Welcome to Commercial Leases Chaired by Ms. Justice Mary Laffoy We will get underway at 2pm IT assistance? Contact us in chat Or call 01 8788 258
Chairperson’s Opening Address Ms. Justice Mary Laffoy IT assistance? Contact us in chat Or call 01 8788 258 2
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Alienation Landlord’s Perspective: Mark Barr IT assistance? Contact us in chat Or call 01 8788 258 4
Central Law Training Landlord & Tenant Seminars Alienation – A Landlords Perspective Mark Barr April 2020
Introduction • Pre-lease evaluation of covenant strength • Review of accounts, other financial data, trading information, sectoral issues • Forms of alienation, assignment , subletting ,licensing, sharing of possession • VAT implications 6
Review of Draft Clause • General prohibition on alienation save as provided in alienation covenant • S 66 L&T(amendment) Act 1980 • Note issues where alienation is by way of charge to a lender to the Tenant • Information on proposed assignee or sublessee • Back to checking covenant strength • Accounts/trading information etc • Requirement for a guarantor or surety for corporate assignees • Licence to assign 7
Subletting Entire or Part? • Sublease to reflect terms and conditions of head lease including rental provisions and rent review • Amount of rent reserved by sub lease -higher of market or passing? Valuation implications and sub lease rent as a comparable in a rent review under the head lease • Note provisions of S.78 of L&T Amendment Act 1980 • Deed of direct covenant/Licence to Sub Let 8
Security of Tenure/Landlord and Tenant Rights • Typically a Landlord will require a sub tenant to execute a deed of renunciation as a precondition to consent • Landlord right of pre emption • Landlords reasonable legal or other expenses (S.66) and Landlords increase of any rates, taxes or other burden(S.66) • Change of Use/Consent to Alterations 9
Grounds for Refusal of Consent • S 85 of L&T(Amendment) Act 1980 – Prohibition on “contracting out” • If Alienation covenant is unreasonably restrictive/prescriptive runs risk of being void • Sample clause is of course eminently reasonable! 10
Thank you May 2020
Alienation Tenant’s Amendments: Brian O'Callaghan IT assistance? Contact us in chat Or call 01 8788 258 12
williamfry.com Central Law Training Landlord and Tenant Seminars Alienation – A Tenant’s Perspective Brian O’Callaghan
Introduction • Tenants requires flexibility • Statutory protection but difficulties with this 14
Practical Considerations • Partial alienation • Partial sub-letting – Does the premises lend itself? – Floor area restriction • Group company assignment – Outgoing tenant to guarantee assignee? – Group company sharing • Third party sharing – Tenant ensures no landlord and tenant rights accrue • Profit test 15
Further Practical Considerations • Sub-letting • Recessionary times; open market rent v passing rent • Disregard of sub-let rent on review 16 WF-26455071-v1
Brian O’Callaghan Partner, Property brian.ocallaghan@williamfry.com T +353 1 639 5316 williamfry.com
williamfry.com Central Law Training Landlord and Tenant Seminars Alienation – A Tenant’s Perspective Thanks WF-26453522
Alienation Negotiation Towards a Compromise Clause IT assistance? Contact us in chat Or call 01 8788 258 19
Repair and Yield Up Landlord’s Perspective: Brian O'Rourke IT assistance? Contact us in chat Or call 01 8788 258 20
Central Law Training Landlord & Tenant Seminars Repair – Landlord’s Perspective Brian O’Rourke April 2020
Introduction • Importance of Repair Covenant • Protect Landlord’s Valuable Interest in the Property • Context is Everything ➢ Age/condition/character of the property ➢ Extent of demise ➢ Length of term ➢ Quantum of rent ➢ Prevailing market conditions / balance of bargaining power 22
Scope of Repair Obligation • FRI v. IRI • Landlord’s aim is an entirely “clean investment” • “to repair”, “to keep in repair” - implies “to put in repair” 23
