Caution on Consent

 

 

With conditions on the high street showing little signs of improvement and tenants seeking to maximise their income streams, Landlords and their agents or surveyors should carefully consider their response to any applications for consent.

 

The case of Prudential Assurance v Mount Eden Land may date back to 1997 but its implications are of paramount importance. The tenant, in accordance with the provisions of the lease, asked for consent to alter the premises. The Landlord’s agent replied in a letter setting out terms upon which a licence would be granted. The letter was headed “subject to licence” and in the body of the letter it stated that if the tenant confirmed acceptance of the terms they would arrange for the solicitor to prepare the licence. The tenants went ahead with the alterations without the licence and subsequently the Landlord claimed a breach as the licence was never put in place. The court however held there was a binding agreement. 

 

Many agents and surveyors will therefore bind the Landlord to an alteration, assignment subletting or a change of use merely by expressing initial consent before a solicitor is even involved. This case has been confirmed in subsequent decisions even to the extent that email correspondence from a Landlord’s solicitor agreeing in principle to assignment making it clear that the email did not constitute a Licence nevertheless constituted the licence for these purposes.

 

It is therefore advisable that the Landlords agent or surveyor should not give consent until they (and their clients) are comfortable with the terms of the tenant’s application (be it for assignment, alteration or otherwise). To assist in preventing inadvertently granting consent, solicitors should be involved from the outset and any licence must be made conditional (for example on undertakings as to costs). Surveyors and agents should be wary of expressing any form of consent or acceptance to a tenant’s request in correspondence, even if qualified.

 

Increasingly, leases will be drafted in such a way that applications for Landlord consent will be “subject to a formal licence by deed drawn up by a solicitor” to prevent any ambiguity. The problem arises in part from the fact that most cases simply provide for the Landlords consent to be in writing.  This problem may be overcome in the case of leases granted in future if Leases are drafted, to make it clear that the consent must be given in a deed prepared by the Landlords Solicitor.

 

If you require advice in relation to the issue of consent or a tenant’s application, BSG has a wealth of L&T experience and can provide valuable assistance and guidance. Please contact Alex Walsh awl@bsglaw.co.uk at Preston office 01772 253841 or Mark Burrow mwb@bsglaw.co.uk in Lancaster 01524 386500.

Options to purchase and Conditional Contracts

 

 

We have recently been instructed by a number of vendors following approaches by developers looking to secure sites for residential development. Whilst this is clearly a positive sign of increasing confidence in the market, there are a number of factors to consider when acting on behalf of the landowner.

 

(1)   Is the transaction to be an option agreement or conditional contract? The latter obviously favours the seller in terms of providing greater certainty; the developer is committed to purchasing the property in the event that planning permission is obtained. An option merely provides the purchaser with the right to exercise that option to buy. It is important to bear in mind that the purchaser will want to drive the matter and seek the ability to walk away if the planning permission granted does not match their plans for the site. Negotiating the contract to ensure flexibility and communication between the parties in the event of a potential planning hurdle can benefit both buyer and seller.

(2)   How long is the option or contract to run for? Following exchange the purchaser will usually place a restriction on the landlowners title; be aware of developers merely seeking to ring-fence sites to prevent and preclude competitors. The longer the period granted, the more time a purchaser has to limit the landowners ability to freely deal with the property. Long stop dates should be agreed from the outset.

(3)   In the event that the buyer does not want to proceed with the planning granted, the seller may wish to proceed with another interested party. Therefore, a clause requiring the assignment of any copyright in plans and drawings for the development and for the removal of the title restriction should be included.

(4)   Consider the concerns of the seller; do they want to restrict development on the property (for example in the event they remain in situ on retained land) or solely want to dispose of the whole of the property? Is the deal exclusively for the whole of the property or will the seller consider a sale of part if the developers plans change? Some clients will require a certain amount of guidance in such deals and its therefore helpful to establish their desired outcome from the transaction along with managing their expectations.

Obviously there will be a whole host of other issues which require careful consideration in such transactions ranging from the calculation of the price to section 106 obligations. If you have any specific enquiries or would like to discuss matters in further detail, please contact one of our commercial team. Alex Walsh awl@bsglaw.co.uk in Preston or Mark Burrow mwb@bsglaw.co.uk in Lancaster.

