Jargon Buster

Jargon Buster


An A-Z of legal jargon explained.

Agent: Description of a firm or individual who advises on and carries out property management normally in a specific field e.g., commercial, or residential property.

 

Agreement for lease: a written agreement on a property whereby, if the obligations contained in the agreement are met, a lease of the property will automatically be granted on terms pre agreed and set out in that agreement. - For example, if a tenant carries out agreed works on a property, a lease of that property will follow.

 

Alienation: general description covering the giving away of the lease through assignment, sub letting or other means of parting with possession of the lease.

 

Assignment: the transfer of a lease to another party so that the party to whom the lease is transferred becomes in effect the lessee

 

Authorised Guarantee Agreement (AGA) (relevant to England and Wales only):

An agreement requiring a tenant to act as a guarantor for the party to whom a lease is transferred by an assignment, which is required by a specific obligation in the lease.

 

Break clause:  the right to terminate a lease at one or more specified dates during and before the specified end date of the lease. This can be for the landlord only, tenant only or for both parties. It potentially shortens the length of a lease.

 

Building surveyor: a surveyor specialising in building surveys, preparation of schedules of condition or dilapidations, planned maintenance, one off and large repairs and the preparation of budgets..

 

Chartered Surveyor: the generic term for surveyors who are members of the Royal Institution of Chartered Surveyors (RICS) and therefore must abide by the Institution’s standards.

 

Charity Trustees: the persons appointed with responsibilities for the strategic management and control of charities (including directors of charitable companies). Charity trustees must amongst other things: act in a sensible and businesslike manner in directing the affairs of their charity; ensure that the charity's property is used only in ways that further the objects of the charity; manage conflicts of interest; and comply with all legal requirements that are relevant to what they do.

 

Commercial property surveyor: a surveyor specialising in property agency, rent reviews, lease renewals, landlord and tenant issues and commercial property management.

 

Commercial Property Standard Enquiries (CPSE): a set of written questions in standard format raised by a tenant's solicitor to find out as much information as possible about the property from the landlord before the lease is granted.

 

Community Asset Transfer (CAT): the freehold transfer or long lease of land and/or buildings from public ownership to community ownership. In most cases this involves a local authority transferring the ownership of an asset to a community organisation or social enterprise.

Covenant: an obligation on either party contained in a lease or other deed.

 

Demised premises: land or building let under a lease.

 

Dilapidations: breaches of repairing obligations on the part of a tenant under a lease, normally arising at the end of a lease, for which payment may have to be made

 

Easement: a permanent legal right granted over a property to another property (normally adjoining) to enable or enhance use of that adjoining land.  Examples are a right of way, or a right to use pipes or cables passing through other land.

 

Energy Performance Certificate (EPC): a certificate that provides a measure of the property's energy use and its impact on the environment. It is increasingly required on the construction, sale or letting of property.

 

Exchange contracts or Agreements: where a legal agreement comes into force by the parties dating and exchanging identical signed copies with a specified future completion date.

 

Freeholder: a property owner who owns the property outright with the ability to sell it..

 

Forfeiture (relevant in England and Wales only): the right of a landlord to terminate the lease early if the tenant fails to comply with a lease but subject to a tenant’s right to apply to the court effectively to cancel the termination (‘relief from forfeiture’) on condition that the tenant remedies the breach of the lease and pay the landlord’s professional costs.

 

Fully repairing and insuring (FRI) lease: a lease where the tenant is responsible for repairing, maintaining, and insuring the interior and exterior of the premises.  Applies also when the landlord carries out some of these obligations but recovers the cost from the lessee.

Guarantee: to be responsible for another party’s obligations under a lease, should that party default.

 

Guarantor: a party that agrees to be responsible for a tenant’s obligations under a lease, should the tenant default.

 

Headlease: a lease agreement between a freeholder and their (immediate) tenant and the terms is used when the tenant has sub let some or all of his leasehold interest whereby he becomes the landlord for the sub tenant.

 

Heads of Terms: a summary of the agreed key points to be included in a lease or other legal agreement and used as the basis of instruction to a solicitor.

 

House in Multiple Occupation (HMO): a property rented out by at least 3 people who are not from one “household” but share facilities like a kitchen and bathroom. This type of accommodation often needs a licence from the local council.

 

Interest (in property): a legal right, share, or financial involvement.

 

Landlord: the party granting the lease to the tenant. Normally owner of the freehold but can be a tenant who is sub-letting his interest. The landlord is the party able to enforce the terms of the lease against the tenant.

 

Land Registry the national government central register hold details of and guaranteeing the ownership of all freeholds and leases over seven years.  Also provides some information regarding rights of others that may exist over such property.

 

Landlord and Tenant Act 1954: an Act of Parliament giving tenants certain rights for their leases to continue beyond their end date and to apply to the court for a new lease in certain circumstances. The Act will not apply if a lease is “contracted out” through a process involving a statutory notice from the landlord and a written declaration by the tenant.

 

Lease: see “tenancy”. The words are interchangeable, but “lease” tends to be used for longer tenancies..

