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
RIGHT OF FIRST REFUSAL
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller JCBLAW. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £2.99. You're not tied to anything after your purchase.