Code of Practice for Commercial Property Relationships during Covid-19

Code of Practice for Commercial Property Relationships during Covid-19

Code of Practice for Commercial Property Relationships during Covid-19
Posted on 20th November, 2020

The Government published the Code of Practice for commercial property relationships during the COVID-19 pandemic in June 2020.

The Code provides an interesting insight into the issues facing our sector from the Government’s perspective and should be reviewed carefully by landlords and tenants.

Key Points

The default position has to be that If tenants can pay their rent, they should do so. However, the Code looks at what can be done where the tenant cannot. Landlords and Tenants are encouraged to act in good faith and be open and flexible in negotiations.

There is a non-exhaustive list of points for Landlords to consider in negotiations:

  1. Closure period(s) impacting the tenant’s business, and ability to trade via other means;
  2. Duration and extent of restricted trading due to social distancing requirements;
  3. Extra costs and obligations through protecting customers to adhere to social distancing requirements;
  4. Needs of other stakeholders such as banks, employees, suppliers during this period;
  5. Government support received and how this has been used;
  6. The tenant’s previous track record under its lease terms and any concessions to the tenant already agreed;
  7. The impact that providing support may have on the tenant’s competitors and on other support already offered to tenants;
  8. Possible alternative considerations in a regulated sector. For example, pubs that are regulated under the Pubs Code.

The Government also tables a series of alternative arrangements for consideration. The Code is explicit that these are suggestions and not intended to be binding but it may be useful for both parties to consider whether one or more of the following would be appropriate:

  1. a full or partial rent-free period for a set number of payment periods;
  2. a deferral of the whole or part of the rent for one or more payment periods;
  3. the payment of the rents over shorter payment periods for a set time (e.g. monthly rather than quarterly) including provision for their payment in arrears;
  4. rental variations to reduce ongoing payments to a current market rate and/or to provide for all or part of the rent to be paid as a proportion of turnover of the site, incorporating any period during which the site was closed;
  5. landlords drawing from rent deposits on the understanding that the landlord will not then require that the deposits be “topped up” by the tenant before it is realistic and reasonable to do so;
  6. reductions in rent, either in whole or part, across other units occupied by the tenant and owned by the landlord, as part of a negotiated agreement applying to a portfolio of units;
  7. landlords waiving contractual default interest on unpaid rents or rents paid in arrears to make payment plans more affordable;
  8. provisions for ending the solutions on a fixed date, or on reaching the trigger point of particular circumstances;
  9. tenants and landlords agreeing to split the cost of the rent for any unoccupied period(s) between them;
  10. any of the above in return for other arrangements e.g. a reversionary lease on reasonable terms, the removal of a break right in favour of the tenant, or an extension of the lease.

The Code also contains guidance for dealing with service charges and insurance which again recognises that circumstances will vary and recommends flexibility. In many cases, inactivity and health and safety requirements have led to increased service charge costs via additional equipment, security and cleaning being required.

Next Steps 

Even though the points in the code are not expressed to be binding, it may be that any matters expressed within leases as being subject to the Landlord or Tenant acting reasonably are consequentially already influenced by this guidance. This may be particularly relevant to alienation provisions.

It is important at the moment to distinguish between guidance that the Government provides and legislation passed by Parliament. However, the concern for many Landlords (and advisors) will be whether these suggestions crystallise into legislation or more rigid guidelines in the coming months.

For further information, please contact James Cleveland or Jo Knight.

Litigation Solicitor – Exeter, Full-time

Our litigation department deals with a broad range of civil litigation work, acting primarily for private individuals but commercial clients too. The work ranges from private property,  landlord and tenant disputes, to commercial claims, contentious trusts and probate, contract disputes, personal injury and clinical negligence. We are a closely-knit team comprising one Partner, one Senior Associate, a Litigation Executive and three secretaries.

We currently have a full-time vacancy for an ambitious and energetic solicitor to join this friendly, hard-working, dynamic team.

