Legal Practice Notes

A key characteristic of a floating charge is that, until it crystallises, the chargor may manage the secured assets in the ordinary course of business without needing further permission from the chargee. By comparison, a fixed charge entails the chargee exercising a substantial level of control over the asset subject to the security... This Practice Note examines the consequences of crystallisation of a floating charge the categories of event that trigger or may trigger crystallisation, including automatic crystallisation partial crystallisation For more on the nature of fixed and floating charges, see Practice Note: Fixed and floating charges. For guidance on the pros and cons of floating charges, see Practice Note: Floating charges—advantages and disadvantages. For details on creating a floating charge, see Practice Note: Floating charges. See also Security—frequently asked questions... The effect of...

This Practice Note examines the requirements of the Law of Property ( Miscellaneous Provisions) Act 1989 ( LP( MP) A 1989) for putting in place a valid contract for the sale, or any other disposition, of an interest in land. It offers direction on the execution and exchange of land sale contracts, sets out what is needed to vary a property contract, and highlights the choices available where an agreement fails to satisfy the statutory conditions for a valid contract. Introduction A contract for the sale, or other disposition, of an interest in land is of no effect unless it complies with LP( MP) A 1989, s 2......

This Practice Note examines how to contract out of the Landlord and Tenant Act 1954 ( LTA 1954), flags typical traps that may arise during that process, and suggests ways to steer clear of them. Why contract out? LTA 1954 granted business occupiers security of tenure—meaning a continuing right to remain in their premises once the contractual term of the lease expires. A landlord that lets to a tenant with the protection of security of tenure can only terminate and recover possession by complying with the procedures prescribed by LTA 1954. Even then, the landlord must prove one of the narrow statutory grounds for possession set out in LTA 1954, s 30, and achieving possession will often entail paying compensation to the tenant. As a result, a tenant with LTA 1954 security of tenure is in a very powerful bargaining position where the landlord seeks vacant...

What is an agreement on liabilities? Parties to a deal may choose to set out, expressly, how known or potential remediation expenses under Pt IIA of the Environmental Protection Act 1990 ( EPA 1990) will be shared, for example on a land transfer. An agreement on liabilities exists where: two or more persons are “appropriate persons” who bear all or part of the cost of a remediation measure they agree, or have previously agreed, the basis on which that burden is to be apportioned a copy of the agreement is supplied to the enforcing authority, and none of the parties notifies the enforcing authority that it contests the agreement’s application An “appropriate person” is the: person(s) who caused, or knowingly permitted, the contaminating substances to be in, on or under the relevant land ( Class A), or owner or occupier of the contaminated land, but only where a Class A person cannot be...

Contracts are frequently prepared on the footing that one or more specified conditions must be met before completion takes place, or before the relevant agreement becomes effective (a condition precedent). Typical conditions include: securing planning permission obtaining a third party’s consent (for instance, the superior landlord’s consent) undertaking works a viability or site assembly requirement It is essential that the condition is drafted with clarity and precision, and that the contract sets out how, when, and by whom it must be satisfied. In addition, the contract should make clear whether a party has the ability to waive the condition, and should also include termination rights if the condition has not been fulfilled by a specified date. Certainty Where a condition is so vague or indeterminate that the parties’ intention cannot be identified with reasonable certainty, the condition is void for uncertainty: see Lee- Parker v Izzet (where the contract...

Nature and purpose of a rent deposit A rent deposit is an amount lodged by the tenant with the landlord, serving as security against unpaid rent and/or the landlord’s losses arising from any other breach of the lease (including the costs of enforcement), by way of protection for the landlord. In that respect, the label ‘rent deposit’ is a misnomer indeed, as the fund is not confined to rent arrears (however broadly ‘rent’ is defined in the lease). For more detail and context, see the Amount of the initial deposit set out below. Landlords typically request one when a lease is granted or assigned to a tenant considered a ‘weak covenant’, ie a tenant unable to give the landlord sufficient evidence of its financial standing before becoming the tenant, and not yet proving robust financial standing. That said, a landlord may equally require a...

The Regulations The Regulations took effect on 6 April 2015. They aim to embed health and safety as a core, everyday factor in the planning and oversight of construction schemes, and to clarify the responsibilities of all parties. Their policy aims are to preserve or enhance worker protection, streamline regulatory practice, curb unnecessary bureaucracy and align with better regulation principles (they gave effect to the EU Temporary or Mobile Construction Sites Directive (the ' TMCS')). The Regulations should be considered alongside detailed guidance from the Health and Safety Executive ( HSE Guidance on the ). It provides practical context and illustrative clarification. That guidance, whilst not legally binding, adds substance to the bare framework of the Regulations for everyday application in practice. They apply to all 'construction work' (as defined in regulation 2). To meet the TMCS, which placed obligations on domestic clients,...

