leasehold covenants

the grant of a lease

• lease is carved out of freehold estate granted to someone else for a period of time

• landlord owns the freehold reversion/estate which is subject to the lease given to the tenant

• when its time for lease to end it reverts back to original estate

the assignment of a lease

• if tenant wants to sell the lease on = assignment of a lease

• transferring the lease from one tenant to another - next person gains remaining time left once transferred

• must also transfer by deed - don’t have s.54(2) LPA 1925 exceptions to fall back on

the assignment of a freehold reversion

sale of property from one landlord to another

grant of a sub-lease

• must be a shorter term than the lease out of which it is granted

• tenant sublets to another tenant - no relationship between head landlord + sub-tenant

• tenant now holds a leasehold reversion + becomes a sub-landlord to the sub-tenant

• different new leasehold doc

periodic tenancy

granted for a period of time which automatically recurs until L or T gives notice to end the tenancy

creation:

• express

• implied - where person is in occupation w the owner’s consent + pays rent on periodic basis

what are leasehold covenants

those terms agreed in a lease that relate to the parties obligations to each other in their capacity as L + T - defines relationship + boundaries

covenants can be:

• express

• implied - common law, statute

common express covenants - T

tenant:

• to pay rent

• not to assign or sublet w/out consent of L:

qualified covenant

• s.19 Landlord and Tenant Act 1927 - landlord cannot unreasonably refuse to give consent where there is qualified covenant against assignment

• s.1 Landlord and Tenant Act 1988 - requires L to give reason + make decision w reasonable period of time

absolute covenant - cannot assign/sublet

• permitted use of the premises

common express covenants - L

landlord:

• to allow the tenant quiet enjoyment - quiet = L cannot interfere w T ability to use property

Owen v Gadd (1956) - lease of shop, scaffolding prevented customers to access window

• not to derogate from their grant - if pre-agreed reason underpins lease + L aware of reason + does something which prevents T from exercising use

Aldin v Latimer (1894) - used shed for timber, L retained adjoining land + built which blocked airflow - risked damp/mould

landlord remedies

where T is in breach of a covenant in lease

• forfeiture

• damages

• injuction

• specific performance

damages + specific performance = contractual remedies

forfeiture + test

• a right of re-entry

• L re-enters premises + takes back the premises + terminates lease prematurely

1. preliminary points that L must check

2. required procedure - for breach of covenants to pay rent, for all other covts

3. does L need to apply for a court order to re-enter

4. T application to the court for relief - for breach of covt to pay rent, for all other covts does- relief from forfeiture

1. preliminary points that L must check

1. the lease must contain a forfeiture clause

2. L must not have waived their power to forfeit the lease

waiver:

1. landlord has knowledge of breach and

2. landlord then does some act which confirms existence/continuance of lease - demanding/accepting rent

types of breach

continuing breach:

• use of premises as a private residence only

• covenant to keep premises in good repair

• illegal/immoral use

once and for all:

• non-payment of rent

• unauthorised alterations

• unauthorised assignments

2(1). procedure L must follow for breach of covt to pay rent

L must make formal demand for rent unless

1. lease dispenses w the requirement (forfeiture clause) or

2. s.210 Common Law Procedure Act 1852 applies

• rent at least 6 months in arrears +

• insufficient good available for distress

2(2). procedure L must follow for all other covenants

L must serve notice on T under s.146 LPA 1925

the notice must:

1. specify the breach of covenant complained of

2. ask for the breach to be remedied if it is capable

3. ask for financial compensation if L requires it

whether a breach is capable of remedy

Expert Clothing v Hillgate House (1986):

late compliance w breach + financial compensation puts L in more or less the same position they would be in anyway - focus on harm - does it remedy harm L has suffered due to breach

• Savva v Hussein (1996) applies + confirms test

irremediable harm

• assignment or subletting w/out consent

• stigma attaching to the premises - Rugby School v Tannahill (1935) - nice residential property used as brothel, left lasting stigma, court = for property of that nature - irremediable

additional protection for tenants on breach of covt to repair

leasehold property act 1938:

applies to any lease - granted for more than 7 yrs, which has at least 3 yrs left to run

if T serves counter-notice claiming protection for minor breach of repair, L cannot proceed w forfeiture w/out leave of court - s.1(5)

effect of service of s.146

• if breach is capable of remedy, L must allow reasonable time for T to carry out remedy

• if T does not + pays compensation - end of matter

• if T doesn’t remedy, + if L reckons breach cannot be remedied then L can go on next stage after serving notice