The successful candidate must be able to work independently, without day-to-day supervision, but there will be regular reviews, and the opportunity to seek advice from more senior colleagues.

The role will include developing your own caseload, whilst assisting on larger, more complex cases conducted by the Senior Associate or the Partner in the team.

A guideline for experience is PQE 3 to 5 years, or equivalent, in terms of the candidate’s skills and abilities.

You must have the following experience:

  • Dealing with employment work to include both employers and employees, settlement agreements, tribunal claims, County Court claims, non-contentious work, and TUPE.

In addition, knowledge and evidence of having worked in the following areas would also be useful:

  • Contentious probate;
  • Landlord and tenant;
  • Property disputes; and
  • Commercial disputes.

A  proven track record in developing an area of work would be useful, together with a willingness to be involved in the firm’s marketing and business development plan. Local knowledge is also important, as many of our clients come from the local community, and choose us because we offer a personalised bespoke service.

A full Driving Licence is essential as you will be expected to see clients at any or all of our offices, attend mediations, site visits, court, and conferences with Counsel.

The successful candidate will have a robust attitude, the ability to think strategically, with good attention to detail, strong interpersonal skills, be willing to take the initiative, and drive ideas forward.

This post will provide excellent career prospects in due course for the right person

This is an exciting opportunity to become an integral member of our Litigation Department and to thrive in a professional and friendly atmosphere offering a competitive salary.  If you are looking for a new challenge please send your CV to jo.garrod@everys.co.uk.

 

 

Mediation training for Exeter Law Students

DASLS Mediation Panel was delighted to put on a Mediation training event for the Exeter University Law Students on 8th October 2020. In a change to last year’s offering with delivery on campus and in person, this year it was conducted entirely by Zoom!  Despite a large number of attendees, the event went without a hitch and we hope this will become a regular event in our diaries for many years to come; educating those entering the world of law on the real benefits of mediation. DASLS Mediation Panel doing its bit for Mediation Awareness Week!

Anyone interested in Mediation should consider the benefits of using Zoom.

Making a Will with a Dementia Diagnosis

Making a Will with a Dementia Diagnosis

Making a Will with a Dementia Diagnosis
Posted on 1st April, 2020

Being diagnosed with dementia does not necessarily mean that you do not have the capacity to create a new will, create a Lasting Power of Attorney or sign other legal documents. However, where capacity is questioned it is important to speak to a solicitor to get advice for peace of mind and security.

Everyone should keep their will under constant review as their situation changes or if a significant amount of time goes by. A will may need updating due to a change in relationship, a death or an increase or decrease in the size of the estate. If a person has been diagnosed with dementia, it makes it all the more important to ensure that the legal papers are put in place in a timely manner to accurately reflect their current wishes and situation.

The Test for Testamentary Capacity

When you meet with your solicitor to discuss your new will, they will need to establish that you have the required testamentary capacity (the capacity to make a will). Capacity is time and place specific and should be assessed individually and according to your condition on that day and at that time. If you are found to not have capacity on one day this does not stop you from having the required capacity on another day if your condition improves.

The test for testamentary capacity was held in the historic case of Banks v Goodfellow (1870). The case outlined that a person creating a will must demonstrate the following things in order to be found to have testamentary capacity:

  1. They must understand the nature of creating a will and its effects. This means that a person must demonstrate that they know what a will does and must understand that they are giving away their assets and possessions.
  1. They must understand the extent of the assets and property they own and are giving away upon death. A person does not need to be able to recall every single item and asset they own, but they must know generally and have an awareness of what their estate consists of, including anything that they expect to receive in the future or anything which is owed by them.
  1. They must understand the people who would be considered to have an interest in their estate even if the person ultimately decides not to leave anything to those people. These can be people who might have either a moral or legal claim on their estate. The person should also understand their closeness and relationship to the people in order to leave a sufficient and proportionate gift.

If someone with deteriorating mental capacity is leaving someone out of their will it is important to take legal advice on the risks of a successful claim against the estate.

