a tenant would be prepared to pay were the property to be let in the open market. If letting values are likely to fall, a hypothetical tenant may only be prepared to pay less for a hypothetical lease of the property. A properly-advised landlord may therefore require that any rent review clause be upwards-only.
A freehold (‘the landlord’) has granted a commercial lease of a property to a tenant. The tenant wants to assign the lease to a newly formed company with no trading history and has asked for the landlord’s consent to assign.
The landlord wishes to withhold consent to the assignment because it is worried about the financial status of the proposed assignee.
The relevant wording of the alienation covenant in the lease is as follows:
“The tenant may, with the Landlord’s consent, assign the whole of the Premises.”
Can the landlord lawfully withhold consent to the assignment.
Yes, because the financial status of the proposed assignee is ground for reasonably withholding consent.
The lease contains a qualified covenant on assignment and prohibits alienation by the tenant without the landlord’s consent. Section 19(1)(a) of the Landlord and Tenant Act 1927 (‘LTA 1927’) provides that a covenant not to assign without the landlord’s consent is not to be unreasonably withheld. It is therefore a fully qualified covenant. As a general rule, a landlord will be acting unreasonably unless his reasons for refusal relate to the status of the proposed assignee or the use to which the assignee proposes to put the premises. On the facts, the landlord’s reason for withholding consent (the fact that the assignee is a newly formed company with no trading history) relates to the assignee’s financial status and is therefore a ground for reasonably refusing consent.
A client company is purchasing a leasehold property from an individual. The lease is being assigned to the client. Contracts have been exchanged and the transaction is to be completed next week. The client is funding the purchase through a mortgage with a bank. The lease is registered at the Land Registry with absolute title.
Which of the following statements best describes which pre-completion searches the solicitor must undertake?
An official search of the register of the leasehold title (OS1) and a company search against the client should be carried out.
We are told on the facts that the lease is registered. Therefore an official search of the register of the leasehold title (OS1) should be carried out to check for any new entries and to gain a priority period within which to register the transfer. We are told on the facts that the client is funding the purchase through a mortgage. As a lender is financing the purchase, it will normally require some security over the property. Therefore, the financial circumstances of the client are important to the lender. The lender will want to avoid lending money to a company that has gone into liquidation and will therefore want to check the client’s financial standing. We are told on the facts that the client is a company. Therefore, the solicitor will need to carry out a company search against the client.
Ten years ago, a financial planning firm entered into a lease of office premises (“the office”). The terms of the lease are silent on whether the tenant can dispose of the lease. The financial planning firm now wishes to move into other premises and wants to dispose of the office. A large wholesale company has expressed an interest in moving into the Office for the remainder of the lease term as they need some extra office space for their human resources team. The wholesale company has seen a copy of the lease and is happy with its terms.
Which of the following best describes whether and how the financial planning should dispose of the office?
The financial planning firm should assign its lease to the wholesale company.
In the absence of a restriction in the lease, a tenant can dispose of their lease in any way they like. In this case, the financial planning firm should transfer its lease to the wholesale company. The wholesale company is happy to take on the unexpired residue of the lease and does not need to renegotiate its terms. This transfer is known as an ‘assignment’.
A man is looking to purchase a residential flat. The seller holds a 99-year lease to the flat, which still has 45 years to run. Neither the freehold nor the lease have been registered.
Which of the following best describes the position on deduction of the freehold title?
An assignee of a lease should check both the terms of the lease and the superior freehold title to identify any potential problems and relevant incumbrances that might impact on the assignee’s enjoyment of the leased premises. If the freehold title is unregistered, this should be deduced through the identification of the root of title and working through the chain of ownership. The documents will need to be presented to the Land Registry on first registration in order to secure absolute title. The provision for deduction of the freehold title must be dealt with by special condition in the contract because the Standard Conditions of Sale do not expressly require the assignor to deduce the freehold title.
Yesterday, an accountancy firm completed an assignment of commercial office-space. The remaining term on the registered lease is five years. The firm paid £160,000 for the assignment. The firm’s solicitors conducted a pre-completion Land Registry search (using form OS1) 10 working days ago.
Which of the following best describes what steps the firm’s solicitors should now take?
They should arrange for payment of stamp duty land tax, calculated by reference to the purchase price, and should apply for registration of the assignment within the next 20 working days.
SDLT will be payable on the purchase price for the assignment (in this case, at the rate of 2% against that part of the purchase price which exceeds £150,000). As the lease is already registered, an application for registration of the transfer to the assignee should be made within the 30 working days priority period given by the pre-completion OS1 search (i.e. within the next 20 working days).
A commercial property lease contains the following provision:
“2. Rent review
2.1 On each Rent Review Date the Main Rent is to be reviewed to the higher of:
2.1.1. The Main Rent reserved immediately before that Rent Review Date; and
2.1.2 The Open Market Rent.”
Which of the following describes what type of rent review provision this is?
An upwards-only rent review.
The lease provision directs the parties that the rent on review will be the higher of the current rent and the open market rent. So the parties will determine the open market rent, but if that is lower than the rent the tenant currently pays, the rent will remain the same. If the open market rent is higher than the rent the tenant currently pays, then the rent will be increased to the open market figure. In other words, the rent must either stay the same, or increase, it cannot go down.
A landlord who bought a warehouse six months ago wants possession when the existing commercial lease ends in nine months, intending to demolish and redevelop the site. The solicitor plans to serve a section 25 notice citing ground(f) (redevelopment). The tenant has committed several breaches of the lease. Should the landlord also include ground(c) (tenant’s substantial breaches) in the notice?
Yes include ground(c).
To avoid paying statutory compensation, the landlord must (1) state a fault ground in the section 25 notice and (2) successfully prove it. Since the tenant has already committed significant breaches, including ground(c) gives the landlord the opportunity to avoid compensation.
A tenant has received a section 25 notice from the landlord stating that the landlord will not oppose the grant of a new lease. Negotiations over the lease terms are ongoing, but the notice is due to expire in two weeks, and the landlord has not responded to a request for an extension. Should the tenant apply to the court before the notice expires?
Yes, apply to the court before expiry. Even though the landlord does not oppose a new lease, the tenant must apply to the court before the expiry of the s25 notice (or any agreed extension) to preserve their statutory right to a new tenancy. If no application is made, the right to apply under the Landlord and Tenant Act 1954 will be lost.
