10.2  Grant of Lease [and Underleases]19

10.2.1  [The Authority will grant and the Contractor will accept a Lease of the [each] Freehold Site on the Lease Completion Date.] or

[The Authority will grant and the Contractor will accept an Underlease of the [each] Leasehold Site on the Lease Completion Date.]

The term of the Lease [Underlease] shall commence on [specify on a project specific basis] and shall expire on the Expiry Date unless terminated earlier in accordance with this Contract.20

10.2.2  Not less than [twenty (20)] Business Days prior to the Lease Completion Date the Authority's Representative shall deliver an engrossment of the counterpart Lease [or Underlease] for the relevant Site to the Contractor.  

10.2.3  [The Contractor shall execute and deliver to the Authority's Representative the counterpart Lease [or Underlease] for the relevant Site within five (5) Business Days of receipt together with the duly sworn Tenant's Declaration.]

10.2.4  [The Contractor shall:

(a)  prior to the carrying out of any alterations or additions of any kind at the Leasehold Site including (without prejudice to the generality of the foregoing) such Works as are to be carried out at the Leasehold Site provide the Authority with all information (including plans and specifications) which the Authority may reasonably require or which the Superior Landlord shall require under the terms of the Head Lease to enable the Authority to apply to the Superior Landlord for consent to the Works in accordance with the provisions of the Head Lease;]

(b)  [bear all reasonable costs properly incurred in obtaining the Superior Landlords' consent under this Clause 10.2.4; and]

(c)  [provide such security and enter into such covenants as the relevant Superior Landlord shall require in accordance with the provisions of the relevant Head Lease.]21

10.2.5  Registration

(a)  The Contractor shall apply for and procure registration of each Lease [Underlease] at HM Land Registry and meet all fees in connection therewith as soon as reasonably practicable after the Lease Completion Date and shall within ten (10) Business Days of completion of such application supply copies of the leasehold register entries and title plan to the Authority's Representative.

(b)  The Authority shall use reasonable endeavours (but without being required to incur any costs) to assist the Contractor in responding to any requisitions raised by HM Land Registry.

10.2.6  Neither the Contractor nor any Contractor Related Party shall be entitled to any compensation on the expiry or earlier determination of any Lease [or Underlease] save as set out in this Contract.

10.2.7  Each Lease [Underlease] shall be granted subject to but where applicable with, the benefit (to the extent the Authority is capable of transferring the same) of:

(a)  all existing rights privileges easements liabilities (and in particular but without prejudice to the generality of the foregoing) drainage or other service rights or easements and quasi or reputed easements affecting the Site(s);

(b)  all local land charges (whether registered or not before the date hereof) and all matters capable of registration as local land charges (whether or not actually registered as such) affecting or relating to the Site(s) or any part thereof or any building or other structure thereon whether general or specific;

(c)  all notices orders proposals or requirements whatsoever (whether registered or not before the date hereof) affecting or relating to the Site(s) or any part thereof given or made by any government department or by any statutory undertaker or by any public local authority or other competent authority;

(d)  all actual or proposed charges orders proposals restrictions agreements notices or other matters whatsoever (whether registered or not before the date hereof) affecting or relating to the Site(s) or any part thereof or any building or other structure thereon or any part thereof under the Planning Act; and

(e)  the matters mentioned or referred to in the registers to the freehold or leasehold titles to the Site(s) as at the date of this Contract;

and the Contractor shall be deemed to take the Lease [Underlease] with full knowledge thereof and shall raise no requisition thereon or objection thereto.

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19  Guidance drafting is provided on the assumption that:

•  the Authority has secured appropriate sites or option over sites (which options will have been exercised at the point of financial close);

•  Authorities have taken appropriate advice over the form of option and any related documentation particularly where a leasehold interest is taken by the Authority;

•  that the Authority may in respect of a site have acquired either a freehold or leasehold interest - the drafting provided here should be adapted accordingly as a number of indicative options have been provided;

•  where a licence is proposed for either the Works Period or the Works and Services Periods see guidance drafting at Clause 10.1.

Where the Contractor secures the Site or Sites, the Authority ought to enter the Head Lease  with the landowner (be it the Contractor or its parent) and then sublease to the SPV. This will facilitate termination of the Under lease with the Contract and allow the Authority to retain the Asset without further property transfer being effected. The rent for the Head Lease during the period after expiry must be the value of the unconsented undeveloped land (as the development costs will form part of the Unitary Charge).

Authorities should consider how any liability of the SPV for breach of contamination or environmental warranties will be remunerated after expiry of the Contract or on termination since the SPV will be dissolved. Appropriate mechanisms to consider are: insurance roll on, O&M PCG, and extension of handback criteria and Final Surveys.

20  The Leases will be excluded from the security of tenure provisions set out in Part II of the Landlord and Tenant Act 1954.  To give effect to such exclusion the Authority shall serve on the Contractor a Notice in the form set out in Schedule 1 to the Regulatory Reform (Business Tenancies) (England & Wales) Order 2003 ("the Order") together with the form of Declaration to be sworn by the Contractor as set out in paragraph 7 of Schedule 2, to the Order (the "Tenant's Declaration") and the Contractor will issue the Tenant's Declaration.  Such actions are to be taken prior to exchange of this Contract.

21  Consider on a project specific basis if the provisions of Clause 10.2.4 are appropriate.  This may also be relevant if the Authority grants a Licence for the Works and a Lease for the Services Period.