Commercial property. 2013

cover......Page 1
Title......Page 4
Copyright......Page 5
Preface......Page 6
About the Contributors......Page 7
Contents......Page 8
C......Page 14
G......Page 15
L......Page 16
P......Page 17
S......Page 18
Z......Page 19
Table of Statutes......Page 20
Table of Secondary Legislation......Page 24
List of Abbreviations......Page 26
SITE ACQUISITIONS......Page 28
What is commercial property?......Page 30
Investors......Page 31
Buying commercial property jointly......Page 32
Contractual joint venture......Page 33
Special purpose vehicle companies......Page 34
Review activity......Page 35
Forward funding......Page 36
Term sheet......Page 37
Loan agreement......Page 38
Need for security......Page 39
Perfection of security......Page 40
Scenario......Page 41
Question......Page 42
The contract of sale......Page 44
Conditional agreements......Page 45
The condition......Page 46
Time for performance......Page 47
Uses of options......Page 48
Terms of an option......Page 49
‘Overage’ or ‘clawback’?......Page 50
The trigger event......Page 51
Securing the overage payment......Page 52
Review activity......Page 53
Legislation......Page 54
Local government......Page 55
The importance of the development plan......Page 56
Neighbourhood development plans......Page 57
Demolition......Page 58
Material change of use......Page 59
Class A1: shops......Page 60
UCO 1987 checklist......Page 61
Part 1: development within the curtilage of a dwelling house......Page 62
Part 4: temporary buildings and uses......Page 63
Article 4 direction......Page 64
Types of planning permission......Page 65
The basis for decision......Page 66
Judicial restrictions on the power......Page 67
Central Government Guidance on the Acceptability of Conditions – Circular 11/95......Page 68
Implementation......Page 69
Completion notice......Page 70
Preliminary steps......Page 71
Notification of persons by the applicant......Page 72
Procedure after the decision......Page 73
Section 73A......Page 74
Initial procedure (DMPO 2010, arts 32, 33)......Page 75
Written representations......Page 76
Inquiry......Page 77
Costs in appeals......Page 78
Review activity......Page 79
Introduction......Page 80
When can a planning obligation be used?......Page 81
Government policy......Page 82
Determination of application by the LPA......Page 83
Calculating the area subject to a CIL charge......Page 84
Figure......Page 85
Social housing relief......Page 86
Surcharges and interest......Page 87
CIL and planning obligations......Page 88
By the developer......Page 89
Review activity......Page 90
Definitions (s 171A)......Page 92
Onus of proof......Page 93
Right of entry without a warrant......Page 94
Contents of a PCN......Page 95
Effect of a BCN......Page 96
Time limits......Page 97
Persons to be served......Page 98
Variation and withdrawal......Page 99
Introduction......Page 100
Compensation......Page 101
Grounds of appeal......Page 102
Documentation and fees to be submitted......Page 103
Review activity......Page 104
Introduction to environmental law......Page 106
Table 7.1 Environmental law: private practice survey......Page 107
Enquiries of consultants......Page 108
Insurance......Page 109
The Contaminated Land Regime......Page 110
Significant harm......Page 111
Contaminant linkage......Page 112
Exclusion tests......Page 113
Apportionment of liability......Page 114
Case law......Page 115
Sanctions......Page 116
Landlord and tenant issues......Page 117
Introduction......Page 118
Public nuisance......Page 119
Environmental Damage Regulations......Page 120
Introduction......Page 121
Table 7.3 Common offences and duties in environmental permitting and regulation......Page 122
Introduction......Page 124
Enforcement......Page 125
CRC Energy Efficiency Scheme......Page 126
Introduction......Page 127
Display Energy Certificates......Page 128
Green leases......Page 129
Introduction......Page 130
Landlord and tenant issues......Page 131
(1) Operation of a dry cleaners......Page 132
(4) Contaminated land and appropriate persons......Page 133
Planning matters......Page 134
Enquiries of the seller......Page 135
Investigation of title......Page 136
Review activity......Page 137
The building contractor......Page 138
The architect......Page 139
The construction, design and management coordinator......Page 140
Traditional contract......Page 141
Figure 9.1 Structure of traditional procurement......Page 142
Design and build contract......Page 143
Figure 9.2 Structure of design and build procurement......Page 144
Management contracting......Page 145
Table 9.3 Advantages and disadvantages of management contracting......Page 146
Table 9.4 Advantages and disadvantages of construction management......Page 147
Introduction......Page 148
Liability in tort......Page 149
Liability for economic loss......Page 150
Collateral warranties......Page 151
Latent defects insurance......Page 153
Limiting repair covenants......Page 154
Dispute resolution......Page 155
Scenario......Page 156
Question......Page 157
Value added tax......Page 158
Commercial developments......Page 159
Who or what is affected?......Page 160
Seller and buyer......Page 161
Reverse premiums and rent-free periods......Page 162
VAT on costs......Page 163
Review activity......Page 164
COMMERCIAL LEASES......Page 166
