Procedural Steps for Lease Transactions

Introduction

This chapter examines the **procedure for the grant of a lease or underlease** of commercial property, the **assignment of an existing lease**, and the **licence to assign and licence to underlet** required where the landlord's consent is needed. The conveyancing procedure is very similar to that used on a freehold transaction, so the chapter focuses on **those matters where the leasehold procedure differs** — drafting the lease, the agreement for lease, deduction of title, pre-completion formalities, completion and post-completion registration, **SDLT/LTT**, the **Authorised Guarantee Agreement (AGA)** and the **old lease / new lease** distinction under the **Landlord and Tenant (Covenants) Act 1995**.

Assessment focus

For SQE1 FLK1 (Property Practice) you must be able to **advise on the steps in a leasehold transaction** and apply them to a client-based scenario. Key examinable points include: when **deduction of the freehold title** can be called for (only where the term exceeds **seven years**); the **registration requirements** for leases (a lease for **seven years or less** cannot be registered with its own title and takes effect as an **overriding interest**; leases over seven years must be registered, and first registration must be applied for within **two months**); the difference between the **SCs and SCPCs** treatment of unobtained landlord's consent; the role of the **AGA** and the **old lease / new lease** distinction under the **Landlord and Tenant (Covenants) Act 1995**; and the **SDLT/LTT** deadlines. Questions are single best answer questions (SBAQs) requiring **application**, not mere recall. This is a closed-book assessment.

Study tips

1) Learn the **seven-year line** in two directions: a tenant may **call for the freehold title** only where the term is **more than seven years**; and a lease for **seven years or less** is **not** registrable with its own title (it is an overriding interest). 2) Memorise the **registration deadlines**: first registration / dealing within the relevant period; an unregistered lease with **over seven years** unexpired must be registered within **two months** of assignment or it is **void as to the legal estate**. 3) Note the **SDLT (14 days, England & NI)** v **LTT (30 days, Wales)** payment deadlines (figures will be given in the exam). 4) Master the **SCs v SCPCs** rules on landlord's consent — rescission v postponement. 5) Fix the **1 January 1996** dividing line for **old v new leases** and remember that an **AGA** binds the **assignor** only while its **assignee** remains the tenant.