Summary
Summary SQE2 - Real Property (Leases)
Structure & Content Grant procedure Assignment Licence to assign/underlet Covenants - Liabilities & Remedies Termination Security of Tenure
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1) Structure & ContentWhat are the rules for repairs?
Repair obligations should be expressly stated clearly defining their burden and extent. They
may be determined by the property’s age, character and environment.
Repairs and service charges may also incur which the landlord can recover from the tenant.
FRI leases require the landlord to conduct repairs and pay to insure the property.
What are the rules for insurance?
Landlord creates an agreement to insure by the tenant, even where the Landlord puts the
property at risk.
What alterations can be made?
Alterations can be made to long leases as long as the landlord consents to it in writing.
Alterations to the value of property can be made. If it is important, landlord must give
consent. If the value is diminished, landlord can claim reasonable capital sum from tenant.
What are the restrictions to the User?
The User’s change of using the property may be restricted either with absolute or qualified
restrictions (landlord’s consent is required).
The Plan is signed by all the parties, it must comply with Land Registry Rules.
What are the rules for rent?
Landlord will give exclusive possession of land to the Tenant, who will pay rent in return.
Both parties’ written approval is required for approving rent. Time is not of the essence when
it comes to reviewing rent.
What are the rules for alienation?
Alienation can include assignment, subletting or mortgages. Generally, they are not restricted
unless expressly provided in which the landlord’s consent will be required.
What are the options for lease terms?
Lease terms may be fixed (under law) or not fixed (under equity). The maximum period is 21
years. They can be terminated by the end of a marriage or civil partnership/death. A 90-year
lease may be terminated on notice. But periodic tenancies will continue to be renewed after
the end of each period.
, 2) Grant Procedure
What is required in a lease?
A lease will include writing and deed if for more than 3 years by law. It requires a date,
landlord’s title number, parties, full description of the property (‘parcels clause’), prescribed
statements, term, premiums, sale prohibitions and restrictions, the party’s right to acquire
another’s title, restrictive covenants, easements, estate rent charges, application for standard
form restriction, declaration of trust. Registration is required at Land Registry if for more
than 7 years to deduce title, or its overriding interest will bind reversionary interest if for less
than 7 years.
How is title deduced?
Landlord’s title will be delivered to Seller’s conveyancer. Seller’s conveyancer will
investigate whether Landlord has sufficient power to grant lease/sublease, third party consent
is needed, and any encumbrances.
What pre-contract searches and enquiries should be made?
Landlord’s solicitor/developer shall provide the information sheet to Buyer’s solicitors. This
will include easements, roads, home warranty insurance, whether landlord’s consent is
granted.
What pre-completion formalities are required in the contract bundle?
The contract bundle should include the draft sale contract, landlord’s title (registered title
requires official copies, unregistered title requires epitome of title and CLC searches), draft
lease requires coloured plans, replies to developer/landlord’s enquiries, home warranty cover
for new buildings, information to management companies, forthcoming years’ service charge
estimate, and lender’s consent.
How may leases be registered?
For a term of 7 years or less, leases take effect as an overriding interest against superior titles.
For unregistered land, leases are binding at large.
For a term of more than 7 years, registered land requires registration of leases within the
priority protection period (30 working days). They must change the register (Form AP1).
Unregistered land requires registration at HMLR using Form FR1 (within 2 months of
completion).
For registered land, Form AP1 must be used to register land including a completed transfer
copy (TR1), discharge evidence of landlord’s title being mortgaged, new charge, SDLT5
certificate, Form D1 (overriding interests), and certified copies to prove title and/or
ownership.
For unregistered land, Form FR1 must be sent to HMLR including Form D1, Tenant’s pre-
completion searches against the Landlord, letter of consent by Landlord’s lender, new charge
copy, SDLT5 certificate, and certified copies to prove title and/or ownership.
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