The occupier will not necessarily be, or only be, the person who is the Seller's immediate tenant of the Let Unit. Occupation may be by a company within the same group as the company that is the immediate tenant, or by an unassociated body. Occupation may also be by virtue of a licence, a sublease, or by trespassers.

If the current use is revealed as residential, then the Buyer should consider raising CPSE.6 for those units.

Tenancy Documents will include any side letters. These may vary the terms of a lease by, for example, waiving the landlord's entitlement to the full amount of rent due for a period, by imposing a cap on the amount of service charge which is recoverable or by authorising the use of additional car parking facilities.

Even a failure to complain that rent is regularly paid late may constitute an informal agreement which could bind the Buyer (Hazel v Akhtar [2002] 07 EG 124).

If pending Consents are disclosed, the Buyer may wish to negotiate a term in the contract to require the Seller to take into consideration the Buyer's wishes as to how the application should be dealt with.

Although the existence of any rent suspension clauses should be apparent from the Tenancy Documents, the Seller should include here details of any rent suspension currently in effect.

There is a presumption that, even where a rent review clause stipulates that certain parts of the rent review procedure must be completed by a specified time, time is not "of the essence" and therefore a failure to observe those time limits does not have any consequence. The following are exceptions to this rule and illustrate where time will be of the essence and the time limits will be binding on the parties:

The Buyer will need to review the rent review terms in the light of what has happened in practice.

The general rule is that where premises have been improved, the improvements form part of the premises and will be valued for the purposes of calculating the rent ("rentalised") unless they are to be "disregarded". Whether or not improvements are to be rentalised will depend on the wording of the lease. Generally the rent review clause will provide that in calculating the rent on a review, an improvement is to be disregarded where it was carried out by the tenant, and at the tenant's expense, with the landlord's consent (where required) but not where the landlord required it to be carried out.

The particular dates on which the Let Units were last redecorated will not necessarily correspond with the required dates for redecoration under the Tenancies. The Buyer will wish to know the actual dates to decide whether any enforcement action is needed for breach of covenants to redecorate and to assess whether any breach can arguably be said to have been waived.

Part I of the Landlord and Tenant Act 1927 (as amended by Part III of the Landlord and Tenant Act 1954) lays down a scheme under which, subject to certain conditions being met, a business tenant may, on termination of its tenancy, be entitled to compensation for improvements which it has carried out to its premises.

Qualifying improvements are those which "add to the letting value of the holding" and may include the erection of the building itself. A tenant must serve notice on the landlord before starting work on any improvement that is to qualify under the 1927 Act, although there is no prescribed form for the notice. In certain cases the tenant's letter requesting consent for works may be treated as a notice.

On receiving a notice, the landlord may either object that the work proposed is not an improvement, or may opt to carry out the work itself, charging a reasonable increase in rent (determined by the court if the parties cannot agree it).

If the landlord carries out the work itself, the tenant cannot make a claim for compensation. The Buyer's reason for making this enquiry is to establish whether, at the end of the Tenancy, the tenant can claim any compensation, and, if so, how much.

Compensation for improvements under the 1927 Act should not be confused with compensation for non-renewal of a business tenancy under section 37 of the 1954 Act, nor with the requirement that certain improvements should be disregarded in assessing the rent payable on review (which is dealt with in enquiry 5.6) or on the renewal of the tenancy under the 1954 Act (which is dealt with in enquiry 12.2).

The Buyer will want to establish which Tenancies qualify as "new tenancies" as defined in section 1 of the 1995 Act and which do not ("old tenancies"). This may not be apparent on the face of the instrument creating the Tenancy. It is important to classify them, as different rules apply to the liability of the parties on assignment of a new and old tenancy.

On assignment of an old tenancy, the original tenant remains liable during the whole term, and the assignee is likely (through direct covenants with the landlord) also to accept liability for the remainder of the term from the point of assignment.

On assignment of a new tenancy, the basic principle is that the assignor tenant and its guarantor, if any, cease to be liable, and the assignee becomes liable from the date of the assignment. This rule is varied if the assignor tenant is required (or agrees) to enter into an "authorised guarantee agreement".