CAVEAT VENDITOR!

Whilst a new version of the Commercial Property Standard Enquires being released is slightly less anticipated than the latest iPhone, the introduction of CPSE 1 (3.2) serves as timely reminder to solicitors, agents and clients alike of the care required in providing accurate responses to enquiries.

 

The concept of ‘caveat emptor’ (let the buyer beware) can be a little misleading and hoodwink sellers into the misapprehension that the burden of risk lies solely with the purchaser. The potential for claims of misrepresentation against both agent and client is highlighted by recent caselaw.

 

In the case of Clinicare, a dry rot enquiry was met with the fairly standard response that, whilst the solicitor was not aware of any, the buyer should rely on its own investigations. The buyer arranged for a survey which revealed the existence of damp and recommended a further survey which the buyer proceeded without. On dry rot subsequently being discovered, the sellers’ solicitor was successfully sued.

 

It was held that knowingly failing to disclose the existence of the dry rot (presumably on client instructions) led to an actionable misrepresentation, Merely advising the purchaser and their solicitor to rely on their own investigations will not simply pass responsibility and, as such, the burden. Similarly, in the residential case of McMeekin, a sellers’ failure to disclose an ongoing neighbour dispute amounted to misrepresentation and an award of £67,000 in damages.

 

It is imperative that sellers (and those acting for them) answer such enquiries with due consideration. In a challenging market, it may be tempting for vendors keen to clinch a deal to be somewhat economical with the truth. However, with sizable sums involved purchasers are more frequently turning to litigation where a problem, not disclosed in the conveyancing process, materially affects enjoyment or use of the property. Sellers are advised to offer more rather than less information to prevent such problems.

 

BSG can offer invaluable advice to agents and vendors in the disclosure required in both commercial and residential matters. If you have a question or query relating to CPSEs or SPIFs, please do not hesitate to contact Alex Walsh at the Preston office on 01772 253841 or email aw@bsglaw.co.uk or Mark Burrow in Lancaster on 01524 386500 or email mwb@bsglaw.co.uk

Quality Conveyancing!

 

 

 

BSG Solicitors secures Law Society's new quality mark

 

BSG Solicitors in Lancaster & Preston has secured membership of the Law Society's Conveyancing Quality Scheme - the mark of excellence for the home buying process.

 

BSG Solicitors underwent rigorous assessment by the Law Society in order to secure CQS status, which marks the firm out as meeting high standards in the residential conveyancing process.

 

Law Society President Lucy Scott-Moncrieff said that the Law Society introduced CQS to promote high standards in the home buying process.

 

"CQS has established itself as the quality mark of the home-buying sector and enables consumers to identify practices that provide a quality residential conveyancing service. With so many different conveyancing service providers out there CQS helps home-buyers and sellers seek out those that can provide a safe and efficient level of service."

 

Tom O’Neill, partner in the property department says: " BSG Solicitors is delighted to have secured CQS status. Buying and selling a home can be a stressful time. Choosing a solicitor to help in that process just got easier. By looking for a CQS firm like BSG the public can seek out a firm that has proved its commitment to quality.

 

“The overall beneficiaries will be clients who use BSG when buying a home. They will receive a reliable, efficient service as recognised by the CQS standard."

 

The scheme requires practices to undergo a strict assessment, compulsory training, self reporting, random audits and annual reviews in order to maintain CQS status. It is open only to members of the Law Society who meet the demanding standards set by the scheme and has the support of the Council of Mortgage Lenders, the Building Societies Association, Legal Ombudsman and the Association of British Insurers.

 

Contact Tom O’Neill ton@bsglaw.co.uk 01524 386500 in Lancaster, and George Mercer gam@bsglaw.co.uk 01772 253841 in Preston.

 

For more information on the Law Society's Conveyancing Quality Scheme visit www.lawsociety.org.uk/cqs

 

Or contact the CQS Unit on 020 7316 5550 or CQS@lawsociety.org.uk