  1. The person must not have a “disorder of the mind or insane delusion” which would result in the distribution of their estate in a way which they would not have done if they had been of sound mind.

This means that the dementia must not be so far advanced that it would affect the wishes of the person making the will.

The level of understanding required with regards to the above test depends on individual factors. For example, the complexity of the will, the complexity and size of the estate and any potential claims on the estate.

The other law relating to the issue of testamentary capacity is the Mental Capacity Act 2005 (MCA). There was uncertainty as to whether the act replaced the capacity test in Banks v Goodfellow above, however the case of Walker v Badmin (2015) confirmed that “the correct and only test” for testamentary capacity is the one outlined in Banks v Goodfellow and therefore the MCA should work alongside but not in substitution of the test.

The main differences between the case law and the MCA 2005 is that the act presumes that a person has capacity unless proven otherwise, and the act also suggests that a person must understand all relevant information rather than merely having an awareness. This means the test under the MCA 2005 is more stringent.

Even if all of the above elements are satisfied this does not stop a will from being disputed later down the line. Your solicitor is likely to request a medical assessment in order to evidence your capacity to make a will at the time you are making it.

Getting a Capacity Assessment

In the case where there are concerns about a person’s capacity, your solicitor may ask for a capacity assessment from either your GP or a capacity expert. Whether this is done by a GP or a Capacity Assessor depends on how much the disease has progressed and the severity of the symptoms presenting.

Time is of the essence with dementia because it is a progressive disease which will eventually deteriorate. If a person is found to not have testamentary capacity, then their assets will either pass under the terms of a previous will or under the rules of intestacy if there is no will in place. A statutory will may be an option: this is when a will is made on behalf of an incapacitated person under the authority of the Court of Protection by someone other than the testator under strict guidance.

If you are making a will or other important legal documents with a dementia diagnosis, it is important that you act swiftly while you still have capacity and that your capacity is evidenced.

We’ve been shortlisted!

We’ve been shortlisted!

Well done to our Private Client team who have been shortlisted in the ‘Team of the Year’ category for the Devon & Somerset Law Society Legal Awards 2020. The Awards ceremony will be held on Thursday, 30th April – we’ll be there, sitting with our fingers crossed under the table! Wish us luck!

A New Year review

A New Year review

A New Year review
Posted on 8th January, 2020

We are now into a new year and although you may have contemplated your New Year’s resolutions, did you give any thought about making or reviewing your will or power of attorney?

At an already difficult time when such documents are required, taking care of these matters beforehand ensures less worry for your family and friends and means you control how your loved ones are protected. Often overlooked is the importance of reviewing a previously signed will or power of attorney.

Without a will, the laws of intestacy dictate the various categories of your family who will benefit from your estate. This means you will have no control over what happens to your assets or the people who will benefit from your estate. This may mean that the people you really want to receive your assets will get less than you intended, or nothing at all.

Without a power of attorney, should you become unable to make your own decisions, a Deputy is required to be appointed by the Court to manage your affairs on your behalf, and this may not be the person you would have chosen. A lasting power of attorney (LPA) lets you appoint the persons (attorneys) whom you wish to manage your financial and health and welfare affairs. Having an LPA avoids the complex, lengthy and expensive Deputy application, the Court’s annual charge to oversee the Deputy’s actions and the need for the Deputy to seek the Court’s permission to deal with certain aspects of your affairs.

A will may need updating where there has been a change in personal circumstances, your beneficiaries or your wishes. Where any law changes have occurred, a review can ensure that your will remains tax efficient.

An enduring power of attorney (EPA) signed before October 2007 remains valid, although you may wish to consider giving your attorneys greater flexibility by updating this to the newer LPA version. Whilst the EPA registration process can take around six weeks and mean a delay in matters at a time when speed may be of the essence, a registered LPA allows your attorneys quick access to manage your affairs. Even if you feel your EPA requires no updating, you may wish to consider a Health and Welfare LPA as an EPA only covers your financial affairs.

