In the current property market, property owners are looking to their assets to see how additional income can be generated without significant cost. One option is the lease of roof space for the installation of micro generation technology, such as a wind turbine or solar photovoltaic panels, to generate income under the Feed In Tariff (FIT). Below we look at some of the practical and legal issues to be considered when assessing the suitability of a building for a lease of this nature:

Where will the technology be sited and how will it connect to the National Grid?

The landlord needs to understand which parts of the building will be affected by the installation, for example where the cables will run, how many meters there will be, and how these will be used, monitored and measured. This highlights a number of legal considerations as I will discuss further on.

How will the tenant get the technology into position?

If a crane is needed, it may have to stand on third party land which will require the necessary consent to be obtained. Also consideration will need to be given to a crane licence. It’s worth noting too that the tenant may need similar on-going access for a crane to carry out maintenance work and as a landlord this may have to be offered on a guaranteed basis.

How will the technology impact on buildings insurance?

The building insurer may need to be notified of the wind turbine or solar panels, in case the changes would otherwise compromise the insurance cover.

Will the proposed installation interfere with existing rights of third parties?

As with any lease of part of a building, the landlord will need to look at (in multi-let buildings) what the existing occupants of the building are entitled to. Consideration must be given to whether neighbouring landowners or tenants have existing rights (whether granted expressly or acquired by prescription) which will be infringed by the proposed lease and/or activities of the FIT generator as tenant.

The landlord may find there are rights for neighbouring buildings to receive light or air across the roof which could be restricted. Or there may be rights for existing tenants, who have equipment on the roof (perhaps air conditioning units or telecoms masts), to access them, maintain them, and receive an unobstructed signal across the roof.

If rights are to be granted over third party land, does the landlord have the necessary ability to do this?

Where it is necessary to place parts of the micro generation technology, such as cables or meters, on third party land the landlord must either already have been granted, or reserved to itself: the necessary rights in terms which permit them to be sub-granted without consent of the third party; or have obtained the consent of the third party to the grant of these rights to the FIT generator, as tenant.

Is planning consent needed?

Planning consent will almost certainly be needed owing to, among other matters, potential noise issues. There were consultations in England and Wales in 2010, designed to explore whether the permitted development rights for microgeneration projects should be extended, but so far there has been no announcement of any changes.

To discuss this, or any other property-related legal matter, please contact Owen McKenna in our property team on 01772 258321.

What is it?

Chancel repair liability is an ancient interest, and according to The National Archives, potentially benefits some 5,200 pre-Reformation churches in England and Wales.  It allows the Parochial Church Council (PCC) to require owners of former rectorial land (which does not need not be in close proximity to a church building) to meet the cost of repairing the church chancel.  It does not matter that the land may have been divided into many freeholds – each part of the land is potentially liable for the whole amount – and the liability passes with the land, regardless of whether the owner of the land knows of the liability or not.

Chancel repair liability is classified in law as an ‘overriding interest’ and therefore did not always appear in the title deeds to a property.  PCCs are now however proactively identifying and registering land that is subject to a chancel repair liability before the 13 October 2013, as after this date chancel repair liability will only bind new owners of registered land if it is protected by an entry in the title to the property.

There have been numerous calls over the years for chancel repair liability to be abolished but it appears that the Government had no plans to abolish it or to introduce a scheme for its redemption.  For the time being, chancel repair liability is here to stay.

How does it affect me?

As mentioned above, if chancel repair liability is established the owner or occupier of property may be called upon to contribute towards the costs of repairing the church chancel.  The House of Lords decision in Parochial Church Council of the Parish of Aston Cantlow and Wilmcote with Billesley, Warwickshire v Wallbank in 2003 highlights the potential costs and liabilities to landowners.  The facts of the case are detailed but the outcome of the case was that Mr and Mrs Wallbank were liable to pay almost £200,000 to put a church chancel into substantial repair and a similar sum again in legal costs in challenging the liability over a 17-year period.

