The Gazette 1984

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GAZETTE SEPTEMBER1984
Practice Notes
Trap for Solicitors in
Rent Review Clauses
Every Rent Review Clause must include some formula
on which the parties or an arbitrator may base their
calculations as to what is the market rent of a hypothetical
letting of the property leased. Most rent review clauses
attempt to define in great detail the exact basis of the
hypothetical letting. It is normal to provide that certain
matters are to be disregarded such as the goodwill of the
lessee's business or genuine improvements made by the
lessee. Some rent review clauses however include a
provision that in assessing the market rent upon a review
the existence of the provision for the review of the rent at
intervals shall be disregarded. The letting value of
property to be leased lor a term of 20 years or upwards
would almost certainly be substantially greater if in
assessing that rent the provisions tor a review of rent were
to be ignored. It is generally agreed by valuers and lawyers
practising in this area that such provisions are not
appropriate. The hypothetical lease for which the letting
value is to be calculated should be identical in terms to the
existing lease so that the rent will be calculated on the
same basis as that of the existing lease.
The Commi t t ee advises solicitors acting for clients
taking lettings of property or purchasing property held
Walter Conan Ltd.,
Academic-Legal-Civil-Clerical
Robemakers.
Telephone - 971730 - 971887
PI I ELAN - CONAN G R OUP
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universities and the Inter-Collegiate code of North
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under rack rent leases to be on guard against the existence
of such a provision. Solicitors should ma ke absolutely
sure that any client who elects to proceed despite the
existence of such a provision in the rent review clause has
been made aware of the full implications of their position.
Such advice should be either given or recorded in writing.
The question of how the Cou r ts would interpret such a
clause has not arisen in Ireland yet as far as the
Commi t t ee can ascertain. It has arisen in the U.K., in a
case of Pugh & Ors. -v- Smiths Industries Ltd., & Ors. 264
E.G. 823 where Mr. Justice Gou l d i ng interpreted the
provisions literally. The case was fully fought and argued
and in a full and reasoned j udgme nt he considered the
a r gume n ts that the Court should not take into account
the provision requiring the existence of a rent review
provision to be ignored, very carefully before ma k i ng his
decision. The decision is, of course, quite logical and it
seems likely that it would be followed in our Courts. •
Combined Drainage Agreements
A Charge on Property
Comb i n ed Drainage Agreements occasionally turn up
on titles or as acts on Searches affecting properties in the
Dublin area.
Such Agreements arose in order to avoid expense of
connecting each house on the Estate directly to the main
drain or sewer, by the Co r p o r a t i on allowing the Builder
or Co n t r a c t or to ma ke an agreed connection, but
indemnifying the Co r p o r a t i on against any cost or expense
arising out of such Consent, because of the liability of the
Co r p o r a t i on to maintain such drains or sewers, and
further, the Co n t r a c t or or Builder agreed to charge the
houses on the Estate with such cost and expenses.
However, since Section 11 of the Local Go v e r nme nt
(Sanitary Services) Act, 1948, all combined drains were
deemed to be drains not sewers, for the purpose of The
Sanitary Services Acts, and since that enactment, these
agreements have become obsolete, as the liability for the
maintenance of all householders' drains, whether
combined or single private drains, devolves on the
owners. There is, therefore, no further liability on the
Co r p o r a t i on to maintain householders' drains which
connect into the main drain or sewer.
Notwithstanding that such agreements have now
become obsolete, they still a pp e ar on the Title, and will
remain on the Title until such time as a formal Deed of
Release is executed by the Co r p o r a t i o n. Such Deeds of
Charge could be deemed prior Charges and so this creates
a dilemma in so far as the Building Society is concerned,
by reason of Section 80 of The Building Societies Act,
1976, which prohibits the Society making an Advance
where there is a prior Charge, unless such prior Charge is
in favour of the Society.
The Conveyancing Commi t t ee has looked at the
position, as has the Joint Commi t t ee and, while it is felt,
there should be a formal Release, the procedure should be
a dop t ed that such Deeds be ignored, because they are of
no further relevance, and are now un-enforceable.
Ac c o r d i n g l y, solicitors a c t i ng for Builders or
Developers should, in the case of Unregistered Title, have
the Title registered in the Land Registry, and there is no
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