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Partnership Property – Make it Legal

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When a property is used by a business run as a partnership it is important that the property status is properly addressed in the partnership’s accounts and in legal documentation. Malcolm Poynter, a property specialist and Rupert Wright, a corporate specialist with law firm, Charles Lucas & Marshall address some of the important issues involved.

Malcolm Poynter

Malcolm Poynter

It is not uncommon for land used by a partnership to be, in fact, owned by one or more of the partners.  It is quite common in a family partnership and particularly so in relation to farming partnerships.

Although it is always strongly recommended that partners enter into a partnership agreement to regulate a partnership, partnerships can exist without any written agreement.  Equally whether or not an asset is held outside a partnership or as a partnership asset may not necessarily be documented on the title to the property.

How the property is held may have a significant impact on tax and particularly the reliefs available for inheritance tax.

Sometimes one or more of the partners own the property and allow the partnership to use it.   In this case these partners retain all interest in the property subject to the rights granted to the partnership.

With partnerships the designation of property as a partnership asset may simply be a question of the accountant showing it in the accounts as such.  That is, the property is shown in the accounts as owned by the partnership rather than the individual partners.  If that has occurred you should seek legal advice.

For example, if one party has introduced property it may be that capital losses and gains for that property should be attributed to that one partner rather than the partners generally and that may need to be documented.

The interest in the property moves to becoming an interest in the partnership and as such a specific gift of the property in a will may therefore fail.  This should be reviewed.

Rupert Wright

Rupert Wright

Consideration should be given as to what is to happen to the property on death or retirement and that should be documented in an agreement between the partners.

You may say ‘oh well it is all in the family’ but in fact it is often more important for families to sit down and consider these issues. Non family partnerships are more likely to formally agree these matters.

It is also not uncommon for one member of the family to assume certain things are going to happen to the property and another member assumes something quite different.  These issues are best aired and documented.

The simple act of adding the property to the balance sheet of the partnership could have far reaching legal consequences which should be considered and addressed.

For further information contact either Malcolm Poynter or Rupert Wright on 01635 521212 or Malcolm.poynter@clmlaw.co.uk or rupert.wright@clmlaw.co.uk

 

Written by Malcolm Poynter

March 3rd, 2017 at 3:08 pm

Posted in News

Root Damage

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Malcolm Poynter

Malcolm Poynter – Partner

A recent case highlights the possibility of compensation where consent to fell a protected tree is refused. A local authority may issue a Tree Preservation Order (TPO) to protect a tree.

A couple had a new conservatory built on the back of the house in close proximity to a large oak tree which was not at the time protected. Subsequently the local authority issued a TPO in respect of the tree. It transpired that the roots of the tree were causing damage to the conservatory. The foundations for the conservatory were too shallow given the nature of the soil and the proximity of the tree. The property owner applied for consent to fell the tree to prevent further damage. This was refused. The TPO provided for compensation where a consent is refused and, notwithstanding the fact that the foundations were inadequate, the Upper Tribunal (Lands Chamber) awarded compensation to the property owner.

For further information contact Malcolm Poynter at 01635 521212 or malcolm.poynter@clmlaw.co.uk

 

Written by Malcolm Poynter

August 11th, 2016 at 1:20 pm

Planning a house extension? Then tread carefully!

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Malcolm Poynter

Malcolm Poynter – Partner

Malcolm Poynter of Charles Lucas & Marshall’s commercial property team and a member of the West Berkshire Development Industry Forum (http://info.westberks.gov.uk/index.aspx?articleid=28698) explains how the Community Infrastructure Levy can catch you out even for a small house extension.

A failure to comply with the Community Infrastructure Levy (CIL) procedures can land you with a big bill – even when carrying out a normal house extension.

Historically, contributions to local infrastructure requirements caused by a new development were dealt with by planning agreements or undertakings commonly known as section 106 agreements.

For example an assessment will be made as to how many extra children would be moving to the area in a new housing estate and there may therefore need to be contributions to the local schools to provide for further spaces.  There are other things such as public art, transport and libraries where the local authority has been paid contributions under these agreements.

The Government introduced an alternative to this called the Community Infrastructure Levy under which there is a fixed fee on each development  in accordance with the charging schedule set by each local authority. This replaces many of the contributions under Section 106 Agreements but not all.   For example social housing will generally continue to be regulated by Section 106 Agreements.

