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LPC Law Notes Property Law and Practice Notes

Leasehold Transactions Notes

Updated Leasehold Transactions Notes

Property Law and Practice Notes

Property Law and Practice

Approximately 490 pages

A collection of the best LPC PLP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of PLP notes available in the UK this year. This collection of notes is fully updated for recent exams, a...

The following is a more accessible plain text extract of the PDF sample above, taken from our Property Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

  • Landlord’s Objectives – to ensure the property is insured, repaired and used only for the permitted purpose.

  • Tenant’s Objectives – to ensure the are no restrictions on desired purpose, ensure the rent doesn't rise too quickly and that the lease doesn't have onerous provisions. Ensure that it can sell/assign the lease.

Requirements for and structure of a lease:

  • Exclusive possession of the property by the tenant

  • s.1 LPA – must have a “term of years” absolute

  • The rough guide is as follows:

    • Parties, date, definitions, interpretation provisions (e.g. “Insured Risks”, “Common parts”)

    • Demise and rents (operative provisions of the lease where L grants the lease for a specified term in consideration of rents paid and covenants entered into)

      • ***When the lease of part be sure to CAREFULLY DESCRIBE the property and INCLUDE A PLAN

    • Tenant’s covenants (issues such as the obligation to pay rent and to repair, the use of the property, alterations, assignment and sub-letting provisions)

    • Landlord’s covenants (covenant for quiet enjoyment, services and insurance)

    • Guarantor’s covenants (guarantee payments and perform other obligations – e.g. repair)

    • Provisos, agreements and declarations (e.g. forfeiture, damage and destruction by insured risks)

    • Rights granted (e.g. right of way, right of access)

    • Rights excepted and reserved (L may reserve right to access property e.g. to carry out repairs)

    • Other provisions (rent review, service charge, form of future documents such as AGAs and rent deposits)

1) Landlord’s Clauses

SERVICE CHARGE: Covenant to provide services

  • T will covenant to pay the service charge.

    • Include a proviso that suspends covenant in the event of insured damage (if premises/access is destroyed).

  • Service charge will be calculated as a proportion of the premises (i.e. square footage). However, T may argue things the T wont use should be taken into account (e.g. lift if on ground floor).

    • GENERALLY, L will estimate the annual cost of maintaining/provides services and charge T. At the end of the year if there is a shortfall then T will pay difference. If there is a surplus it will be carried forward into the next year.

  • L may try to resist an obligation to provide services, preferring an obligation to provide “such of the Services as it deems necessary”. It may also try to dilute it to “best/reasonable endeavours”. Basically to put the obligation on its own terms

    • This is unacceptable for T. T should resist efforts to make the provision of the services condition on the T paying the service charge. This is a separate obligation and must remain so.

    • T also doesn't want the include of wording such as “and other services”. He wants CERTAINTY via a restrictive list of specified services.

  • It is reasonable for L to limit its liability to provide services where factors beyond their control prevent them from doing so (e.g. industrial action). In this situation, L should still use “best/reasonable endeavours to restore services as soon as possible”.

  • L must disclose irregular events that would have a significant impact on the amount of future service charges.

  • L must during negotiations provide the best estimate of the service charges.

Insurance – it is common in an FRI lease (where lease part of building/estate) for L to insure the whole development and recover a proportion of the cost from each T.

  • Define “insured risks” in the definitions section.

    • L will want to include a proviso stating “and other such risks as the L may from time to time reasonably consider necessary”.

  • The insurance policy should be fair and reasonable.

  • L must during negotiations provide the best estimate of the insurance payments.

  • The Tenant will then covenant to pay the insurance premium or a fair proportion.

Where damage occurs:

  • Covenant by L to make a claim and reinstate premises: T must insist on this as no common law provision.

  • Rent abatement: T must insist that a clause suspending the payment of rent is included in the lease if damage by an insured risk has caused the premises to be unfit for use.

  • If reinstatement impossible: include a provision of time (e.g. “if the premises cannot be reinstated within the [3 years] during which rent is suspended”) and then the lease can come to an end.

2) Tenant’s Clauses

a) Positive Clauses

PAYMENT OF RENT

This is establish in the front of the lease.

Breach of payment covenant

  • Legal action – issue proceedings in debt to recover rent that has fallen due

  • Distress – ancient right of L to peaceably re-enter and seize chattels to the value of the debt (or by court order)

  • Forfeiture – a commercial lease usually contains a lease enabling L to peaceably re-enter the demised premises and prematurely end the lease on breach by T of a covenant.

    • It is not automatic – L can only do it if the lease has a covenant to that effect.

    • No notice is required – s.146(1) LPA.

REPAIR

Example: Clause 4 Vento Teso lease

Generally, a T will be required to repair and decorate the premises during he term and hand premises back to L in repair at end of the term.

  • BEWARE of the covenant to “keep/put the premises in repair”: courts have held this means to “put and keep” in repair, even if in disrepair at the start of the lease.

    • INSTEAD, the T wants to maintain the premises in the state it was at the start of the lease.

    • As a result, it should be kept to the standard of the schedule of condition ( a survey of the property at the outset of the lease identifying the state of the property):

      • The Tenant covenants to maintain the Premises in the state evidenced by the Schedule of Condition.

  • Exclude: damage by “Insured Risks”, as well as latent defects (hidden problems) and fair wear and tear if you are representing T. Also try to avoid a responsibility to renew or to replace and rebuild.

  • Define “Premises in a clear way – this is vital to establish the Ts obligation.

Breach of repair covenants – L’s remedies

  • Forfeiture: Leasehold Property (Repairs) Act 1938 – this requires a special type...

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