Legal Practice Notes

A guarantee operates as a species of quasi-security (see Practice Note: Guarantees). Within commercial finance, guarantees frequently serve as a standard form of credit support in lending transactions and wider arrangements. For instance, where a company is the borrower, the lender may seek guarantees from its directors. More rarely, and typically at the smaller end of the commercial finance market, the lender may ask a closely related family member of a director—such as a spouse, civil partner, or parent—to act as guarantor for the borrower. When obtaining an individual’s guarantee, a number of additional matters arise beyond those encountered in the general law of guarantees. This Practice Note sets out the principal issues to address when taking an individual guarantee in a commercial financing context, namely: the capacity of individuals to grant guarantees undue...

The rules relating to perpetuities and accumulations Originating in common law and the Perpetuities and Accumulations Act 1964 ( PAA 1964), the doctrines on perpetuities and accumulations grew increasingly outdated and problematic. In 1989 the Law Commission began consulting on reform. This process produced a 1993 paper exposing flaws in the framework, followed by a 1998 final Report with a draft bill, which in turn led to the Perpetuities and Accumulations Act 2009 ( PAA 2009). PAA 2009 duly took effect on 6 April 2010. Its purpose is to streamline and modernise the law, introducing revisions to both the rule against perpetuities (sometimes called the rule against remoteness of vesting) and the rule curbing excessive accumulations. Practitioners must nevertheless consider the former regime where it still operates in particular situations and remain mindful of its continuing application in certain cases....

Scope of this note Once security has been properly constituted, it is effective as between the security provider and the secured party. It is not, however, automatically binding on third parties such as a liquidator or an administrator of the security provider. In many situations, additional steps must be taken to perfect the security. Perfection is the process by which security is made enforceable against certain third parties (though not necessarily all). The term is sometimes used more widely to cover measures that improve or safeguard a creditor’s position, eg by securing a legal interest or ensuring the priority of its security. For information on the third parties that may not be bound by security that has been perfected, see The difference between perfection and priority below......

Introduction Section 203 of the Housing and Planning Act 2016 ( HPA 2016) grants authority to override easements and other rights benefitting neighbouring land where this is connected with development. HPA 2016, s 203 commenced on 13 July 2016 and superseded and extended the former powers in section 237 of the Town and Country Planning Act 1990 ( TCPA 1990). The provision applies across England and Wales. HPA 2016, s 203 (and previously TCPA 1990, s 237) has been invoked on prominent schemes to address rights of light and comparable easements or restrictive covenants that might otherwise halt progress. In practice, when a particular development programme is jeopardised because agreement cannot be reached to release specified rights, developers have sought local authority intervention, asking it to use its powers to appropriate or acquire the development site (or a portion of it), thereby...

This Practice Note outlines the duty of care owed by valuers and the scope of their potential liability to purchasers, vendors and mortgagees for erroneous valuations. It considers the permissible margin of error, the measure of damages, claimants’ contributory negligence, and efforts to exclude liability. It does not address a valuer’s liability when acting within an expert determination or an arbitration. For general guidance on arbitration and expert determination, see: Settlement and settling disputes for property disputes lawyers—overview. Duty of care A valuer appraises or determines the value of property, or sets a price for it. In performing that task, a valuer must exercise reasonable care and skill. This obligation is typically an express or implied term of the contractual retainer, but it also arises independently in the tort of negligence......

Section 62 of the Law of Property Act 1925 ( LPA 1925) (section 62) At its core, it works as a drafting shortcut. Yet on a transfer of part, it can turn permission—eg to use an area for car parking—into a right that cannot be defeated......

This Practice Note outlines how light obstruction notices ( LONs) operate, clarifies the ‘19 years and 1 day’ principle and its bearing on applications for temporary or definitive certificates, sets out the impact registration of a LON has on rights of light, explains the process for lodging such a notice, and states the circumstances in which it can be cancelled, covering application, registration, effect and cancellation scenarios. Light obstruction notice procedure A building owner may acquire a prescriptive right to light at law over adjoining land where light has been enjoyed for 20 years without an interruption of a year or more. Under the Rights of Light Act 1959, the owner of the neighbouring land can formally prevent such rights arising by applying to the local authority or HM Land Registry ( HMLR) to register a notice treated as an obstruction to light, known as a...