The Landlord and Tenant ( Covenants) Act 1995 ( LT( C) A 1995) stipulates that, save for specified exceptions, any lease completed on or after 1 January 1996 is treated as a ‘new tenancy’ for the purposes of the LT( C) A 1995, with earlier grants classified as ‘old tenancies’. This Practice Note sets out, for both ‘old’ and ‘new’ tenancies, whether the benefit of tenant covenants and the burden of landlord covenants pass with the reversion, whether the benefit of landlord covenants and the burden of tenant covenants attach to the term, and the scope of any release from liability on assignment. Old tenancy New tenancy Transfer of reversion Benefit of tenant covenants—does it run with the reversion? By virtue of section 141 of the Law of Property Act 1925, the obligation to pay rent and the benefit of other lease covenants and...

This Practice Note looks closely at assents of interests in land made by the personal representatives of a deceased landowner. It chiefly addresses how an assent operates and the appropriate format for vesting a legal or equitable estate in land in a beneficiary named in a will, or in trustees to hold under the terms of a continuing trust. For guidance on other matters that may arise following the death of someone owning an interest in land, see the following Practice Notes: Death of a proprietor of land—sale of property by a sole surviving co-owner Death of a proprietor of land—death of the seller or buyer between exchange and completion Death of a landlord or tenant Use and form of an assent of land As a general rule, a transfer of land must be effected by deed, ordinarily......

Reasons for amending security documents and key risks Reasons for amending a security document There are occasions when parties may decide to revise existing security documentation. Typical triggers include: wanting to alter the obligations that are secured the chargee seeking to assign or novate its security following a transfer of the underlying debt adding further assets as security or changing the nature of a current charge (eg converting a floating charge into a legal mortgage) correcting an error or formally recording an agreed amendment Parties may conclude that updating an existing security document is cheaper and more straightforward than putting a fresh one in place. Key risks of amending security documents New security? Depending on the amendment, a liquidator or administrator could assert that new security has been created, with the consequence that it might be set aside (see Practice Note: Introductory guide to antecedent transaction...

To establish that an easement has been given up, the servient owner must prove the dominant owner had a definite, settled intention never to: use the right again for themselves, or seek to transfer the right to any other person Abandonment where the original use has become impossible An easement may be treated as abandoned if it is tied to a particular use and that use can no longer occur (for instance, where the building benefiting from the easement has been demolished). For this to hold, the dominant land must have undergone a radical change in character or a change in identity. In line with the Court of Appeal’s ruling in Mc Adams Homes v Robinson, the court should also assess whether the new use of the redeveloped site would bring about a substantial increase in, or alteration to, the burden on the...

Scope of planning judicial review Within the Civil Procedure Rules 1998 ( CPR), SI 1998/3132, Part 54, a claim for judicial review is described as a claim to assess the lawfulness of an enactment, or any decision, act, or omission made in connection with the exercise of a public function. Decisions, actions, or failures to act pertaining to the performance of a public function are, as a matter of principle, subject to judicial review......

When disposing of a freehold on sale, sellers may seek to impose positive covenants for later owners to fulfil. Difficulties can occur when trying to enforce positive covenants against successors in practice and in law. While leasehold covenants bind the initial tenant and anyone taking title after them, positive covenants in freehold conveyances do not by default. One technique to safeguard and enforce covenants over freehold land is the use of an estate rentcharge. For alternative approaches see Practice Note: Positive covenants—binding successors in title. Since August 1977, only specified categories of rentcharge, including estate rentcharges, can be created. Estate rentcharges can be used to enforce: positive covenants service charge contributions towards the rentcharge owner’s costs in performing covenants for the: provision of services ...

Introduction This Practice Note outlines and explains, in particular, escheat, bona vacantia (ownerless property) and the power of the Crown, or a Royal Duchy, to disclaim bona vacantia on the dissolution of a company where the relevant asset is a freehold estate in land. It further addresses the impact and consequences of a disclaimer of onerous freehold land by a liquidator, a trustee in bankruptcy, or the Official Receiver. Escheat Paramount lordship of the Crown The doctrine of escheat has its roots in the long-standing feudal arrangements for holding land. Within that framework, all land across England, Wales and Northern Ireland is, in the last resort, held by the Crown: this is the principle of paramount lordship. Nevertheless, others may hold a legal estate in land; the more modern expression of this appears in section 1 of the Law of Property Act 1925 ( LPA 1925), which...

