POST 1996 LEASEHOLD

Act applies whether or not the covenant has reference to the subject matter.

• S. 2:

1.  Benefit and burden of all landlord and tenant covenants are transmitted to assignees provided that the covenants are not expressed to be personal to any person,

S.3:

 Parties are prohibited from contracting out of LTCA 95.

S.25

• Original tenant upon assigning to T2 shall be released from tenant’s covenants contained in the original lease and is corrsepondingly disabled from enjoying the benefit of the landlord’s covenants

• S. 5:

• Subject to s.11 LTCA 1925

  • Landlord can allow sublet and may request covenants so that  T1 might have to guarantee the performance of T2. 

• STATUTORY RELEASE EXCEPTIONS

1. Original tenant’s assignment to subsequent tenant is in breach of covenant

• If assignment was not allowed.

2. Original tenant’s assignment to subsequent tenant occurs ny operation of law

• Eg. bankruptcy

3. Where original tenant as a condition of consenting to the assignment to subsequent tenant causes original tenant to enter into an unauthroised guarantee agreement

• Law does not allow this guarantee.

  • "If T2 fails to pay rent or breaches the lease, T1 must step in and fulfil those obligations.

AUTHORISED GUARANTEE AGREEMENT

s.16

If there is an AGA -> T1 can be liable for T2’s actions as he is a guarantor.

Good Harvest Partnership LLP v Centaur Services

• If there is any further assignment (T3, 4,5) T1 will be released from AGA.

PROCEDURE TO CLAIM FIXED CHARGES FROM AGA

• S.17: Must notify original tenant of new tenant’s breach within 6 months

  • If failed guarantor is freed from liability for fixed charges

• Landlord must also inform the fixed charge is due and specify the amount in the notice including appropriate interest.

  • Includes rent, service charges or any other liquidated.

  • Bloomfield v Williams:

    • Excludes claim for unliquidated damagees

OVERRIDING LEASE

• S.19 AGA: Overrides T2 Lease

• Original tenant is entitled to have landlord to grant him overriding lease if he has made full payment.

• A new lease granted by the landlord to T1, after T2's lease was forfeited.

  • It sits above the old lease and any subleases.

  • It puts T1 back into possession/control of the property.

REQUIREMENTS FOR OVERRIDING LEASE

1. Have entered into a valid AGA under Section 16.

2. Have made full payment to the landlord (e.g. paid T2’s unpaid rent or repair costs).

Do so after T2’s lease ends, especially by forfeiture.

LIABILITY OF ORIGINAL LANDLORD

• Same as pre 1996.

  • Original landlord is not automatically released from performance.

LIABILITY OF ORIGINAL LANDLORD: If L1 assigned to L2

• L1 is not automatically released as they are in higher bargaining power than tenants.

LIABILITY OF NEW LANDLORD AND NEW TENANT

s.3 : Benefit and burdens of all landlord and tenant are statutorily transmitted except if they are personal.