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Summary Property and Environmental Considerations - Private Acquisitions £2.99   Add to cart

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Summary Property and Environmental Considerations - Private Acquisitions

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  • May 12, 2023
  • 8
  • 2022/2023
  • Summary
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JCBLAW
10. PROPERTY & ENVIRONMENTAL ISSUES

ISSUES FOR BUYER TO CHECK
 Title vested in S / T = good and marketable title to properties
 3rd party rights adversely affecting property (e.g. charges/security that need to be released)
 3rd party consents to transaction – consent to assign (business sale) / CoC clause in lease
(share sale)
 Value of property
 Contingent liabilities (e.g. original tenant liability in leaseholds)
 Contingent environmental liabilities

 Planning position re: property
o PP for building works and changes of use
o Conditions complied with
o No outstanding planning obligations
o Planning charges have been discharged
 Property can be used for actual / proposed use
 SDLT + stamp duty history for property


GOOD AND MARKETABLE TITLE
 Business sale – S has duty under open contract rules to disclose defects in title, but
otherwise caveat emptor applies
 Share sale – no implied duty, so B must establish:
o T has good title
o Properties have benefit of all necessary rights for beneficial use + enjoyment
o Properties not subject to onerous conditions / third-party rights
o Properties may be used for intended purposes

 Generally, B, representatives + surveyor make site visit to confirm seller has complied with
repair obligations
 B should also obtain valuation

, DD & DEAL STRUCTURE

ORIGINAL TENANT LIABILITY (SHARE SALE)
 Was T ever the original or a subsequent tenant of a pre-1 January 1996 (Old) Lease?
 If T was:
o The original tenant of an Old Lease; or
o Assigned an Old Lease at some point (so T was the tenant in the past) and it
covenanted with LL in the licence to assign to perform those covenants throughout
the remainder of the term
 T will be liable for breaches by the current tenant = potential source of
liability for T on a share sale + could devalue T

 Business sale – if LH interest is an asset included in transaction, B becomes new tenant,
so original tenant liability is not an issue for B

AUTHORISED GUARANTEE AGREEMENTS (AGA)
 Under New Leases, T automatically released from obligations on assignment; however,
may be required to enter into AGA
 Where T has been tenant under New Lease, B should ask whether any AGA liability + see
copies of any relevant AGAs

SECURITY OF TENURE

Target as tenant
 Share sale – T remains tenant and can continue to exercise LTA 1954 rights of security of
tenure at the end of its lease term
 Business sale – assignment of lease would include assignment of tenant’s rights under LTA

 Must check that lease not contracted out of LTA 1954
o T will not have a right to remain in premises after expiry of term + will have no right
to a new lease where:
 LL’s notice on tenant
 Tenant provided simple or statutory declaration
 Lease contains clause referring to both + stating provisions of LTA do notapply
 If contracted out, inform client of consequences

Target as landlord
 Issue where B / T want to occupy premises + lease not contracted out
 LL will have to rely on s 30(1) LTA ground e.g. (g) LL has a firm and settled intention to
occupy the property itself, but this cannot be relied upon where L acquired its interest in the
5 years prior to the expiry of the tenancy (s 30(2) LTA)
 Share sale – ensure T has held interest for > 5 years prior to expiry of tenancy
 Business sale – if buyer client buys reversion ≤ 5 years before expiry of existing tenancy, it
will not be able to oppose new tenancy on s 30(1)(g) ground
 s.42 LTA extends LL’s right to refuse new tenancy under s 30(1)(g) to a situation where the
person intending to occupy is another company in the same group as LL

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