Nottingham Law School Legal Practice Course

Question 1.

Six types of searches Standard Drainage and Water Enquiries on Form CON 29DW Land Charges Registry Search Flooding Search at the Environment Agency Environmental Search Rivers Search BIDs Searc

Question 2.

Question a. D. If TP has opted to tax the Site, this would make VAT chargeable on the purchase price. DD should opt to tax the Site after completion, so it can generate output tax (e.g. on the lease to TP) to offset the input tax charged on development/acquisition.

Question b.

C. It is not possible. A TOGC applies where property is sold subject to leases and here all the buildings are lying vacant.

Question 3

Question a.

The local authority can lawfully demand the contribution as part of the planning process as per the Town and Country Planning Act 1990. Section 106 provides that the planning permission can be subject to the applicant entering into a legal agreement with the local authority that will require that certain things must be done or money be paid to the Local Planning Authority. For instance, these requirements may include contribution by the applicants towards improvement of local highways, schools, or other facilities that will serve the development proposed. Contributions required under this section will be required only if they are necessary to make development acceptable, reasonable, and directly relate to the proposed development of the applicants.

Question b.

The owner of the property will enter into section 106 agreement with the local authority. In this case, it will be Dickinson Developers Limited after it acquires the Site. In this case, DD will be making application to the local authority for planning permission to develop the property, as is provided in the case. It is only DD that will be required to take the undertaking as required by the local authority and fulfil the terms and conditions of the agreement.

Question 4.

This situation is governed by Part IIA of the Environmental Protection Act 1990. This Act provides for identifying contaminated land and for allocating responsibility for remediation. As per Section 78F, an “appropriate person” is liable to remediate contaminated land if she caused or knowingly permitted the contaminating substance to remain in the land in question. However, if she conducts a reasonable inquiry and she cannot find any contamination, it is the responsibility the owner or occupier of the land who is liable for remediation. In this case, TP is a printing business. It has owned the Site since 1979. The Site has not been used as a printworks for several years. This shows that TP has not been taking care of the Site. The contamination found is a sign of historic contamination, and the Act imposes strict liability. Part IIA of the Act applies the “polluter pays” principle and hence, TP could be liable for any such contamination and as an entity responsible for the contamination, it should be primarily liable to pay for its decontamination.

Question 5.

The current positive covenant on its own may not be sufficient for TP to secure the overage payment. There are certain other conditions that could be incorporated in the agreement to ensure TP secures the payment. TP can go for personal contractual obligation, guarantee or bond with DD to ensure the payment as and when the event occurs. It can impose a restrictive covenant covering the transfer of the legal title or receipt of rent from the tenants. It can go for a combination of the positive covenant with conditions attached to it on the legal title to the land. It can create a charge or mortgage on the Site in respect to the future event and the rent that would create. TP could create security against DD and also its successors in title to the land.

Question 6

Question a.

B DD will remain liable unless it applies to TP for a release within 4 weeks of any sale of the reversion. DD will then be released if either TP fails to object within 4 weeks of receiving DD’s notice or if a court decides that it is reasonable for DD to be released.

Question b.

D DD’s solicitors must ensure that the new wording states expressly that DD will no longer have any liability once DD has sold its reversionary interest; this will be an effective automatic release.

Question 7

Question a. Flood is included in Insured Risks. Clause 9 provides for DD to keep the Estate insured against loss or damage by the Insured Risks for its full reinstatement cost. Clause 9.3 requires TP to pay Insurance Rent and other fair amount or costs concerning the insurer or the valuation. As for the Common Parts, DD, as landlord, will be responsible to maintain the Common Parts, as provided under Clause 8.1 of the lease. TP as a tenant must pay the Service Charge as per Clause 8.5 of the lease.

Question b.