Lease/licence distinction......Page 168
Original tenant......Page 169
Review activity......Page 170
A typical agreement......Page 172
Practical completion......Page 173
Penalties for delay......Page 174
Deduction of title and disclosure of incumbrances......Page 175
Review activity......Page 176
The 2007 Code for Leasing Business Premises in England and Wales......Page 178
Drafting leases......Page 179
Required wording......Page 180
‘Term’ (in the Appendix 4 lease defined as ‘Contractual Term’)......Page 181
Joint and several liability (clause 40.1 in the Appendix 4 lease)......Page 182
The reddendum (clause 2.3 and clause 6 in the Appendix 4 lease)......Page 183
The provisos......Page 184
Review activity......Page 185
The original landlord......Page 186
A successor to the reversion......Page 187
The original tenant – privity of contract......Page 188
The assignee – privity of estate......Page 189
The original tenant – privity of contract release......Page 190
Practical points......Page 191
The new regime......Page 192
Release of co-guarantor......Page 193
Drafting points for the landlord......Page 194
An assignee’s guarantor......Page 195
Review activity......Page 196
Fixtures......Page 198
Rights to be granted and reserved......Page 199
Review activity......Page 200
Introduction......Page 202
Effect of exercise of option on sub-tenants......Page 203
Review activity......Page 204
Introduction......Page 206
Interest......Page 207
Review activity......Page 208
Index-linked clauses......Page 210
The upwards only rent review......Page 211
The penultimate day rent review......Page 212
Instructions to the valuer......Page 213
Sub-tenancies......Page 214
The reverse premium......Page 215
The parties are to assume that the premises are available to let ‘for any use falling within Class [A2 or B1] of the Town and Country Planning (Use Classes) Order 1987’......Page 216
The parties are to assume ‘the willing lessee has had the benefit of any rent-free or other concession or contribution which would be offered in the open market at the relevant review date in relation to fitting out works at the premises’......Page 217
The parties are to assume that the premises ‘may lawfully be used, and are fitted out and equipped so that they are ready to be used, by the willing lessee (or any potential undertenant or assignee of the willing lessee) for any purpose permitted b.........Page 218
The parties are to assume that ‘no work has been carried out on the premises or any other part of the building that has diminished the rental value of the premises’......Page 219
The parties are to disregard ‘any goodwill attached to the premises by reason of any business carried out there by the tenant or by any authorised under-tenant or by any of their predecessors in business’......Page 220
The parties are to disregard ‘any statutory restriction on rents or the right to recover them’......Page 221
Capacity of the valuer......Page 222
Recording the review......Page 223
Review activity......Page 224
Introduction......Page 226
Disrepair......Page 227
Factors to consider......Page 228
Repair v improvement/renewal/replacement......Page 229
Additional adjectives and verbs......Page 230
Tenant’s concerns and amendments......Page 231
Decorating......Page 232
Review activity......Page 233
Sub-letting......Page 234
Dealings with part......Page 235
Absolute covenants against dealings......Page 236
What is usually permitted and prohibited?......Page 237
Leases granted on or after 1 January 1996......Page 238
Authorised guarantee agreements......Page 239
What detailed provisions will apply to sub-lettings?......Page 240
Section 19(1)(a) of the LTA 1927......Page 241
Notice of assignment or sub-letting......Page 243
Virtual assignments......Page 244
Review activity......Page 245
The landlord’s concerns......Page 246
The permitted use......Page 247
A covenant that names the tenant......Page 248
Qualified covenants......Page 249
Ancillary clauses......Page 250
Review activity......Page 251
Introduction......Page 252
Absolute covenants......Page 253
Landlord’s consent......Page 254
Other lease clauses......Page 255
Restrictions outside the lease......Page 256
Review activity......Page 257
Negotiating the covenant......Page 260
Review activity......Page 261
Introduction......Page 264
In whose name?......Page 265
Risks and losses covered......Page 266
Compliance with the terms of the insurance......Page 267
Who will reinstate?......Page 268
When will rent suspension apply?......Page 269
Termination......Page 270
Who retains the insurance monies?......Page 271
Insurance by the tenant......Page 272
Review activity......Page 273
Express reservation of the right......Page 274
Procedural rules......Page 275
Procedural rules......Page 276
Breach of a tenant’s repairing covenant......Page 278
Tenant’s bankruptcy or liquidation......Page 279
Review activity......Page 280
Rights granted and reserved......Page 282
Repairs......Page 283
Repairs and decoration......Page 284
Other common items of expenditure......Page 285
Landlord’s covenant to perform the services......Page 286
Advance payments......Page 287
Certification of amounts due......Page 288
RICS Code of Practice for Service Charges......Page 289
Review activity......Page 290
Applications for consent to assign......Page 292