Drafting • Definition of demise is crucial • Covenant to repair From time to time and at all times during the Term: a)to keep clean and tidy and to maintain, repair, replace and reinstate and to put into and keep in good order repair and condition from time to time and at all times during the Term, the interior and exterior of the Demised Premises and every part of it and any additions, alterations and extensions to it including, without derogating from the generality of the foregoing, the roof, structure, drains, foundations, walls (including external and load bearing walls), timbers, joists and beams of the floors and ceilings, chimney stacks, gutters, doors, locks, plate glass and other windows, fixtures, fittings, fastenings, wires, waste water drains and other pipes and sanitary and water apparatus in or on the Demised Premises; and b)to keep clean and tidy and to maintain, repair and keep in good working order and condition and (where necessary) renew and replace with articles of a similar kind and quality all plant and machinery in or forming part of the Demised Premises including the Conduits and the central heating and air conditioning plant (if any), the sprinkler system and all lifts, lift shafts and lift machinery, all boilers and all electrical and mechanical plant, machinery, equipment and apparatus. 24
Other Relevant Provisions ▪ Decoration ▪ Statutory works/obligations ▪ Break Options ▪ Yield Up ▪ Landlord right of entry (interim schedule of dilapidations) 25
Negotiation ▪ Schedule of Condition ▪ Fair wear and tear ▪ Latent and Inherent Defects ▪ Collateral Warranties ▪ Uninsured Risks 26
Thank you April 2020
Repair and Yield Up Tenant’s Amendments: Conor Treacy IT assistance? Contact us in chat Or call 01 8788 258 28
williamfry.com Central Law Training Landlord and Tenant Seminars Repair – A Tenant’s Perspective Conor Treacy
Introduction • FRI • IRI • Extent of demise / length of term / market • Contribution to repairs of structural – service charge 30
Repair • Schedule of Condition • Fair Wear and Tear • Defects / Collateral Warranties / LDI Policy • Insured Risks / Uninsured Risks • Decoration 31
Yield Up • Dilapidations • Section 65 (2) of the Landlord and Tenant (Amendment) Act 1980 The damages recoverable in any court for the breach shall not in any case exceed the amount (if any) by which the value of the reversion (whether mediate or immediate) in the tenement is diminished owing to the breach • Break Options • Practical Considerations 32 WF-26470554-v1
Conor Treacy Partner, Property conor.treacy@williamfry.com T +353 1 639 5370 williamfry.com
williamfry.com Central Law Training Landlord and Tenant Seminars Repair – A Tenant’s Perspective Thanks WF-26470554
Repair and Yield Up Negotiation Towards a Compromise Clause IT assistance? Contact us in chat Or call 01 8788 258 35
Rent Review Landlord’s Perspective: Mark Barr IT assistance? Please email cpd@cltireland.ie Or call 01 8788 258 36
Central Law Training Landlord & Tenant Seminars Rent Review – A Landlords Perspective Mark Barr April 2020
Introduction • Rent keeps pace with market/inflation • Methods of review, Open Market, CPI, Bespoke buildings with few if any market comparables. • Law Society/IAVI Clause from early 1980s 38
Role of Rent Review Valuation Surveyor in relation of Rent Review Provisions • Experience in how facets of drafting play out at arbitration or expert determination • Assume each review under the clause will go to third party adjudication 39
Review of Sample Clause • Open Market Rent - probably the most crucial definition in entire provision • Length of term of notional lease • Tenant with a special interest – a “willing tenant” includes the “Tenant” • Same terms, conditions, covenants and provisions as contained in “this Lease” • Remember onerous covenants may have negative valuation connotations at rent review and “Tenant friendly” covenants the opposite effect! • Passing rent is ignored but existence of rent review provisions is taken into account. 40
Assumptions • Ready for occupation/use • Tenant has enjoyed rent concessions for fitting out but not a “headline rent” • No devaluing work by Tenant • Premises have been reinstated if damaged or destroyed • Premises in good repair/condition • Permitted Use – avoid very narrowly described uses • Landlord and Tenant covenant compliance • Floor Area • Landlords finishes specification 41
Disregards • Tenant/subtenant occupation • Goodwill attaching to the Tenant’s business • Tenant works other than those required to comply with lease covenants 42
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