Real Estate Legal Update : Global Corporate Real Estate Property and Planning Lawyer & Attorney : Reed Smith Law Firm

This post was written by Catrin Phillips and Siobhan Hayes

Much has been written about the UK Government’s Carbon Reduction Commitment (Energy Efficiency) Scheme (‘CRC’) over the last two years. Many in the property sector are aware of the complications around reporting carbon emissions to comply with the CRC and charging the costs of allowances to those consuming the fuel.

The UK Government’s comprehensive spending review last week has actually taken a positive step to simplify CRC but has done so in a way which will undoubtedly increase the cost of CRC for all of the participants.

Many in the industry are calling this a stealth tax but as everybody immediately noticed the impact of the change that must be a misnomer!

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This post was written by Siobhan Hayes , Philip Olmer and Alex Heaton

Earlier this year we wrote about the impact of the Good Harvest case (Good Harvest Partnership LLP v Centaur Services Limited), both from the perspective of the landlord and of the tenant . Much of the commentary from the spring of this year was advising those involved in property to wait and see what the outcome of the Appeal would be; however, the Good Harvest case settled before it got to the Court of Appeal. Now we need to operate with the High Court decision standing as good law unless (or until) there is a dispute that is large enough to involve a Court of Appeal decision on the same subject.

This posting covers what we are experiencing in advising our clients in practice.

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This post was written by Siobhan Hayes and Indeg Kerr.

We wrote a variety of blog postings on the UK’s Carbon Reduction Commitment (Energy Efficiency) Scheme (‘CRC’) whilst the Government was consulting on the draft Regulations. A lot of the information must have seemed unimportant prior to April 2010 but now the CRC Energy Efficiency Scheme Order 2010 (‘CRC Order’) is in force and many businesses will need to evaluate whether, how and to what extent they must comply with the CRC.

The CRC is aimed at organisations which are not energy intensive and will cover many sectors including offices, retailers and hotels. The CRC affects overseas companies that do business in the UK and applies whether or not they do so using UK subsidiaries. Private equity investors have to determine how to manage their CRC liabilities.

This posting covers how to determine whether the first phase of the CRC Order is going to apply to your business and provides pointers on what to do next.

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This post was written by Alex Heaton and Siobhan Hayes.

A recent High Court decision on the liability of a guarantor is already causing investors concern. See our earlier posting . Here we consider the immediate implications for tenants and their guarantors, and, perhaps surprisingly, it is not all good news.

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This post was written by Mark Hargreaves, Emma Parsons and Catrin Phillips.

Following on from our original blog on the Bribery Bill there have been some changes to the Bill during its speedy passage through Parliament. We have no doubt that this Bill will be enacted before the General Election. Agents, investors and developers do need to be aware of the new law and will be required to review internal procedures and contracts with those supplying services to them to ensure they minimise any risks of a criminal sanction.

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This post was written by George Brown,  Mark Hargreaves and Emma Parsons

Can the Bribery Bill, which we are told will become law before the General Election, affect property investors, agents and buyers?

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This post was written by Katherine Campbell and Siobhan Hayes.

Tenants exercising break clauses in their leases are creating plenty of work in the property disputes field at the moment. Many tenants who have the opportunity to break the term of their lease are seizing it, and landlords in return want to find any way possible to challenge the validity of those notices. This posting identifies some of the topics arising on lease breaks.

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This post was written by Siobhan Hayes and Richard Nicoll.

Landlords/investors involved in selling or refinancing tenanted properties may need to carry out intensive environmental tests to satisfy the buyer/lender.  Can landlords do these without the tenant’s co-operation, for which a tenant may seek a high price?  Leases of commercial property reserve specific rights of entry for landlords.  Can these be exercised to allow an intrusive environmental investigation during the lifetime of a lease whilst a tenant is in occupation?  Without an express reservation, it is highly unlikely that any commercial property lease would be interpreted to permit an environmental survey that would disrupt the tenant from carrying out its normal business.

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This post was written by Siobhan Hayes and Richard Nicoll.

The duty on investors and other owners to notify building insurers and keep them updated of all material circumstances should not be under-estimated.  Failure to do this may result in cover being prejudiced.

An unusual case that reached the Court of Appeal earlier this year made us think about whether property investors have got more to disclose to their buildings insurers in this market.  They probably have.

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Effecting a lease break can be vital to a tenant’s business plans.  There are a vast number of reported cases on the question of whether notices have been validly served.  There are many more property lawyers’ files where the operation of a break is challenged.  Tenants need to take great care and seek legal advice to ensure they have exercised their break-right correctly.  Failure to do so may result in the tenant having to pay rent on a surplus property until lease expiry or until the next break date.

In the most recent case on the subject – Orchard (Developments) Holdings PLC v Reuters Ltd (2009) – some bad luck and an unusual break clause meant that the tenant was bound to its lease for a further five years.

• The bad luck was that the person who served the formal notice on behalf of the tenant posted them through the wrong letterbox!
• The unusual break clause allowed for informal service of notice by fax if receipt was acknowledged.  The landlord did not acknowledge receipt until the litigation started.
• The break notice was held by the Court of Appeal not to have been validly served.

What can tenants do to avoid break notice pitfalls?

• Review all of the terms of the lease relevant to the break and the termination of the lease well in advance of the break date.  This will be particularly important to check if the break is conditional on any matters – see below.
• Check the notice provisions in detail (again in plenty of time) and comply with all the details
• Check who the landlord is (e.g., by reference to the Land Registry title), and where and how notices may be served.  If the investment was sold to an offshore investor, service may be difficult and may take a week or more.
• Never leave any decisions to the very last minute so that there is time to serve a break notice and get confirmation of receipt (re-serving if necessary)
• Take legal advice early as it could save a fortune later.  If break clauses are conditional on compliance with, e.g., the tenant’s covenants in the lease, a new set of issues will have to be dealt with, and these will be the subject of other postings.

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