Purpose An environmental impact assessment ( EIA) evaluates a project’s likely significant environmental effects. It ensures the environmental implications of a development proposal are given appropriate weight, alongside economic and social considerations, when planning applications are determined, and creates opportunities to lessen those impacts. It also allows the public and other consultees to participate in the decision-making procedures. Legislation and guidance In relation to town and country planning, EIA is governed by: The Town and Country Planning ( Environmental Impact Assessment) Regulations 2017, SI 2017/571 (the English EIA Regulations) in England; and The Town and Country Planning ( Environmental Impact Assessment) ( Wales) Regulations 2017, SI 2017/567 (the Welsh EIA Regulations) in Wales Together, the ‘ EIA Regulations’. The EIA Regulations transpose into English and Welsh law the changes introduced by Archived Directive 2014/52/ EU to Archived Directive 2011/92/ EU on assessing the effects of certain public and private...

FORTHCOMING CHANGE : The Product Security and Telecommunications Infrastructure Act 2022 ( PSTIA 2022) is in partial effect. Additional provisions will commence on dates to be fixed by regulations. PSTIA 2022 alters elements of the Code and the Landlord and Tenant Act 1954, chiefly relating to the sharing of apparatus, valuation on renewal under the LTA 1954, and dealing with unresponsive occupiers. Both the current position and anticipated amendments are highlighted in the Practice Note below. For further detail about the Code, see Practice Note: The Electronic Communications Code—code rights. The Code The Electronic Communications Code (the ‘ Code’) appears in sections 106–119A and Schedule 3A of the Communications Act 2003 ( CA 2003). It superseded the earlier Electronic Communications Code, which had been located in Schedule 2 to the Telecommunications Act 1984 ( TA 1984) (the ‘previous Code’). This Practice Note explains whether an...

Negotiation Guide Part of the Practical lease negotiation collection, this Negotiation Guide sits alongside the Practice Note: New starter guide—entering into new commercial leases. A lease granted for a term of years may include a mechanism allowing the parties, or just one of them, to bring the lease to an end before the term expires. This is commonly called a break option (also known as a break clause, or an option to determine). A break clause can be operated: at any time after a specified date (a ‘rolling break’) on one or more specified dates upon the occurrence of identified events Where the break is conferred on the tenant, it is a tenant’s break option (or tenant’s break right), and where it benefits the landlord, it is a landlord’s break option (or landlord’s break right). The parties may alternatively agree mutual break rights, giving both landlord and tenant the...

Good and marketable title This Practice Note explains the meaning of ‘good and marketable title’, a phrase frequently seen in title certificates, reports, and property warranty provisions. For more detail on reporting to lenders and on property warranties, see the Practice Notes: Reporting to a lender in an investment real estate finance transaction, and Property warranties and indemnities in corporate transactions. The UK Finance Mortgage Lenders’ Handbook and the Building Societies Association Mortgage Instructions likewise require a lender’s solicitor to be in a position to certify that the title to the property is ‘good and marketable’. See Practice Note: Lenders’ instructions—the UK Finance Mortgage Lenders’ Handbook and the Building Societies Association Mortgage Instructions therein......

A caution against first registration Within this Practice Note, a ‘caution’ denotes a device for safeguarding interests in land that is not yet registered. It does not itself bring an interest into being, nor does it alter the validity or ranking of any interest held by the cautioner. Instead, it prompts HM Land Registry ( HMLR) to serve notice on the applicant for the caution—namely, the cautioner—whenever an application is made to register for the first time the legal estate relating to the land covered by the caution. This notification enables the cautioner, where there is reasonable cause, to challenge that first registration, if necessary. For more comprehensive direction, consult HM Land Registry Practice Guide 3: for detailed guidance......

Introduction Most leases impose an absolute bar on assigning part of the demised premises, owing to likely complications concerning and arising from: apportionment of rent, other sums and covenant obligations as between the split parts progressive dilution of tenants’ covenant strength the physical subdivision of the premises potential knock-on adverse effects on rental values and/or the value of the landlord’s reversion Nevertheless, assignment of part is sometimes allowed in practice under leases granted for a substantial term on payment of a significant premium or on a rent‑sharing basis, often with development obligations on the tenant (this applies to both commercial and residential schemes). Where the term is very long (potentially up to 999 years), landlord’s consent may not even be required if the assignment meets strictly pre‑determined criteria and/or is notified to the landlord within a specified period following the event. If the lease is...