LPC NOTES
[LEASE]
(2019-2020)
, LEASE
The grant of a lease
INTRODUCTION
short-term letting of residential, procedure informal and not much more than
landlord taking references and presenting the lease to the tenant for signature
on a ‘take it or leave it’ basis.
Below consider the procedure adopted in the following two contexts:
(a) The grant of a long residential lease.
The landlord grants the lease to the tenant on terms stipulated by the
landlord.
draft lease annexed to draft contract and is then open to negotiation
with the tenant.
(b) The grant of a lease of commercial property.
less usual for a contract to be drawn up.
parties will agree the terms of the lease and then proceed directly to
grant.
TAKING INSTRUCTIONS FROM THE LANDLORD
Similar to freehold transactions.
Before drafting the lease, the landlord’s solicitor should investigate his own
client’s title.
to ensure that the client is entitled to grant the lease and to anticipate any
problems with the title, such as covenants which prevent the use proposed
under the lease.
landlord’s solicitor will need to investigate title in order to be able to draft
the contract.
Investigation is done in exactly the same way as a freehold transaction.
property is subject to an existing mortgage, will frequently contain a
provision which prohibits or restricts the borrower/landlord’s ability to grant
a lease of the property.
, lender must be contacted and permission to grant lease obtained before the
matter proceeds.
DRAFTING THE LEASE
The landlord’s solicitor will draft the lease.
DRAFTING THE CONTRACT
contract for the grant of the lease - drafted by the landlord’s solicitor
Particulars of sale must state property is leasehold and give details of the
term vested in tenant.
Incumbrances affecting freehold title must be disclosed and contract should
provide an indemnity given in transfer in respect of future breaches of any
covenants affecting the title.
Except where lease’s term doesn’t exceed 3 years, takes effect in possession
and no premium payable for its grant, contract for lease must satisfy s 2 Law
of Property (Miscellaneous Provisions) Act 1989.
Standard Condition 8.2 (SCPC 10.2) provides for the lease to be in the form
annexed to the draft contract, and for the landlord to engross the lease and
supply the tenant with the engrossment at least five working days before the
completion date.
DEDUCING TITLE
Leases
Ideally, a tenant will want the landlord to deduce title to its freehold
interest.
important where
a premium is to be paid for the grant of the lease;
the property is being offered as security for a loan; or
where a tenant is paying a significant rent for the premises.
Absence freehold title usually prevent tenant and successors from
obtaining an absolute leasehold title on subsequent registration of lease
unless the freehold is already registered.
At common law, the tenant is not entitled to call for deduction of the
freehold title on the grant of a lease (LPA 1925, s 44(2)).
This rule disapplied to grants of leases for more than seven years by Sch
11 to the LRA 2002.
, Where lease exceeds 7 years, SC 8.2.4 (SCPC 10.2.4) requires landlord to
deduce such title as would enable the tenant to obtain registration with an
absolute title at Land Registry.
The intending tenant will thus be able to insist on the deduction of the
freehold title, and so should obtain registration with absolute leasehold
title.
Sub-leases
At common law, a grant of a sub-lease out of an unregistered head-lease,
the sub-tenant is entitled to call for the head-lease out of which his sub-
lease is to be derived and all subsequent assignments under which the
lease has been held for the last 15 years.
s 44 LPA 1925 provides that he is not entitled to call for production of the
freehold title.
Rule unsatisfactory where premium paid on the grant, where the sublease
is to be used as security or where the tenant is paying a significant
amount by way of rent.
This rule has also been disapplied by Sch 11 to the LRA 2002 in respect
of the grant of a sub-lease for more than seven years.
tenant will thus be able to insist on production of title to the head-lease
and the freehold.
Standard Condition 8.2.4 (SCPC 10.2.4) also applies to the grant of a
sub-lease.
may cause problems to a head-tenant wanting to grant the sub-lease,
when he did not call for the deduction of the freehold title when he took
the head-lease. He may not be able to comply, and so will need to
exclude this requirement by a special condition in the contract.
The Sch 11 amendments to s 44 will also apply if the title to the head-
lease is registered with its own title.
If the head-lease is registered with absolute title, there will be no need to
see the title to the freehold.
if the title to the reversion is registered, the Open Register rules will
always allow the prospective tenant to inspect that reversion.
