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Leasehold Notes

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Leasehold Revision

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Core Module: PLP

Leasehold

1. The structure and content of a lease

Characteristics of a lease: [Street v Mountford]

1. Fixed / periodic term

2. Exclusive possession
♥Look at substance not the label
♥Why important = because of the NATURE of a lease. It is a interest in property combined with a contractual agreement. A license gives you no interest in the property. Important for statutory protection [LTA 1995 etc]

Formalities to create a lease


Must be by Deed - S.52 LPA 1925 (if for less than 3 years no deed is needed - S.54(2) LP S.1(2) LPMPA says what a deed is.


S.4 LRA 2002: Registration at Land Registry if over 7 years (under 7 years it is overriding interest Sch.3 LRA 2002 - no registration is required)


Granting a lease = the execution and dating of the lease by the parties is all that is necessa to complete the grant of a lease - and create the LL and T relationship.

Commonhold:


Commonhold and Leasehold Reform Act 2002: gives all tenants an interest in the freeho


Applies to commercial and residential. The Commonhold parts vests in the Commonhold Association. Quarterly days 25th December 25th March 24th June 29th September

Characteristics of business leases
♥Shorter term
♥Market rent [plus rent review clause is common]
♥NOT suitable as security for a loan - tenancy is considered to be a liability

Payment of premium [a capital sum for moving in, paid by T to LL - usually where demand is greater th supply]

Lease of part will include provision of a service charge.

Procedure for granting a lease: 1

Core Module: PLP

Engrossment and execution of the lease


"top copy" of the lease. It is this document that both parties sign.


2 identical documents - "original" [signed by LL] and "counterpart [signed by T].


SCPC 10.2.5 / SC 8.2.5: LL prepares the engrossment.

Apportionment of rent:


Is completion takes place on a different day to rent falling due [e.g. rent due 1 st of the mont and completion takes place on 15 th - so T must pay from 15th to the 1st]


ONLY if rent is payable in advance [not in arrears]


Must be a express special condition in the contract unless it is dealt with in lease itself.

Stamp Duty Land Tax: When to pay?


Following completion of the lease


Pay on the premium and the rent


Payment must be sent [with appropriate Land Transaction Return] to HMRC


Land Transaction Return is required on grants of leases 7 years + and where there is chargeable consideration. [SDLT1 or, for a new lease, SDLT4]


Time limit for payment = 30 days from completion.


HMRC will issue certificate - SDLT5 on receipt of payment - this will enable registration Land Registry to proceeed.

Contracting ["Agreement for lease"]

NOT a requirement for the grant of a lease. S.2 LPMPA requirement [in writing; containing all terms; signed by both parties] - the ag form of draft lease must therefore be attached to the contract and specifically referred to in it.

1. When is it needed?


Long residential lease - buyer paying substantial purchase price - contract provides certa and a time-frame - need time to gather finances (e.g. mortgage)


Simultaneous sale / purchase transactions - for certainty. So client does not end up with or no properties.


Commercial lease: less likely to be needed! But good idea if:

waiting for formalities to be completed prior to actual grant (i.e. mortgagee's / superior Landlord consent is required; planning permission needed)

2. Why is it good to have?


Certainty - especially if having to wait


Contractual remedies


SCPC 10.3 - deals with delayed completion date - possibility of rescission if delay longer than 4 months.

3. Issues relating to deducing title - contract to grant a lease


S.44 (2) LPA - T is not allowed to call for deduction of freehold title on grant of a lease!
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