The formal record which sets out the proportionate liability of all owners in a parish required to contribute to the repair of the church chancel is called the Record of Ascertainments. A search in the records of ascertainment will help to identify the likelihood of liability in respect of a given property as well as the proportion of the total cost to be paid in respect of each liable property.  The actual amount to be paid cannot be known until repairs are carried out and their cost established but it is important to be aware that the potential liability is not limited to the value of a property.

What can I do?

A simple check to see whether a property is near a medieval church alone is not sufficient and it is not safe to assume that properties in urban areas will necessarily be free from any chancel repair liability.

Any purchaser or tenant of property should, before it becomes contractually obliged to buy property or take a lease, have their solicitor check the title deeds, the Land Registry and current landowners for information as to chancel repair liability.  Internet searches are now available from companies such as Chancel Check, which for a cost of less than £20 provide an indication as to whether or not a property is situated in a parish that continues to have potential, theoretical chancel repair liability.

If an initial chancel repair search reveals that there is a risk, a purchaser or tenant can take out indemnity insurance (for a one-off premium) against the risk of a PCC seeking to recover the cost of repairs, or they can obtain a full search from The National Archives.  A full search costs in the region of £100 and provides a more definitive reply as to whether a particular property has a liability.  If a full search does reveal a liability, a purchaser or occupier can still approach insurers to obtain an indemnity insurance policy covering the costs of repairs but, given the known risks the policy premium will be higher.

It will often be a condition of any insurance policy that no contact has been made with the PCC alerting them to the potential liability and therefore parties should keep this in mind when conducting their investigations.

Evidence of ownership of land is, in most cases , a set of “ official copies of register entries” that is copies of the entries in the register maintained by the Land Registry. The entries list the owner, the price paid and the name of any mortgagee and other relevant details . They are available from the Land Registry for a few pounds and they are a matter of public record, as many MPs have recently found to their cost.

On completion of the purchase of a property we send the transfer and, if the property has been bought with mortgage funds,  the mortgage to the Land Registry with any other necessary documents and receive back, assuming everything is in order, a new set of official copies showing the new owner, the new mortgage and so on. That used to take weeks. Now the new entries come back usually within a few days and sometimes almost overnight.

There are delays; the usual cause is that the seller’s lender has not supplied evidence that their mortgage has been discharged. The delays in processing deeds of release (called DS1s or ENDS in the trade) vary but for most transactions the release is processed by a different office to that which receives repayment of the mortgage and, with the best will in the world, delays of a month are not uncommon.

Most conveyancers have accepted, as a matter of course, undertakings from the solicitor acting for the seller, that they will pay over the required money to the lender and then will forward the release when they receive it. Very few practitioners have demanded set time scales. The releases do turn up even if it takes 3 months (except in the most exceptional cases).

The Law Society has encouraged that practice and the Land Registry has accepted it. It has made conveyancing transactions quicker and more straightforward. Where a release was not produced quickly the Land Registry would usually accept an explanation that the relevant form was awaited and grant an extension of time for it to be sent.

That will change in August when the “Early Completion Policy” comes into force. What we are currently being told is that the Registry will grant one extension of 20 working days for the release to be provided but if it is not then produced the Registry will complete the registration but leaving in place the registration of the previous charge.

Let’s take an example:
Suppose Mr Spock owned some land and mortgaged it to ABC Bank. Spock then sells the land to Mr Kirk who uses a mortgage from XYZ Bank to finance the purchase. If the DS 1 is not produced in time by ABC Bank  (something over which the buyer’s solicitor and in fairness the seller has no control) the Registry would issue a document which shows Mr Kirk as the owner but ABC Bank and XYZ Bank both having  mortgages over it (in that order) . That is not what Mr Kirk and XYZ Bank wants, to put it very mildly.

Let’s be clear, this is a real issue for everyone involved in property transactions. One or two bold souls are predicting the revival of the property market. Banks and purchasers need to see the old charge cleared off, not left in place, if they are to invest with confidence.

Here are two suggestions (not my own by any means)
 1. Lenders guarantee production of releases within, say, ten working days of completion so conveyancers can give undertakings to provide the release to the buyer’s solicitor in the same time scales.
2. The seller’s lender deposits the release with seller’s solicitors against an instruction it can only be released if the mortgage money is paid over to the lender the same day.

Neither of these is normal practice for lenders at present.

Solicitors acting for buyers are likely to start asking (ever so politely) for one or other of these two options.

They will need to do that to protect their clients and their client’s lenders even though the result may be to slow matters down because of what sounds like conveyancing technicality.

It isn’t, of course, a technicality because buyers don’t want to buy property which is still subject to their seller’s mortgage (and nor do their bankers) 

How will this work out? It’s too early to say but rest assured there will be more to be said about this issue which up to now has been part of the “backstage” part of property deals.
Someone is going to have to ask the seller’s bank to agree to one of the options, unfortunately the person who can authorise this is probably not your friendly local bank manager.
Watch this space.

Landlords and tenants have always been able to agree a whole range of different deals for different circumstances
Even in the present market with lower rents and shorter terms on offer a lease of commercial premises, be it a shop, an office or an industrial unit is a transaction that both sides need to consider with care and proper advice… The lease is the Landlord’s document and it is designed to protect the Landlord’s income Sometimes you’ll hear the term a “clean lease”… It means the landlord gets clear income with no deductions from the rent for expenditure.  From the Landlord’s point of view that is important-. That is what his bankers will expect to see in place.

. The trade shorthand is” and FRI Lease.” or full repairing and insuring I’ll pick up just three of the “headline” areas

The repairing obligation gives rise to most problems- usually at the end of the lease .A typical covenant would be “The Tenant shall keep the Demised Premises clean and tidy and in good and substantial repair and condition”
Often this is assumed to include a degree of “fair wear and tear”. Not so. The landlord will expect- and  in fact is entitled to  require that the unit is  returned at the end of the term in a state of  repair such that he could re-let it the next day without a void period while the  premises are brought back up to  lettable condition.- If that is not the case the tenant will face a sizeable dilapidations claim.  A well advised tenant will have had surveying advice on the property before the lease is signed but even then the lease needs to be looked at carefully-. Just what is the tenant to repair and  replace? The, the door  fastenings the wash hand basin, the shop windows, the carpets, the  roof trusses-? It can soon turn into a very expensive obligation.

. It’s easy to agree what the rent should be the rent at day 1 and often for  the next years as well but  a  longer lease will usually  contain a rent review clause providing for the rent to be increased  usually every five years.
Often the  rent review provisions start  about page 52 and  they are often not “ user friendly”  and they have to be read along side the “ user “ clause.  One of the best pieces of advice I ever got was when reading a lease to start with the rent review clause.  That remains true whether acting for the landlord or the tenant. The basics  of the rent review clause is to determine what rent a hypothetical land lord and a hypothetical tenant would  pay  in five years time if they were negotiating a new lease of the property then.
Sometimes the  terms of the theoretical new letting are quite different from the terms of the deal the parties have just done., Recently on e of the large financial institutions sold off a chunk of it’s property portfolio.  The user clause allowed the tenant to use the properties for a wide range of  uses-including as a “trendy wine bar”.
The rent review clause however provided that the rent review was to be only on the basis of the original use or a retail shop.. So the buyers may well find in five years instead of a certain bank they have  a  wine bar as a tenant but they are trying to decide what the correct level of rent would have been if it had remained a bank. That’s an extreme example but it shows how it’s possible for the theoretical lease  can become divorced from what parties might  agree if they had sat down  and talked it through at the outset.

Another issue is alienation- that is can the tenant assign or transfer the lease or sublet  the property to someone else. Again these provisions are  common to most leases over  a year or two in length but on what terms. It’s now industry standard to require an outgoing tenant to give an AGA (  shorthand for an “authorised guarantee agreement”  rather than an upmarket stove) but  can the landlord insist on  a rent deposit from   the assignee or even personal guarantees if the lease is to pass to a limited company. That might make it more difficult to get rid of a property which is surplus to requirements.

I’ve just picked up  the three “ headline” clauses from a  standard commercial lease here and I’ve only just touched on a few of the areas that  need to be considered by both

The commercial lease has been the backbones of the commercial property market for the last hundred years and in the present economic climate with funding limited it will gain not diminish in importance… Leases need to remain workable and secure from the landlord’s point of view if Landlords are to provide new businesses with space   start and grow. On the other hand no-one gains by tenants signing up to standard documents which   don’t reflect the reality on the ground. A typical lease might easily deal with obligations which can last ten years and include financial obligations amounting to £1 Million so it needs to be right at the start for everyone’s benefit.

I’ve been dealing with commercial lease for the best part of twenty years now- if you are intending to let out property or take a lease of premises and I can help please contact me.

You only have to look at the high street and read the newspapers to see that the number of empty premises has increased and tenant administrations are on the rise.  Clearly, in today’s economic climate there are a number of new challenges facing landlords and tenants of commercial leases.  One such challenge facing a landlord is what to do in the event of tenant breach.

Forfeiture is a landlord’s right to re-enter the premises and determine the lease on breach by the tenant of its lease covenants or upon the happening of certain specified events.  The right is not automatic, it exists only where the lease expressly includes such a right.  Most commercial leases however will contain a clause thereby allowing the landlord to re-enter the premises on the happening of specified events.

Before a landlord proceeds to forfeit a lease, it should consider carefully the consequences of so doing.  In a rising market a landlord should have no difficulty in subsequently re-letting the premises.  However, in a falling market, re-letting premises may not be so easy and as a result of the forfeiture a landlord may be left with an empty property on their hands for a long time, and of course following the recent legislative changes, a potential business rates liability.  Nevertheless, forfeiture remains an important tool in a landlord’s armoury in the event of tenant breach and the challenge for a landlord therefore is to avoid losing or “waiving” the right to forfeit.

A landlord will be prevented from forfeiting a lease if it has expressly or impliedly waived the right to forfeit.  A landlord will still be able to pursue other remedies but will have lost the right to forfeit.  Waiver will be implied in the following circumstances:

• A landlord knows of the relevant breach; and
• A landlord (or its agent) does some unequivocal act which recognises the continued existence of the lease, and that is communicated to the tenant.

Waiver is not a however a question of intention.  So long as the act is inconsistent with an intention to determine the lease the motive for the act is irrelevant.

Waiver operates in respect of past breaches of covenant.  Generally waiver will be relevant only in the case of “once and for all” breaches (for example unlawful assignment/subletting or unlawful alterations), where in the event of waiver the right to forfeit is lost forever.  If however the breach is of a continuing nature (for example failure to insure or failure the keep premises in repair) the right to forfeit, though waived on one occasion, will arise again.

The number of cases that have come before the courts over the years on the issue of waiver is significant but unfortunately uncertainty remains.  Circumstances which have been held to constitute waiver include accepting rent due after the date on which the right to forfeit arose, demanding rent due after the breach, enforcing other covenants in the lease or granting licence to assign or sublet.  Since waiver is not a question of intention and as a landlord is deemed to have the knowledge of its employees, an accounts team for example sending out rent demand or banking a cheque at the wrong moment may result in the loss of the right to forfeit.

The safest course for a landlord on becoming aware of a breach if it wishes to preserve its right to forfeit, is not to make any demands for rent due after the breach and to refuse to accept all rent.

Please do not hesitate to contact me if you require any further information on the issue of forfeiture or waiving the right to forfeit.