THE PRE-CONTRACT PACKAGE
General principles
As a matter of general principle, the landlord’s solicitor should provide
the tenant’s solicitor with at least the following documents:
[LEASE]
(2019-2020)
, LEASE
The grant of a lease
INTRODUCTION
short-term letting of residential, procedure informal and not much more than
landlord taking references and presenting the lease to the tenant for signature
on a ‘take it or leave it’ basis.
Below consider the procedure adopted in the following two contexts:
(a) The grant of a long residential lease.
The landlord grants the lease to the tenant on terms stipulated by the
landlord.
draft lease annexed to draft contract and is then open to negotiation
with the tenant.
(b) The grant of a lease of commercial property.
less usual for a contract to be drawn up.
parties will agree the terms of the lease and then proceed directly to
grant.
TAKING INSTRUCTIONS FROM THE LANDLORD
Similar to freehold transactions.
Before drafting the lease, the landlord’s solicitor should investigate his own
client’s title.
to ensure that the client is entitled to grant the lease and to anticipate any
problems with the title, such as covenants which prevent the use proposed
under the lease.
landlord’s solicitor will need to investigate title in order to be able to draft
the contract.
Investigation is done in exactly the same way as a freehold transaction.
property is subject to an existing mortgage, will frequently contain a
provision which prohibits or restricts the borrower/landlord’s ability to grant
a lease of the property.
, lender must be contacted and permission to grant lease obtained before the
matter proceeds.
DRAFTING THE LEASE
The landlord’s solicitor will draft the lease.
DRAFTING THE CONTRACT
contract for the grant of the lease - drafted by the landlord’s solicitor
Particulars of sale must state property is leasehold and give details of the
term vested in tenant.
Incumbrances affecting freehold title must be disclosed and contract should
provide an indemnity given in transfer in respect of future breaches of any
covenants affecting the title.
Except where lease’s term doesn’t exceed 3 years, takes effect in possession
and no premium payable for its grant, contract for lease must satisfy s 2 Law
of Property (Miscellaneous Provisions) Act 1989.
Standard Condition 8.2 (SCPC 10.2) provides for the lease to be in the form
annexed to the draft contract, and for the landlord to engross the lease and
supply the tenant with the engrossment at least five working days before the
completion date.
DEDUCING TITLE
Leases
Ideally, a tenant will want the landlord to deduce title to its freehold
interest.
important where
a premium is to be paid for the grant of the lease;
the property is being offered as security for a loan; or
where a tenant is paying a significant rent for the premises.
Absence freehold title usually prevent tenant and successors from
obtaining an absolute leasehold title on subsequent registration of lease
unless the freehold is already registered.
At common law, the tenant is not entitled to call for deduction of the
freehold title on the grant of a lease (LPA 1925, s 44(2)).
This rule disapplied to grants of leases for more than seven years by Sch
11 to the LRA 2002.
, Where lease exceeds 7 years, SC 8.2.4 (SCPC 10.2.4) requires landlord to
deduce such title as would enable the tenant to obtain registration with an
absolute title at Land Registry.
The intending tenant will thus be able to insist on the deduction of the
freehold title, and so should obtain registration with absolute leasehold
title.
Sub-leases
At common law, a grant of a sub-lease out of an unregistered head-lease,
the sub-tenant is entitled to call for the head-lease out of which his sub-
lease is to be derived and all subsequent assignments under which the
lease has been held for the last 15 years.
s 44 LPA 1925 provides that he is not entitled to call for production of the
freehold title.
Rule unsatisfactory where premium paid on the grant, where the sublease
is to be used as security or where the tenant is paying a significant
amount by way of rent.
This rule has also been disapplied by Sch 11 to the LRA 2002 in respect
of the grant of a sub-lease for more than seven years.
tenant will thus be able to insist on production of title to the head-lease
and the freehold.
Standard Condition 8.2.4 (SCPC 10.2.4) also applies to the grant of a
sub-lease.
may cause problems to a head-tenant wanting to grant the sub-lease,
when he did not call for the deduction of the freehold title when he took
the head-lease. He may not be able to comply, and so will need to
exclude this requirement by a special condition in the contract.
The Sch 11 amendments to s 44 will also apply if the title to the head-
lease is registered with its own title.
If the head-lease is registered with absolute title, there will be no need to
see the title to the freehold.
if the title to the reversion is registered, the Open Register rules will
always allow the prospective tenant to inspect that reversion.
THE PRE-CONTRACT PACKAGE
General principles
As a matter of general principle, the landlord’s solicitor should provide
the tenant’s solicitor with at least the following documents:
