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Over-rented property – what can T do?

In today’s market, many Ts are burdened with leases that they would like to get rid of. In practice, it can be very difficult to find someone else prepared to take an assignment of the lease (perhaps because the rent is higher than the current going rate, and because of concerns about dilapidations liabilities). The other option is to sub-let the whole or part of the property so as to recover rent from someone else.

Solicitors – disbursements

In 2008, HMRC argued that personal injury clients should pay VAT on the cost of medical reports obtained by their solicitors. This was against the established principle that the report fees were disbursements, with the solicitors acting as agents for their clients.

Sewers and drains – transfer to public ownership

All private sewers and drains will transfer to water and sewage companies in October 2011. This will happen automatically, unless the existing sewer and drain owners object. 

SDLT – update

A reminder that: 

a 5% rate applies to purchases of residential property of over £1m where the effective date (normally the date of completion) is on or after 6 April;

Privilege – handing over file?

If you act for a lender, as well as the buyer, then how should you respond to a request from the lender to hand over your file? 

The starting point is that a solicitor should not disclose the parts of the file that are privileged or which are confidential to the borrower. As the Code of Conduct says: ‘If the client does not consent, you should only send those parts of the file which relate to the work being done for the lender.’ This is because ‘you cannot, without the consent of the borrower, send the whole file to the lender, unless the lender can show to your satisfaction that there is a prima facie case of fraud’. Moreover, in Nationwide [1999] it was said that ‘it was the lawyer’s duty to claim privilege on behalf of the client or former client whose privilege it is, at any rate where it is at least arguable that the privilege exists’. 

Drafting – construction

In certain situations, rectification of a document may not be necessary, and the error can be corrected by the court through ‘construction’. But, this can only apply if (i) there is a clear error on the face of the document, and (ii) the correction needed to cure that error is clear. 

Enfranchisement – deferment rate

The ‘deferment rate’ is important when valuing the amount to be paid by T on a leasehold enfranchisement claim against L. As part of the valuation process, you need to determine the future value of the freehold once the lease has expired, and to then give a discount for accelerated receipt of the money; that is done by applying an interest rate to the present freehold value, which is referred to as a ‘deferment rate’. In simple terms, the lower the deferment rate, then the higher the price to be paid by T. Thus, there has been much argument about the correct deferment rates that apply on enfranchisement claims. 

Boundaries - presumptions

At common law there are several rebuttable presumptions

Order for Sale – proportionality?

Traditionally, there are three sets of factors that have to be taken into account by a court when dealing with an Order for Sale application: firstly, CPR 70.10; secondly, TLTA 1996; and thirdly, Article 8 of ECHR. 

Applications to enforce a charging order are made under CPR 73.10. The White Book notes at 73.10.1 contain a useful summary of the key factors to be considered by the court when exercising its discretion: an Order for Sale is an extreme sanction; all the circumstances must be considered; an order is likely in the case of a debtor’s contumelious neglect or refusal to pay, or if without a sale the debt will not be paid off. 

Injunction – or damages?

What are the criteria used for deciding whether damages should be granted in lieu of an injunction? The answer is that there are four principles (set out in Shelfer [1895]). The point to appreciate is that these four hurdles are cumulative – which means that a defendant has to meet all four of them to be able to convince a court that damages should be awarded instead of an injunction: 

Assured shorthold – s21 notice

Can the L of residential premises let on an assured shorthold commence possession proceedings during the currency of the two-month s21 notice, or must they wait until it has expired? The conventional answer is that L must wait until the notice has expired, because of Lower Street Properties [1996]. 

LTA 1954 – competent L?

Under LTA 1954, T’s s25 notice (and, indeed, many other significant notices) must be served by T on the ‘competent L’. That person is defined as the person with the ‘legal estate’ (s44(1)). 

Sub-lease – forfeiture of headlease

The forfeiture of a headlease means that all sub-leases will also end. But, the position of a sub-sub-T can vary. Consider these two examples: 

Tenancy agreement – in writing?

Why bother to have a written tenancy agreement (as opposed to an oral agreement)? The main reasons are: 

a written contract is better than an oral contract, especially if L wants to prove breach and be able to claim financial compensation;

Assured shortholds – agricultural land

’A tenancy under which agricultural land, exceeding two acres, is let together with the dwelling house’ cannot be an assured tenancy (Para 6, Sched 1, HA 1988). 

Renewal lease – sub-leases

One of the grounds for L being able to oppose the grant of a new tenancy to T is that there is a part sub-letting, with L requiring the whole property for reletting. This is ground (e) – s30(e) LTA 1954.

Client account – deposits

The Law Society has published a practice note on deposit protection for client accounts. To a large extent, it updates the previous practice note on the banking crisis (which has not yet been withdrawn). 

Construction – quantity surveyor

Is a quantity surveyor liable merely for ‘quantities’, or are they also liable for ‘quality’? 

In a recent High Court case it was held that ‘a quantity surveyor is concerned with quantities, not the quality of work, and it is for the architect to notify the quantity surveyor if there are defects in the work which affected the valuation’. In practice, therefore, if a quantity surveyor does notice an obvious defect in construction works, which appear to have been overlooked by the architect, then that should be referred back to the architect for comment – rather than assessed by the quantity surveyor. 

Break clause – rent payment

If T has a break clause in the lease, than in the current market there is a considerable likelihood that it will be exercised. Needless to say, Ls adopt a strict approach when served with break notices under such clauses. 

No doubt L will check that the notice has been served correctly; remember, it was said in Mannai [1997] that any precondition must be complied with (eg if the lease says the notice must be served on pink paper then indeed it must be served on pink, not blue, paper!). Secondly, L will no doubt check the timing of the notice to ensure that this has also been strictly complied with. Thirdly, L will want to be certain that all the existing lease provisions have been complied with – no doubt L will respond with a comprehensive dilapidation schedule and argue that T is in breach of repair and decoration obligations, and L will also insist that rent is paid fully up-to-date. 

CML Handbook – update
The CML Handbook was amended on 1 December.
Section 2 – constructive trust?

Section 2 Law of Property (Miscellaneous Provisions) Act 1989 says that ‘a contract for the sale or other disposition of an interest in land can only be made in writing’. But, to what extent can s2 be avoided by a finding that there is a constructive trust? 



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