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Clause
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Intention of
the clause
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What the lease
might say
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When you need to implement the clause
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Alterations Clause
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Control alterations to
- layout (removal of walls),
- loading of services (extra bathrooms)
- exterior walls (holes in outer walls, ie new boiler flues)
- permitted habitation, ie, extra rooms
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Lease might saye
- absolute prohibition ie. no rights to alter
- alterations permitted (subject to landlord's consent)
NB: lease may or may not state "not to be unreasonably withheld"
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EITHER
When a lessee requests permission
OR
When it is suspected that alterations have been carried out that may cause detriment/damage to the building
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Interest Clause
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A detterent to late payment of ground rent or service charge
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if the rent.... is in arrears for (normally either 14 or 21 days)
typical clauses state interest is payable at X% above X bank base rate....
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As part of a credit control regime to recover service charge or ground rent arrears
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Decorations Clause (Landlord's / Management Companies duties)
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To set the frequency or basis on which the Freeholder and/or Management Company should maintain & redecorate the exterior or common parts
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- "as and when the surveyor deems necessary"
- every 3 years - typical in a modern lease with softwood windows
- every 5 years - most common clause
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To encourage lessees to commit to building a reserves fund towards future maintenance
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Sub-letting
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To ensure that tenants of lessees get advised of building rules/issues, eg, park in the right place, put rubbish out on the right day & that the ownership registers are up to date
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- not within last 7 years...
- Not to sub-let part of the property (ie, not as bedsits)
- serve notice of any underletting within 1 month of transaction,
- to notify of any sub-letting
- not without landlord's consent
- obtain licence form the landlord
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EITHER
When a lessee requests permission
OR
When it is suspected that a unit is sub-let and tenants need to be advised of the block rules to ensure the block does not deteriorate
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Ground Rent Provisions
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To set out the dates when ground rent is due
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- 4 times a year on the lunar calender dates (25th March, 24th June, 29th September, and 25th December),
- twice a year
- once a year
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As part of a credit control regime
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Service Charge Provisions
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- To set out the dates when service charge is due
- To set out the manner in which service charge is to be calculated
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- 4 times a year on the lunar calender dates (25th March, 24th June, 29th September, and 25th December),
- twice a year
- once a year
- in advance/in arrears
- including a reserve fund
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As part of a credit control regime
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Provisions for Reserves Collection / sinking fund
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To enable the Freeholder and/or Management Company to build up a fund towards future cyclical works of repair/replacement
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The Lessor/Management Company may at its option create and maintain a reserve fund of such sum (to be fixed annually) as shall be estimated by the Lessor or managing agents (if any) to be reasonably required to provide a reserve fund for items of expenditure in connection with the provision of the services facilities and amenities specified in Schedule
The Tenant's proportion of the service charge expenses shall include any amount required for the maintenance of the Reserved Fund hereinafter mentioned
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When considering a strategy to collect funds toward future cyclical works
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Provision for Supplementary demands
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To enable the Freeholder/Management Company to collect funds towards service charge items other than by way of a budget annually
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"to pay within X days of being demanded any such sum as the Lessors may require to reimburse the Lessors against any sum expended to fulfil their obligations...
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| Year end / Service Charge Accounts |
To set out the method of accounting to be adopted for the service charge accounts. (A legal requirement if there are more than 4 flats in the building) |
Prepare
- A statement of account
- A verification of service charge expenditure
- An audited of expenditure
Note: lease will state whether to be certified by accountant or surveyor
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When placing year end papers, as to instruct an audit when all that is required is a service charge verification would create extra cost.
To not carry out an audit where the lease sets this out may put litigation on service charge arrears in jeopardy
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| Provisions on sale of a property |
Enable person in charge of ownership registers to be properly notified of changes in ownership.
To enable the Agent to prevent sales where there is a breach of covenant or service charge arrears.
To set out criteria that purchasers have to meet (applies only where a lease sets out the seller must obtain Licence to Assign)
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That the seller must
- obtain Licence to Assign (permission to sell) from the Freeholder. Common in central London leases or high value properties
That the purchaser must
- enter into a deed of covenant (promise to uphold the lessee's covenants in the lease) with the Freeholder and/or Management Company
- notify the Freeholder/Management Company/Agent of any transfer within 1 months of any assignment
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On every sale of a unit in the block/estate |
| Forfieture/S146 Procedure |
To ensure that the Freeholder's costs of forfeiture or contemplation of forfeiture are recoverable |
- "costs in contemplation of forfeiture are recoverable from the lessee..."
- Action under S146 Law of Property Act 1925...
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When seeking to terminate a lease for breach of covenant
Note: Post February 2004 you may need a court order or the consent of the Leasehold Valuation Tribunal to be allowed to take forfeiture action
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| Rights of entry |
To enable the Freeholder and/or the Management Company to inspect units internally, both in the case of emergencies and for routine inspections |
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To inspect for breach of covenant arising from waste/neglect or alterations within a flat.
To enter & effect emergency works where damage is being caused to a unit below...
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| Insurance |
Set out whose duty it is to insure.
Set out whether insurance premiums can be collected on demand as opposed to forming part of usual service charge collection.
Set out whether the landlord can insure at the service charge cost for loss of rent.
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When considering how to pay a large insurance premium.
When considering what you can insure for.
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| Parking (allocated, demised) |
To set out what vehicles can park on an estate, how and where and who retains the ownership of a space |
A space is: "allocated" to the lessee "demised" to the lessee |
When considering how to deal with
- commercial vehicles on an estate.
- Nuisance parking
- Abuse of visitors parking
- Untaxed vehicles
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| Pets Clause |
To set out what animals can be kept in a flat |
No pets... |
To enable covenant enforcement where pets are being kept in a property |
| Nuisance Clause |
To prohibit nuisance |
Normally hours where noise such as washing machines and playing musical instruments are restricted is included in the lease |
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| Carpeting |
To ensure floors are carpeted which assists in reducing noise transfer |
Keep covered with... |
When a lessee removes carpeting and/or installs wood flooring |
| Residents duty to clean their own windows |
Keep exterior windows clean & presentable |
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When a lessee is not cleaning their windows |
| Lessee's duty to comply with statutory instruments and bye-laws |
To ensure that wiring, gas, drainage/sewerage installations within flats comply with statutory regulations |
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When wiring is out of date and could cause a hazard/invalidate buildings insurances etc. |