Differences between leases and licences to occupy Leases In Scots law, a lease is a contract permitting a tenant to occupy a landlord’s heritable property for a set period, in exchange for rent, typically paid on a periodical basis and usually in money (though payment in goods is possible, albeit uncommon). The four cardinal elements of a lease are generally accepted as: defined subjects a rent an agreed duration identification of the separate parties For further information, see: Cardinal elements: Stair Memorial Encyclopaedia [4]. If the other cardinal elements are present but the length is not, the court may imply a duration of one year. Licences to Occupy A licence to occupy (licence) is a contract falling short of a lease, granting a right to use property, or part of it, rather than any possessory right in the property itself being ceded; see: Licence: Stair...

Possession ' Possession' and 'occupation' are not synonymous terms. A covenant in a lease that bars parting with possession is not breached where, in law, the tenant retains possession, even if another is permitted to use and occupy the premises. Possession encompasses the entitlement to collect rents and income from the property. A tenant only parts with possession if the person admitted to occupation holds the power to exclude everyone else, the tenant included, from the premises. Hence, in Reiner v Triplark, the tenant parted with possession by assigning the lease, notwithstanding that the assignment was unregistered at HM Land Registry and legal title remained with the tenant; the assignee had assumed control of the premises and could exclude all others. Where there is a prohibition on sharing possession, the term ‘possession’ is construed with the same strictness and does not extend to, and...

Form of covenant The tenant’s capacity to assign or underlet turns on the covenant contained in the lease. Careful analysis of the covenant is essential to identify whether it limits assignment or underletting and, if so, the scope of that limitation. No covenant Although uncommon in modern leases, some long residential leases impose no constraint on assignment or underletting other than notifying the landlord. Where no restriction exists, the tenant is at liberty to assign or underlet as it wishes. Absolute covenant A provision that wholly forbids any assignment or underletting is commonly called an absolute covenant. Such covenants are not modified by statute and therefore operate as a complete prohibition. Even so, the wording should be scrutinised to determine exactly what conduct is barred. The presence of an absolute covenant does not stop the tenant from requesting consent, nor the landlord from giving it (a party with the...

Under the Landlord and Tenant ( Covenants) Act 1995, tenants and any guarantors are automatically discharged from tenant covenants when the lease is assigned. By contrast, the Act provides no automatic release for landlords. Instead, on assigning the reversion, a landlord may ask its tenants, under sections 6–8, to be released from the landlord covenants; a former landlord that chose not to seek release, or missed the time limit, may apply when the reversion is next assigned. These statutory provisions apply only to new tenancies and therefore do not assist parties: to leases granted before 1 January 1996; or to leases granted after 31 December 1995 but under an agreement for lease, option, or court order made before that date Should the landlord seek release? It is not invariably wise for a landlord to pursue a release from covenants in a multi-let building or...

The way land is used and occupied commonly relies on the land enjoying easements—for instance, a right of way or a right to drain. Such rights might be created by express grant, arise by long use (prescription), or be implied into the land’s original transfer. As ownership or patterns of use shift over time, it is often necessary to assess the character and scope of any easements that have been conferred or obtained. A buyer will want assurance that the easements benefiting the property are adequate for their particular requirements. Conversely, the owner of servient land may contend that a fresh or intensified exercise of an easement by the dominant tenement amounts to ‘excessive user’. There is no universal rule for construing easements; each dispute is determined on its own facts. That said, where an easement has been expressly granted, the primary...

Where a lease contains no express repairing covenant, each party’s responsibility for repairs is curtailed. For landlords, liability is shaped by a mix of common law principles and statutory regimes; for tenants, it turns on the doctrine of waste and the implied duty to use the premises in a tenant‑like fashion. This Practice Note outlines those obligations and sources, addressing: what constitutes waste the distinct categories of waste the consequences if a tenant permits the property to decline the meaning of use in a ‘tenant-like manner’ Landlord's repairing obligations The landlord bears repairing duties only to the extent required by any express terms in the tenancy (in relation to which, see Practice Note: What is the appropriate standard of repair?)......