This is a type of guarantee agreement permitted under the 1995 Act which effectively makes the outgoing tenant a guarantor of the incoming tenant until that incoming tenant itself assigns the lease. The Buyer ought to be aware of any authorised guarantee agreements because they should be included with the Tenancy Documents; in practice, they are often incorporated within a licence to assign.

This enquiry applies only to "new tenancies" under the 1995 Act.

Section 11 of the 1995 Act defines "excluded assignment". The most common reason for an assignment being excluded is because it has taken place without the landlord's prior consent, where that consent ought to have been obtained. This commonly happens where the assignment is taking place as part of a company asset sale, which for commercial reasons needs to be kept confidential, making it undesirable to leak the proposed deal to the public through an application to the landlord for consent to assign.

On a strict reading of the 1995 Act, a subsequent grant of consent will not rectify the situation and the assignment will remain an excluded assignment until the next assignment which is not itself an excluded assignment.

The other reason an assignment may be excluded is because the assignment has taken place "by operation of law" as, for example, where on a privatisation, legislation has operated to transfer property from one body to another.

Under an excluded assignment the assignor remains liable under the Tenancy together with the assignee. This means the Buyer will be able to enforce the tenant covenants against both the assignee and the assignor.

This enquiry is relevant to both old and new tenancies.

Under section 17 of the 1995 Act, in most cases, where a tenant has failed to pay sums due under a lease and a former tenant or its guarantor remains liable for that default, the landlord can only recover these sums from the former tenant or guarantor if it has served notice of its intention to do so. The notice must be in the form prescribed by section 17 and must be served on every former tenant and guarantor against whom the landlord wishes to recover. The notice must be served within six months after the sums first became due.

This element of the 1995 Act is more important for "old" leases, i.e. those granted before 1 January 1996 because generally under new tenancies a former tenant will have no continuing liability.

Enquiry 7.3(c) is made to alert the Buyer to the need to serve section 17 notices following completion of the Transaction and also to warn the Buyer of potential claims for overriding leases (see enquiry 7.4 below).

If a former tenant or its guarantor has been served with a section 17 notice of the landlord's intention to claim unpaid sums due under a Tenancy, and pays in full the amount claimed, that former tenant or guarantor is entitled to claim an overriding lease under section 19 of the 1995 Act.

An overriding lease is a lease of the premises, granted by the landlord to the former tenant or guarantor and which slots in above the lease to the defaulting current tenant, so that the claimant becomes both the landlord's new immediate tenant and the landlord of the defaulting tenant. The form of the overriding lease is the same as the lease which it overrides, i.e. the lease between the landlord and the defaulting tenant.

The advantage for the former tenant or guarantor of taking an overriding lease is that it gains an interest in the premises and a degree of control over the defaulting tenant. It can sue the defaulting tenant and, as landlord, can bring forfeiture proceedings against the defaulting tenant if there is a further breach of covenant.

The advantage for the landlord is that it has as its immediate tenant someone who has demonstrated, in the past, their ability to pay the rent. The disadvantage is that the landlord may end up with someone whom it would not have chosen to be tenant, perhaps because that former tenant had been difficult or unreliable as a tenant in the past.

The Buyer will want to know whether there are any potential claims for overriding leases. A claim for an overriding lease can be made at any time within 12 months after full payment under a section 17 notice has been made.

Under the 1995 Act an assignee (whether of the lease or the reversion) becomes liable under the covenants unless they are personal to the assignor. Covenants for these purposes may include obligations contained in any agreement for lease.

The Buyer will need to know whether there are any obligations in an agreement for lease which remain unfulfilled and for which he may become liable on completion of the Transaction. These might include obligations to build, alter, repair or fit out any Let Unit. The Buyer may need to reflect the cost in the price for the Transaction or to negotiate indemnities.

The Seller should beware that, according to the Court of Appeal in BHP Petroleum Great Britain Ltd v Chesterfield Properties Ltd [2001] 3 WLR 227, personal covenants are not released by the mechanisms of the 1995 Act and it may therefore need to consider whether to reserve appropriate rights to comply with any continuing personal obligations.

