Lect 4 3201_7203 Lecture 2018(1) (2).ppt

It should be noted that unless otherwise expressly

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It should be noted that unless otherwise expressly provided within the terms of the lease, rent is payable in arrears.
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Leases Types of Rent Review clauses Indexation This primary purpose can be achieved by linking the rents to some index which reflects changes in the value of money (e.g. the Consumer Price Index). Indexation of this kind is commonly found either singularly or mixed with market type reviews. Fixed Increase A fixed percentage or dollar increase. This is commonly mixed in an indexation clause where the rent is the greater of CPI or X%.
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Leases Types of Rent Review clauses Fluctuations in market value A secondary purpose of rent review is to adjust the rent payable to take account of fluctuations in the market rental value of the property. As compared with indexation, rent review may benefit either landlord or tenant in that the rent may move upwards or downwards with the market. Upwards only reviews It has become common in commercial leases particularly in recent times to include a restriction on the rent falling. This is commonly referred to as a ratchet clause as the rent can only ratchet upwards. A further variation on this type of restriction is a 'cap and collar' which provides for a maximum and minimum level outside of which the rent will not move at review.
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Leases Conducting a Rent Review Trigger notice Time (is of the essence) Lease must specify who can instigate the review Market review considerations Disregard tenant improvements Disregard goodwill of tenant Assume tenant has complied with repair obligations No reduction for tenant’s previous rent abatements and incentives Dispute Resolution Mechanism for appointing arbitrator or expert Binding on parties Award of costs
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Leases Restrain on assignment At common law a covenant restricting alienation is not regarded as one of the usual covenants. Therefore, in the absence of such a covenant, the tenant may dispose of his interest as he wishes. S 121 of the Property Law Act 1974 provides some statutory protection for lessees by providing that the landlord is prohibited from taking a fine or premium in consideration of the landlord granting consent and that such consent shall not be unreasonably withheld. The courts have interpreted the reasonableness of withholding consent in a number of cases and generally the lessor is able to consider the proposed assignees ability to pay the rent, previous business experience, promptness in paying rent (see Pimms Ltd v Tallow Chandlers Co 1964)
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Leases Restrain on assignment Assignment of the lease does not release the original lessee from the contractual obligations under the lease. There remains privity of contract between the lessor and the original lessee. While the assignee enters a relationship of privity of estate with the lessor there is no contractual relationship. The lessee remains liable, unless expressly released from the contract, to the lessor for any breach of lease terms.
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