 

Leaseholder: effectively the same as “tenant”..

 

Lessee: effectively the same as “tenant”.

 

Lessor: effectively the same as landlord.

 

Licence to occupy: a contract granting permission to occupy a property normally on a short-term basis and which has limited legal standing and is not a legal interest capable of being transferred.

 

Licence: the term used to describe the landlord’s consent (e.g., to subletting or alterations) required by the tenant under the terms of a lease. 

 

Licensee: a party to whom a licence is granted.

 

Licensor: the party granting the licence.

 

Managing agent: an individual or company that manages a property on behalf of his client, normally the landlord.

 

Meanwhile use lease: the letting of empty space on a short-term basis free or low cost to not for profit tenants while the landlord is looking for a longer term commercial tenant. It can provide the landlord with relief from business rates.

 

Notices:  a formal written legal document issued by either party.  In leases there is often the requirement to serve such a notice to implement a clause in the lease.  These are important.

 

Option: A right given to one party to implement an action or right if they wish.  It can be given by the other party to the lease or by an Act of Parliament. There are many different types of options, depending on who has the benefit of it and what the option offers the beneficiary. An example would be for the tenant to opt to buy the freehold of the property on certain specified terms.

 

Party: a term which is typically used to refer to landlord, tenant, or where applicable Guarantor, without having to name them specifically.

 

Pop up lease/licence:  a short term temporary lease or licence for a pop-up business (normally a shop) in a vacant retail space. 

 

Pre-emption: this is sometimes called the first right of refusal. Typically, it might arise where either a landlord or tenant want to sell their interest in a property and the party with the benefit of the pre-emption has the first option on the property interest being sold. A pre-emption can be included within the terms of the lease.

 

Premium: a lump sum of money paid by a tenant to a landlord on the grant of a lease either instead of, or additional to, rent.

 

Rateable value: an assessment of the value of a property by the Valuation Office Agency, from which business rates are calculated.

 

Rates relief: the range of reductions on rates bills available to charities (80% mandated relief and 20% at the discretion of the local Authority. Also available to small businesses and organisations providing local services and maybe on premises that are partly or completely empty or where a recent revaluation has led to a large change in the rateable value.

 

Rent deposit: a sum of money paid to the landlord at the start of a lease which the landlord will draw on if the tenant defaults on rent or other payments or obligations.

 

Rent deposit deed: a contract between the landlord and tenant setting out the terms on which a rent deposit is held.

 

Rent review: the right to review the rent on a property at one or more specified dates during the term of the lease.  This normally is instigated by the landlord and it usually has the effect of increasing the rent.

 

Repairing obligation: a tenant’s obligation in a lease to repair and maintain the premises let to the tenant.

 

Reservations: rights that a landlord retains over leasehold property for example to access the property to carry out works to the rest of the building.

 

Schedule: a detailed list of specific grants, reservations and obligations forming part of a lease.

 

Schedule of condition: a record of the physical state of a property (which can include written documentation and photographs) at the start of a lease which provides the standard against which any disrepair at the end of the lease is measured.

 

Schedule of dilapidations: a notice prepared by the landlord, setting out where the tenant is in breach of their repairing obligations under the lease. This is usually served close to the end of a lease when a landlord seeks to claim that a tenant is obliged to put the property back into good condition.

 

Security of tenure: the right to continue to occupy a property under lease until the end of the lease.

 

Section 117 to 121 (Charities Act 2011): a set of statutory obligations on charities that may apply when they sell or let property or grant easements. The main requirements are prior valuation advice and a need for Charity Commission consent when dealing with connected persons.

 

Service charge: a regular payment made to a landlord (in addition to the rent) to cover the costs associated with the operation, maintenance and repair of the structure and common parts of a building.

 

Serviced office accommodation: a fully equipped office with the option of additional services such as reception.

 

Sinking fund: in general terms a sum of money (also known as a reserve or setting aside fund) accumulated over time as an element of the service charge and held by the landlord to cover exceptional items such as replacing the roof, lifts, or central heating system.

 

Stamp Duty Land Tax: a tax payable by a buyer or tenant on the purchase or lease of land and buildings. Charities are exempt from the tax, but the exemption must be claimed online with in the statutory period of 14 days otherwise there are financial penalties.

 

Sublease (or underlease): lease agreement between a tenant and their tenant.

 

Sublet: to grant a sublease.

 

Subtenant (or undertenant) the tenant under a sublease.

 

Tenancy: the legal right to exclusively occupy land or buildings for a fixed period or (under a periodic tenancy) a successive series of periods (e.g., years or months).

 

Tenancy at will: occupation of premises where no period of notice is required to be given by either landlord or tenant to bring the tenancy to an end.

 

Tenant: the individual or organisation to whom a tenancy is granted; often interchangeable with lessee.

 

Term: has two meanings. Firstly, the period of time of the duration of the lease, and secondly a condition or obligation in a written property agreement, e.g., a lease. 

 

Title: the legal term for an owner’s rights of ownership to a piece of property, including freehold and leasehold ownership. The title is registered and held by the Land Registry.



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