PA - SGS 7
Terms
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- What are the means by which property is transferred to a buyer in an asset sale (i.e. a business sale)?
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Conveyancing process - freehold
Assignment - leasehold - What is the essential element in relation to seller/target in the context of property (freehold or leasehold)?
- That the seller/target has 'good and marketable' title.
- How are issues related to property likely to arise?
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DD questionnaire - private treaty sale
Data room document - auction sale
- What is original tenant liability?
- A question as to whether the seller was ever the original tenant of a pre-1 January 1996 lease (Old Lease).
- What are the implications if a target was the original or subsequent tenant under an old lease?
- Target remains liable to the landlord no matter how long ago the target sold its interest.
- In what type of sale is original tenant liability an issue?
- A share sale as the liability stays with the original tenant. In an asset sale, the lease won't be assigned to the buyer unless the buyer wants to become the tenant.
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What should a buyer ask in connection with more recent leases, and what date in particular?
What type of sale does this apply to? -
T or a sub may have entered into an Authorised Guarantee Agreement under a lease granted after 1 January 1996.
Should request a copy of any AGA.
Only applies to Share sales. - What right might a tenant have that occupies premises?
- If occupying premises for the purposes of a business, generally will have security of tenure.
- What are the implications regarding a tenant that has security of tenure?
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1. Lease will continue even after contractual expiry date until terminated in accordance with the LTA 1954; and
2. Tenant has right to apply to court for the grant of a new lease. - What are the implications related to security of tenure for the purpose of a T that is a tenant?
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Share or asset sale: will continue to have right as either entity won't change or right will pass on assignment.
Note: should check to see if right to security of tenure was contracted out of - by excluding LTA. - What are the implications in connection with security of tenure for the purpose of a Target who is a landlord, or property to be purchased from a landlord owner?
- No issues unless the buyer owner intends to occupy. Right under LPA to oppose grant if landlord intends to occupy, however, cannot be relied upon if interest acquired in the last five years.
- Does the landlord's right to occupy extend to other company's that may wish to occupy in the seller's group?
- Yes - but the landlord must have not acquired his interest in the five years prior to the expiry of the tenancy.
- What should you be mindful of in relation to the right to first refusal?
- Certain tenants in properties of multiple occupation might have a right of first refusal if the landlord wants to sell the freehold. This will only apply on an asset sale.
- Whose consent will ordinarily be required in connection with leasehold land?
- The landlord's consent.
- What clauses should you look out for when the company that is the subject of a share sale has a leasehold interest in land?
- Should look out for a change of control provision in the company's lease.
- What are the three ways in which the buyer can obtain protection in respect of property issues on a share purchase?
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1. Investigation of title;
2. Certificate of title; or
3. Property Warranties - Who conducts an investigation on title and how
- Buyer's solicitors through the carrying our of searches and enquiries.
- What happens once land has been designated as polluted?
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1. The local authority will serve a remediation notice on the 'appropriate persons'
2. The appropriate persons could call into either class A or B. - Who are class A appropriate persons?
- Person who caused or knowingly permitted the contaminating substances to be in, on or under the land in question (broadly, the original polluter).
- What happens if no Class A persons are can be found?
- Liability passes to the current owner and occupier of the land - Class B appropriate persons.
- What liability do class B appropriate persons have?
- Responsibility for clean up regardless of involvement.
- How is liability dealt with for more than one class A person?
- Apportioned according to the parties' respective contribution to the contamination - or equal shares if cannot be determined.
- How is liability dealt with for more than one class B person?
- according to the capital values of their respective holdings, or equally if unascertainable.
- In relation to the pollution emitted by a company, what should the buyer check?
- That the company has all the necessary licences for the type of business being carried on.
- Discuss the type of liability that could be incurred for contaminated land?
- Mainly civil, however, failure to comply may be a criminal offence.
- Can individuals be held liable in the context of polluted land?
- Yes, directors, managers and company secretaries can be held liable.
- What search is carried out to determine whether any contaminated land remediation notices have been filed?
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CON 29R - only covers notices
Desktop Environmental Search must be carried out.
Subject to results, a Phase I or II search may be required - Discuss indemnities in the context of contaminated land.
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1. possible source of protection;
2. increasingly uncommon because sellers reluctant to give for environmental reasons. - Is environmental insurance available?
- Yes, however, is expensive and rarely used.
- What should you flag where a property is mixed commercial/residential use?
- Residential tenants will have a right of first refusal on any transfer of the freehold if the non-residential use is 50% or less.
- What three documents can a landlord request before granting consent to the assignment of a lease?
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Licence to assign;
Authorised Guarantee Agreement;
Deed of guarantee of new tenant. - If a person buys land knowing to be polluted, can the person become directly liable as a class A person?
- Yes