3. does L need to apply for a court order to re-enter

residential leases: yes

s.2 Protection form the Eviction Act 1977 - where any person is lawfully residing in the premises

Golding (2019) - if reason to believe they ceased to reside + able to re-enter where T has not been there - accepted

commercial leases: peaceable re-entry, w/out court order available but risky

s.6 Criminal Law Act 1977 - it’s a criminal offence to use or threaten violence for purposes of securing entry into any premises where, to the knowledge of entrant, there is someone present who is opposed to entry

• if successful - T can get longer relief

4. T application to court for relief for non-payment of rent

if T pays the arrears + L costs, then court will grant relief from forfeiture

4. T application to court for relief for breach of all other covt

apply under s.146(2) LPA 25:

• if L re-enter w court order - ends scope for relief

• if peaceable re-entry - T can apply for relief even after re-enter happened

relief possible if breach is irremediable - Van Haarlam v Kasner - T already prosecuted + not granting relief is punishing twice

enforcing leasehold covt + rules

to enforce a covt means to sue someone bc the covt was broken =

• a party w the benefit of a covt has the ability to sue

• a party w the burden of a covt is liable to be sued

one set - for leases granted before 01/01/1996

a different set - for leases granted on or after 01/01/1996

old leases

granted before 01/01/1996

• original parties can sue + be sued - able to enforce against another as of contractual rights - privity of contract between them

• an original T can be sued for a breach of covenant by any later T (T2,T3..) - T1 retains liability/burden all the way down the chain even if they didn’t assign to T3

• an original L can be sued for a beach of covenant by any later L

s.79 LPA 1925:

a covenant shall be deemed to be made by covenantor on behalf of himself, his successor in title + the persons deriving title under him or them

indemnity covenant

original tenant can get back what he had to pay out

• implied by statute - s.77 LPA 25 + s.134 LRA 2002 - need to show you suffered loss + breaching T was unjustly enriched

• and maybe expressly stated in deed of assignment between T

each person that assigns have their successor indemnify them against loss on each assignment - needs to be unbroken - if broken once then done

can successors directly sue + be sued

a) successor T: resort or common law - spencer’s case

b) successor L: resort to statute

a) successor T

may be possible for successor T to be sued + to sue directly if rules in spencer’s case met

Spencer’s case (1583):

1. lease must be a legal lease and

2. there must be a privity of estate = a current relationship of L + T and

3. the covt must touch + concern the land

• P + A Swift v Combined English Stores (1989):

a covt will touch + concern land if:

1. it benefits covtee only while he has the reversion, if sold it would cease to benefit them and

2. it affects the nature, quality, mode of user or value of land and

3. its not personal in nature

b) successor L

may be possible for successor L to be sued + sue directly if conditions met

s.141 + s.142 LPA 1925 - if covt have reference to the subject matter of lease

• touches + concerns land

new leases

granted on or after 01/01/1996

landlord + tenant act 1995

can an original party be sued when successor breaches covt - T1

T1: general rule - s.5 - T1 automatically released from burden of their covenants on assignment of his lease which is not excluded

exceptions - s.11:

• assignments in breach of covt to assign - assign w/out consent/or at all

• assignments by operation of law - movement of lease if T dies/declares bankruptcy

s.16 - authorised guarantee agreements - only relevant to absolute/qualified covt against assignment

agreement where T guarantees performance by successor - confidence they will perform covt + if not will fall to me - sue T1 instead - L can insist AGA on any T within chain + T only liable for immediate assignee

can an original party be sued when successor breaches covt - L1

s.6: L1 may be released from their covts on assigning their freehold reversion - release is not automatic

s.8: statutory procedure -

• L1 must serve notice on T before or within 4 weeks of assignment, notifying of assignment + requesting release

• L1 is released if T consents, or fails to object, or objects but court orders release

can successor L + T directly sue + be sued

s.3: takes the benefit + burden of all covenants in lease pass on assignment of the lease or of the reversion

s.3(6): other than those covt which are expressed in the lease to be personal

provisions of 1995 act which apply to both old + new leases

s.17: a former T will not be liable to pay any fixed charge (rent) owned by current T unless L serves a notice on former T within 6 months of fixed charge becoming due

s.19: if former T pays charge in full his is entitled to grant of an overriding lease of property

• T becomes interim L for T that breached - they had to pay out on behalf of

- continuing enforcement of covt

- have access to landlord remedies