TP must hire Professionals to refurbishment works. TP and DD must have an agreement in place about the scope of refurbishment works, governing structure and exterior of Unit 1 ensuring that the work does not affect them Agree to impose liability on DD in case the work on the premises is not tenant-like manner Pass on the liability of adequate building insurance to DD protecting the actual structure and fabric of the property since Unit 1 is an independent building Take out Landlord’s liability insurance to cover damages on premise of other tenants Ensure DD complies with design and construction rules and provide relevant certificates to TP.

Question 8

Question a.

You would accept the current wording as it is very standard and there is no adverse risk to your client.

Clause 7.5.c might be changed as: “point b is subject to the condition that the Tenant has fully complied with its obligations in this lease”. This makes the ‘benefit of any rent-free or other concession or contribution’ qualified to Tenant’s compliance with the lease obligation. DD may have some objections to it to treat the two points separately. However, non-compliance to the lease terms is a good ground to deny any such concession or benefit.

Question c.

Clause 7.6 states that any effect on rent attributable to any physical improvement with all necessary consents has to be disregarded. In this case, if the improvement is without consent it cannot be disregarded and it will have effect on the rent review. Clause 7.11 states that time will not be of the essence for the purpose of rent review and therefore Landlord does not need to adhere to the time schedule unless the issue in hand is fixed. If the improvement has led to diminished rental value of the property, the landlord will have a higher bargaining power in terms of agreeing to the revised rent.

Question d.

Clause 7.6(d) states that if there is any effect on rent of the restrictions on user in clause 27.1, this matter must be disregarded when rent in review. As per clause 27.1, the Tenant shall not use the Property for any purpose other than the Permitted Use. So, if the premises has not been used for the permitted use and purpose, it has an impact on the lease itself and well as the rent, depending on the consent of the Landlord. Therefore, in such case of violation of the purpose, Clause 7.6(d) will have an impact on the rent review.

Question 9

Question a

That should be change to make the arrears due on registration of the assignment. Assignment if effective only when it is registered.

Question b.

Assignment can only be done to entity within the group of the companies that assignor belongs.

Question c.

The proposed assignee is in substantially lower financial condition than the Landlord. The amount of deposit also matters here as it may not be sufficient to protect the financial and legal interest of the tenant.

Question d.

i. ‘the Annual Rent which is then payable’ may fluctuate and the tenant may get more benefit than the landlord in case of higher rent than the original rent value. ii. It ensure the rent is as per the standard subject to the full open market rental value of the Property. this will be a fair value rent and there will not be any future legal issues.

Question 10

The lease will be amended to include provision allowing the Tenant to conduct its businesses in Unit 1. It should provide for underleting part of Unit 1 to one of its group companies or a third party. It should further be entitled to undertake necessary structural works to the building to create self contained space and necessary arrangements to accommodate businesses of sub-tenants.

Question 11

Question a. The exact procedure is subject to the tenancy agreement and its terms.

a.i. BI must served the ‘no-fault’ notice (Section 21 of the Housing Act 1988) to the tenants to regain possession of the property. The notice is from a period of two months within which tenants must vacate the property. BI cannot commence possession proceeding until the fixed term and the notice period has ended. BI can the tenants a Section 8 notice if they have breached terms of the tenancy.

a.ii. In case the notice and eviction process fail, BI can start court proceedings immediately as the two-month notice period will expire at the same time the AST ends. BI must apply for a warrant for possession if the tenants still do not leave. The bailiffs can remove them from the property.

Question b.

BI can sue CH as it is the original tenant, which is liable for any arrears existing at the time of assignment. RC is liable for rent arrears after it took over tenancy.

ii. BI must serve the tenants a section 146 notice, which requires a 14 days’ notice. If the tenant fails to comply, BI can take steps to terminate the lease and carry out eviction procedures.

iii. If the arrears are not much comparing with the business plan BI has in place, it would be advisable to state with the procedure to regain possession of the property.

iv. This may not be practical as the administrator cannot serve the required notice and answer to the procedure needed when it itself is on the other side of the issue.

Continue your journey with our comprehensive guide to A Critical Examination of Mortgagor and Mortgagee Interests.