Content of an authorised guarantee agreement......Page 294
Review activity......Page 295
Reasons for sub-letting......Page 296
Licences to sub-let......Page 297
The term......Page 298
The rent......Page 299
Other drafting points......Page 300
Review activity......Page 301
Landlord’s remedies......Page 302
Distress......Page 303
The measure of damages......Page 304
Specific performance......Page 305
Injunction......Page 306
Breach of an express covenant......Page 307
Covenant for quiet enjoyment......Page 308
Derogation from grant......Page 309
Notice to quit......Page 310
Surrender......Page 311
Review activity......Page 312
There must be a ‘tenancy’......Page 314
The premises must be occupied for the purposes of a business carried on by the tenant......Page 315
The competent landlord......Page 316
Contracting out – before 1 June 2004......Page 317
Contracting out – on or after 1 June 2004......Page 318
Termination under the Act......Page 319
Content......Page 320
Section 26 requests......Page 321
Reasons for making a request......Page 322
The need for an application......Page 323
Agreements extending time limits......Page 324
Avoiding s 24A......Page 325
Ground (c): substantial breaches of other obligations......Page 326
The landlord’s intention......Page 327
The need to obtain possession......Page 328
The five-year rule......Page 329
Double compensation......Page 330
The renewal lease......Page 331
The rent......Page 332
The order for the new lease......Page 333
Review activity......Page 334
PROPERTY AND INSOLVENCY......Page 336
Measures to reduce the perceived risk of insolvency......Page 338
How to check which insolvency regime applies......Page 339
Identify the type of contract......Page 340
Moratorium......Page 341
Table 32.2 The differences between a LOPA receiver and an administrative receiver......Page 342
Effect of bankruptcy......Page 343
Appointment of the administrator......Page 344
Types of liquidation......Page 345
Table 32.3 Transactions at an undervalue and preferences......Page 346
The range of remedies available to a landlord......Page 348
Flowchart 1 Where an individual tenant (X) is subject to an IVA......Page 349
Flowchart 2 Where an individual tenant (X) is bankrupt......Page 350
Flowchart 3 Where a corporate tenant (X) is subject to a CVA......Page 351
Flowchart 4 Where a corporate tenant (X) is in administration......Page 352
Flowchart 5 Where a corporate tenant (X) is in voluntary liquidation......Page 353
Recovering the premises – forfeiture and its drawbacks......Page 354
Bankruptcy......Page 355
Receiver......Page 356
What can be disclaimed?......Page 357
On the insolvent party (X) and the insolvency official......Page 358
On sub-tenancies......Page 359
Vesting orders......Page 360
Review Activity Answers......Page 362
Scenario 3......Page 366
Scenario 4......Page 367
Lease of first floor – Grantham......Page 375
Prescribed forms of notice under the Landlord and Tenant Act 1954......Page 380
The Code for Leasing Business Premises in England and Wales 2007......Page 394
Contents......Page 406
PRESCRIBED CLAUSES......Page 407
INTERPRETATION......Page 409
GRANT......Page 414
ANCILLARY RIGHTS......Page 415
RIGHTS EXCEPTED AND RESERVED......Page 416
THE ANNUAL RENT......Page 417
REVIEW OF THE ANNUAL RENT......Page 418
SERVICES AND SERVICE CHARGE......Page 420
INSURANCE......Page 424
RATES AND TAXES......Page 426
DEFAULT INTEREST AND INTEREST......Page 427
ASSIGNMENTS......Page 428
UNDERLETTINGS......Page 429
REGISTRATION AND NOTIFICATION OF DEALINGS AND OCCUPATION......Page 430
DECORATION......Page 431
USE......Page 432
COMPLIANCE WITH LAWS......Page 433
BREACH OF REPAIR AND MAINTENANCE OBLIGATIONS......Page 434
LIABILITY......Page 435
NOTICES, CONSENTS AND APPROVALS......Page 436
EXCLUSION OF LTA 1954 PROTECTION......Page 437
GUARANTEE AND INDEMNITY......Page 438
VARIATIONS AND SUPPLEMENTAL DOCUMENTS......Page 439
PAYMENTS IN GROSS AND RESTRICTIONS ON THE GUARANTOR......Page 440
SERVICES......Page 441
SERVICE COSTS......Page 442
EXCLUDED COSTS......Page 443
Agreed terms......Page 446
Tenant’s liability......Page 447
Tenant to take a new lease......Page 448
Other securities......Page 449
Contracts (Rights of Third Parties) Act 1999......Page 450
Continuation of tenancies to which Part II applies and grant of new tenancies......Page 452
Date from which interim rent is payable......Page 453
Amount of interim rent where new tenancy of whole premises granted and landlord not opposed......Page 454
Termination of tenancy by the landlord......Page 455
Tenant’s request for a new tenancy......Page 456
Order by court for grant of new tenancy or termination of current tenancy......Page 457
Opposition by landlord to application for a new tenancy......Page 458
Property to be comprised in new tenancy......Page 460
Rent under new tenancy......Page 461
Carrying out of order for new tenancy......Page 462
Compensation where order for new tenancy precluded on certain grounds......Page 463
Restriction on agreements excluding provisions of Part II......Page 464
Duties of tenants and landlords of business premises to give information to each other......Page 465
Tenancies excluded from Part II......Page 467
Meaning of ‘the landlord’ in Part II, and provisions as to mesne landlords, etc......Page 468
Index......Page 470