This was in theory voluntary.  However, funding arrangements for local authorities were such that most local authorities found themselves compelled to introduce CIL eg West Berkshire did so on the 1st April 2015.  There is no central register of charging schedules in force and therefore one needs to check with each local authority whether CIL is in effect in their area or is due to be so.

CIL rates are expressed as £/per square metre on the basis of new gross internal area created.  However, that is not defined in the regulations and in consequence it has been interpreted differently by different authorities.

Within West Berkshire the charge applies only to residential and retail development.

On the face of it, all developments that create new space above 100sqm are liable to CIL.  However, there are a variety of exemptions, one of which is building an extension or residential annexe to your main dwelling.

Although it is described as an exemption it is not automatic and must be applied for.  Application may not be made retrospectively so if you build an extension without going through this procedure you may well find yourself landed with a significant bill.

An application must therefore be made before you commence a development and granted by the local authority.  Separately, a commencement notice must be served before the development is started.

There is also a further form that must be lodged with the local authority after the works are completed otherwise the exemption will again be lost.

For further information contact Malcolm Poynter at 01635 521212 or malcolm.poynter@clmlaw.co.uk

 

Written by Malcolm Poynter

March 31st, 2016 at 10:43 am

Posted in House Extension,News

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Sleeping in the Office

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Malcolm Poynter

Malcolm Poynter – Partner

For some time it has been possible to convert office to residential accommodation with an automatic planning permission subject to Local Authority prior approval.   Prior approval does not take into account the desirability of the development. It ensures there are no adverse consequences for transport, highways, contamination and flooding.

This was a temporary measure to boost housing and expires on the 30th May 2016. The Government have now announced that this measure will be made permanent. There are some exemptions most notably in and around listed buildings or scheduled monuments. There are also geographic areas that have a general exemption. These exceptions will continue for the time being.

Further measures are in the pipeline including similar rules for light industrial buildings and launderettes.

For further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

October 20th, 2015 at 3:24 pm

Energy Efficiency Hotting Up

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Malcolm Poynter

Malcolm Poynter – Partner

Most properties are now required to have an Energy Performance Certificate. In relation to commercial buildings it will be unlawful as from the 1st April 2018 to let a property which has an energy performance rating lower than E. This may seem a long way off but landlords should be bearing this in mind when they acquire properties or own properties below this standard which they may wish to let in the future.   This will also apply if the landlord then wishes to renew the lease to an existing tenant or indeed extend the term.

For further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

October 15th, 2015 at 4:01 pm

CRAR

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Malcolm Poynter

Malcolm Poynter – Partner

In April 2014 new legislation came into effect known as the commercial rent arrears recovery or CRAR for short. One aspect of this is the need to give tenants at least 7 days notice of the intention to effect recovery of arrears under those provisions and it has emerged that some tenants are using this as a form of short term overdraft.

The British Property Federation is making various recommendations in relation to these provisions to the Ministry of Justice – one of which is that if the landlord uses this process 3 times under a particular lease then if further arrears arise no notice will be required.

 

For further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

‘Hedge and Ditch’ Not Ditched

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Malcolm Poynter

Malcolm Poynter – Partner

The exact position of a boundary is not always evident from the conveyancing documentation. Indeed the Land Registry generally operates under the basis of a rule called ‘general boundaries’ which means the precise position of the boundary is not specified in the register nor is the Land Registry title plan to be taken as definitive as to where the boundary lies. In consequence, over time, various presumptions have arisen to identify the position of a boundary although these are always rebuttable.

That means that if evidence to the contrary is found then the presumption will not apply.   One famous presumption is known as the ‘hedge and ditch rule’.

Where there is a ditch with a hedge running along the side it is assumed that the edge of the ditch away from the hedge is the boundary line and that the hedge and ditch lie together on one party’s land.

The presumption is that someone digging a ditch and wanting to plant a hedge will dig the ditch up to the edge of their land depositing the soil within their land, i.e. on the inside edge of the ditch, and plant their hedge on top of that.

In a Court Appeal case this year the court held that this presumption remained part of our law.

For further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

October 2nd, 2015 at 9:51 am

Charles Lucas & Marshall – Business Team – Summer Newsletter 2015

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Business Team - Summer Newsletter

Business Team – Summer Newsletter

 

 

 

 

 

 

 

 

 

 

 

 

Written by Malcolm Poynter

July 10th, 2015 at 10:58 am

Posted in News,Newsletter

Tagged with

What a bind!