When reviewing an LPA / EPA, consideration should be given to whether your appointed attorneys remain able to act for you and that any included restrictions remain relevant.

Following a review, no action may be required but at least this ensures your wishes continue to be up-to-date and correctly reflected based on your current circumstances.

If you are considering making or reviewing your will or power of attorney, please contact one of our offices.

 

Rent charges: to be avoided?

Rent charges: to be avoided?

Rent charges: to be avoided?
Posted on 21st November, 2019

Historic rent charges are yearly payments made by homeowners to whoever owns the rent charge (rent charge owner), and date mainly from the end of the nineteenth century and the early twentieth century. The rent charge owner does not usually have any interest in the property other than a right to receive this sum each year. In today’s terms, historic rent charges are generally for nominal sums, say a few pounds a year. Despite the small sums due, payment of these should always be made promptly and it is worth seeing if these can be redeemed by the payment of a single lump sum.

In the 1970s, legislation was passed preventing the creation of any more of these historic rent charges, with a few exceptions – one of which was estate rent charges.

It is becoming increasingly common for a developer to set up a management company on new developments. These companies manage common areas and facilities, such as playgrounds, drainage, amenity land, car parks and private accesses, including their insurance, cultivation, maintenance, repair and lighting. Each freeholder is responsible for a proportion of these estate charges. By applying an estate charge to freeholders, the developers or estate managers can ensure the recovery of costs accrued from providing services and maintenance.

Whilst leasehold owners have significant statutory protection in relation to service charges payable under a lease, freeholders do not share the same rights and protection. Freehold owners should therefore be aware that they have very limited protection and few options to investigate or challenge any charges demanded from them. There is no implied test of reasonableness for estate charges, and any dispute or challenge must be made by bringing court proceedings.

Freeholders also have no right to receive accounts or to be provided with information relating to the charges claimed, unless express provision is included in the title to the property.

Both historic rent charges and estate rent charges have the same enforcement remedies. If rent is unpaid for 40 days, the rent owner’s options for enforcement of the debt may include rights to repossess the property or to grant a lease of the property to trustees. The trustees will then try to use that lease to raise enough money to settle the unpaid rent. A case in 2016 (Roberts v Lawton) confirmed that once a lease had been created it would continue even if the arrears had been paid off and the rent charge terminated, unless the rent charge owner agrees voluntarily to remove it. Such enforcement remedies are very heavy handed.

There is no obligation on the rent owner to serve notice demanding the over-due estate charges before pursuing these draconian remedies. These penalties create a great risk to homeowners and any lenders whose charge is secured on the property. The Government has promised reform but, for the time being, if you are contemplating buying a property subject to historic rent charges, check if these have been paid up to date and look at the possibility of redeeming the charge. Historic rent charges are common in Bath and Bristol.

With regard to estate rent charges, you should make sure the rent is paid on time so as to avoid any of these penalties. Also, try to ensure that even if the property is subject to such a yearly payment, the various statutory remedies are stated not to apply or are watered down so as to mitigate the enforcement risks.

 

Cohabitation

Cohabitation

Cohabitation
Posted on 13th September, 2019

It is suggested in this morning’s newspapers that marriage for women is at a record low.

What then happens in a relationship breakdown?

It is widely recognised that upon relationship breakdown unmarried couples do not have the same rights as married couples.

The law relating to property disputes between unmarried couples centres on the parties’ intentions. It does not give the court the ability to take account of the parties needs or contribution. If intentions are not clearly recorded in a declaration of trust or cohabitation agreement then there is no scope for argument.

A cohabitation agreement can help couples agree how they will manage their household and other finances and living arrangements during their relationship as well as in the event that it comes to an end.

Setting clear expectations from the start has to be the best way to avoid a costly battle in the future.

If marriage is not for you then consideration of a cohabitation agreement is vital if financial interests are to be protected.

If you need further advice, please contact Kris Seed who is the Head of Family department on Exeter 01392 848951.