The Buyer needs to know how any Tenancy of any Let Unit may have been varied, when the variation was made, and who was party to it. Variations affecting the length of term or the extent of the premises demised by the lease may constitute a surrender of the existing lease and the grant of a new lease. If such a variation is made to an "old tenancy", the regrant will be treated as a grant of a new lease under the 1995 Act, so that the variation will have effectively converted an old tenancy to a new tenancy, to which the 1995 Act liability regime will apply.

Even if the variation does not constitute a surrender of the lease, it may still release a guarantor from all further liability unless either the guarantor has consented to it or there are provisions in the guarantee agreement to permit such variations.

The guarantor in question could be the guarantor of a former tenant or of the current tenant, or a former tenant who has given a guarantee in the form of an AGA. Release under this rule of law cannot apply to the original tenant or a former tenant under an "old tenancy", as neither are in the position of a guarantor. However, their liability may be capped (see the following paragraph).

Where the variation has not released the guarantor, the guarantor's liability, and that of former tenants, may still have been limited. Where the lease obligations have been made more onerous by a variation of terms, a former tenant (which includes a former tenant who has provided an AGA) or the guarantor of a former tenant is not liable insofar as liability has been increased by the variation. This is the effect of the Court of Appeal's decision in Friends Provident Life Office v British Railways Board [1995] 1 All ER 336 but, in addition, for variations on or after 1 January 1996, section 18 of the 1995 Act has the same effect.

It is not clear, however, whether section 18 applies if the former tenant or the guarantor of the former tenant was a party to the variation (as a result of the operation of the anti-avoidance provisions in section 25 of the 1995 Act). The protection afforded by section 18 does not apply to the current tenant's guarantor.

When the Buyer completes the acquisition of the Property, the Buyer is likely to become a dutyholder for the purposes of regulation 4 of the Control of Asbestos Regulations 2012 (CAR 2012). It will then be under a duty to assess the Property for the presence of asbestos and to prepare a written plan for the management of any asbestos that may be in the Property.

The Buyer is unlikely to comply with regulation 4 if it just relies on the Seller's assessment or written plan. The Buyer will have to do its own survey after completion and carry out any necessary works. However, any information that the Buyer can obtain from the Seller before exchange will improve the Buyer's ability to address issues arising from asbestos, particularly in the case of an emergency, in the period between completion and the Buyer completing its own CAR assessment.

Enquiry 10.12 refers to both the CAR 2012 and the comparable predecessor regulations (Control of Asbestos Regulations 2006 (CAR 2006) and Control of Asbestos at Work Regulations 2002 (CAWR 2002)). All of these contain a regulation 4 in the same terms. All sets of regulations are referred to as the Seller may have relevant information under the earlier regulations.

For more information on the CAR 2012, see the guidance notes for enquiry 8 in CPSE.1.

If a tenant does something which gives rise to a claim on the landlord's insurance, then as it is the landlord rather than the tenant who is the insured, the insurance company may pursue its own claim against the tenant who caused the loss, to recover the amount of the insurance claim. This is known as the insurance company's right of subrogation. This is considered to be unfair to the tenant if the tenant pays the cost of the insurance premiums. A tenant will usually therefore try to negotiate that the insurance company waives its rights of subrogation. In practice that is believed to be the common law position where the tenant pays the insurance premium, following the case of Mark Rowlands Ltd v Berni Inns Ltd [1986] QB 211, but the position is not free from doubt.

This is included as a reminder to the Seller to include in the package of Tenancy Documents all documents relating to the termination of a Tenancy, including applications by the tenant to renew the Tenancy under the 1954 Act.

When the tenant exercises its right to a renewal of its business tenancy under the 1954 Act, the amount of rent it can be required to pay must not include the value of any improvements which it has carried out to the Property at its expense (section 34(1)(c), 1954 Act).

Following the decision in Esselte AB v Pearl Assurance Plc [1997] 2 All ER 41, provided that a tenant vacates the premises before the expiry of the contractual term, there is no need for the tenant to serve the landlord with a section 27 notice to terminate the Tenancy.

As a result, the landlord does not know before the contractual expiry date whether the tenant intends to vacate the premises and if so, when. This puts the landlord in a difficult position as far as remarketing the premises is concerned. If the Seller has any indication of a tenant's intentions, this should be revealed in the reply to this enquiry.