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When a deal is done in relation to property there will be a contract. What distinguishes property transactions from simple contracts is the ability of one party to bind future owners of the property. Malcolm Poynter, a commercial property specialist with law firm, Charles Lucas & Marshall discusses an example of this, restrictive covenants.

Malcolm Poynter

Malcolm Poynter – Partner

Properly drafted, a covenant on a property will bind each owner of that property. There are many examples of restrictive covenants, such as not to sell alcohol, not keep pigs and not to use the property for business.

The covenant must be restrictive ie say what you cannot do. If it is positive, such as to contribute to the maintenance of something or to keep something in repair, it is not directly enforceable against successors of the freehold. It is for this reason that flats tend to be dealt with by lease because each tenant is bound by the terms of the original lease in which the covenants will be set out.

Covenants that restrict building can obviously cause problems if you are proposing to develop your land. The wording of these covenants needs to be looked at very closely to decide what may not be done. For example, there was a case where a developer wanted to build a roadway which had to be adopted by the Highway Authority as a public road. A covenant not to erect anything on the land did not prevent the roadway being built but did prevent lamp posts being erected which meant the road could not be adopted and was therefore, in effect, prevented.

Some covenants allow building if ‘the Transferor’ approves the plans. Does this mean the original Transferor or the current owner of the land which has the benefit of the covenant? Difficulties can also arise if the person to give consent cannot be found or has died.

When faced with covenants restricting development sometimes you can establish that the covenants are invalid and may therefore be ignored.

Sometimes there are grounds for applying for the covenant to be modified or discharged by the Upper Tribunal (Lands Chamber). There are a variety of grounds upon which an application may be made.

Compensation may be payable but how is it calculated? The loss of the covenant may have a small effect on the value of the property with the benefit but, on the other hand, the person with the benefit may have been able to extract a significant payment from the developer for the covenant’s release. There is no rigid formula how compensation is to be calculated and, as the Courts love to say, each case depends on its own facts.

Further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

April 10th, 2015 at 10:38 am

Commercial Leases – The Devil is in the Detail

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With business confidence growing in West Berkshire, Malcolm Poynter, a commercial property specialist with law firm, Charles Lucas & Marshall, is witnessing a noticeable increase in instructions on new leases. These are ranging from start-ups taking their first premises through to establishing businesses relocating and expanding.

Malcolm Poynter

Malcolm Poynter – Managing Partner

The tenant, under a commercial lease, usually takes on obligations which are not always that obvious to people not used to dealing with commercial leases on a regular basis.

Tenants often negotiate terms with the landlord’s agents but are not themselves represented. Since the landlord agent acts for the landlord, he obviously tries to get the best deal he can for his client. Tenants can often get a better deal if they are themselves represented by an experienced commercial agent. The agent can advise you on the amount of rent you should be paying. He can advise on the market and your negotiating strength. The solicitor will advise you on the terms of the lease and what they actually mean.

During the course of negotiations Heads of Terms will be agreed. These tend to be non-binding but are the basis upon which the landlord’s solicitor will draft the necessary documentation.

The tenant should be in contact with his solicitor to discuss the main terms as matters progress so that there are no unpleasant surprises when the draft documentation arrives. Without this, tenants often find that they had not fully appreciated what they had agreed until we explain the provisions of the resulting draft lease to them.

Once Heads of Terms have been agreed and issued it is far more difficult to reduce the impact of the more onerous provisos when negotiating the draft lease.

Understanding risks and potential obligations is crucial to planning your business and commercial leases can often include significant risks and obligations for the tenant. For example, it is often thought that solicitors’ advice is less important for short term leases at a low rent. However, this may not be the case. If your annual rental is a few thousand pounds but you then, unexpectedly, discover you are responsible for the cost of repairing the roof the actual cost of your occupation has increased significantly.

If you are to pay a service charge, then what can the landlord charge back to you? Often he can charge you the full amount expended in repairing the structure of the building and, in some cases, even the cost of improvements.

You may well be able to remove or limit your liability but ensuring you understand the Heads of Terms agreed could be crucial.

If you understand your potential liabilities you can plan accordingly. You may see a property you think is ideal for your business, but do the sums stack up? Does it come with unacceptable risks? Professional advice can help you answer these questions.

Further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

Written by Malcolm Poynter

April 25th, 2014 at 5:27 pm