This Practice Note looks at how to obtain official copies of the registers and plans maintained by HM Land Registry ( HMLR) in respect of individual registered titles relating to freehold and leasehold land in England and Wales. It sets out how to obtain official copies where you have only: the title number or the property’s address the property’s location, or the name of the registered proprietor Property practitioners ought, as a matter of routine, to secure up-to-date official copies of all relevant title documents at the outset of a property transaction. Practitioners in other areas may likewise find it helpful or necessary to obtain official copies when involved in transactions concerning property......

Floating charges are typically set out within a debenture, alongside other security interests such as fixed charges, assignments, and legal mortgages. Including a floating charge can deliver significant advantages to secured lenders (see Reasons for taking a floating charge below). This Practice Note addresses the following topics: the characteristics and nature of a floating charge the rationale for, and benefits of, taking a floating charge who is able to grant a floating charge principal considerations when taking a floating charge, and issues of perfection, priority and enforcement What is a floating charge?......

Please be aware that obligations to implement reasonable adjustments to the physical features of shared parts have not yet taken effect. Accordingly, until they do, this Practice Note is supplied for information only. Physical features Section 20(4) of the Equality Act 2010 ( Eq A 2010) sets a general duty to take reasonable steps to make reasonable adjustments to a physical feature where it places a disabled person at a substantial disadvantage in relation to a relevant matter, compared with a person who is not disabled, so as to prevent or avoid the disadvantage......

Security over land Security can be taken over real property by means of a mortgage or a charge, with the form selected typically hinging on the importance of the land to the borrower’s business or its relevance to the arrangement and the circumstances of the particular transaction in question. If the land is a key asset, or the facility funds acquisition or development, funders tend to insist on a charge by way of legal mortgage. Where the property is of lesser importance, they may accept an equitable mortgage or charge. Lenders frequently take a debenture, combining fixed and floating security over all the borrower’s assets, capturing its rights, title and interest in the real property it owns. A charge by way of legal mortgage is usually included within the debenture, though it can also be set out as a standalone security document, or as a...

This Practice Note considers who bears the burden of repairing and looking after land affected by easements, and who must meet the expense of ongoing upkeep, especially where no express provision allocates responsibility for carrying out works and/or funding repair and maintenance. It also addresses the position in the absence of any explicit agreement setting out duties or cost‑sharing. The focus is on responsibility where obligations are not expressly allocated between parties... Is there an obligation to repair? An easement confers a liberty to do something on another’s land, or to restrain something from being done; it is not a duty to act. In the Scottish decision of Moncrieff v Jamieson, Lord Scott observed that a right which can only be enjoyed if the servient owner undertakes positive acts cannot amount to an easement. Nonetheless, in day-to-day situations easements often entail action: a track may...

Within the suite of papers required to arrange funding for a development or construction scheme, the facility agreement sits as the core instrument and is regarded as the principal document. It spells out the terms and conditions on which a lender is willing to finance the scheme and participate in the project. Its provisions address every element of the funding package, and are not confined to construction-specific matters but extend across the entire arrangement. Banking and finance solicitors will prepare and negotiate the finance clauses, while construction specialists review the construction terms, acting for the lender or the borrower as required. For guidance on the overall structure and layout of a facility agreement, see Practice Note: Structure of a facility agreement for construction projects. In this Practice Note, ‘borrower’ denotes the party taking the loan, that is, the entity borrowing the money....

This Practice Note concentrates on stamp duty, mortgages, the execution of documents, absent title deeds, sales of part and further matters, including searches and contract plans, when deducing title to unregistered land. It sets out how to approach each aspect and, where relevant, outlines both current practice and the historical position. Stamp duty Confirm that every instrument executed before 1 December 2003 bears the proper stamp. For leases, be aware that a lease completed before 1 December 2003, or one granted under an agreement for lease entered into before 10 July 2003, remains subject to the stamp duty regime. If any stamping is missing or defective, require the seller to arrange late stamping at their own expense......