10 Lease termination Flashcards by Noor Shaban

4 methods of termination of leases

Effluxion of time
notice of quit
surrender
merger

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Meaning of Effluxion of time

the lease ends at the end of the contractual term using a break clause

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Meaning of notice to quit

means that either the landlord or tenant giving notice that they intend the tenancy to end

for protected tenancy, a landlord’s notice to quit will end the periodic tenancy, but the tenant can hold over

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Meaning of surrender

the tenant gives up its leasehold interest to the landlord
- possible with protected tenancy

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Meaning of merger

either the tenant acquires the landlord’s interest, or a third party acquires both interests.
Either way, the freehold and the leasehold are merged and come to an end

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5 landlord’s remedies

damages
action in debt
guarantor and rent deposit
commercial rent arrears recovery (CRAR)
equitable remedies

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Meaning of action in debt as a landlord’s remedy

landlord can issue court proceedings to recover a debt, such as unpaid rent, service charge or insurance rent.

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Limit for action of debt

6 years before issue of proceedings
- anything before is irrecoverable

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Meaning of guarantor and rent deposit as a landlord’s remedy

If the landlord had concerns about the covenant strength of a tenant or assignee at the time of the grant or assignment, the landlord may have obtained a guarantor or rent deposit from the tenant.

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Meaning of Commercial Rent Arrears recovery (CRAR) as a landlord’s remedy

self-help remedy that may be used where:
- premises are purely commercial
- minimum of 7 days’ principal rent is owed
- the lease has not been forfeited

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2 types of equitable remedies for landlord

specific performance
- an order to the tenant to do something that it has not done.
Injunction
- an order to the tenant not to do something.

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Meaning of forfeiture

the right of the landlord to re-enter the premises and take them back from the tenant. It brings the lease to an end before the contractual term

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what is an ‘insolvency event’?

range of events that indicate financial difficulties, such as the appointment of an administration receiver or bankruptcy

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When would a commercial lease allow the landlord to forfeit the lease?

if the tenant fails to pay the rent
breaches its obligations under the lease
there is an ‘insolvency event’

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What is a section 146 notice?

this notice details the alleged breach and gives the tenant a reasonable opportunity to remedy it, failing which the landlord will be entitled to forfeit

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When does/can an implied waiver of right to forfeiture arise?

When landlord acknowledges lease
e.g. accepting rent from the new tenant on assignment even if tenant unlawfully assigneed the new tenant

What is a ‘once and for all breach’?

once the landlord waives the right of forfeiture, it will never be able to regain it for that breach
examples:
- non-payment of rent
- an unlawful assignment or underletting

What is a continuing breach in relation to forfeiture?

each day that the breach continues, the landlord regains the right of forfeiture
examples:
- failing to keep the premises in repair
- failure to comply with an insurance obligation

When can a tenant apply for a relief from forfeiture

As soon as the landlord serves a section 146 notice or starts the process of forfeiture, whether by peaceable re-entry or issuing proceedings, the tenant is entitled to apply for relief from forfeiture.

For a landlord to serve forfeiture for a breach of a repairing obligation, tenant has right to serve counter-notice.
What are the requirements that the lease needs to meet for these to be applicable? (2 things, relates to time of lease)

lease is for a term of 7 years or more, and
theres at lease 3 years of term left to run

In whose covenant is the repairing obligation set out? Tenant or landlord?

Tenant’s

What does a landlord has to serve to issue proceedings for damages for a repairing obligation (in relation to forfeiture)?

Section 146 notice

a landlord’s inspection of premises reveals damage to the internal walls of the premises that the tenant has neglected to repair. The repairs would cost £8,000, but the landlord’s freehold is estimated to be only £1,000 less valuable, if at all.

How much are the landlord’s damages limited to?

£1,000

Remedies for non-payment of rent

debt action
commercial rent arrears recovery (CRAR)
Forfeiture

A landlord lets a shop to a jewellers on a 10 year lease. It is a tenant-friendly letting market, and until now the tenant has been a good tenant. However, the current quarter’s rent is due, and the grace period of 14 days under the lease has expired. The landlord is experiencing its own cash flow problems and needs the money urgently. What is the best remedy for non-payment of rent?

CRAR, as the tenant will have valuable goods that van easily be seized to cover the rent - jewellery

Remedies for repairing breaches

- Damages - Forfeiture - Self-help (Jervis v Harris clause) - Specific performance

Remedies for all other types of tenant breaches

- damages - forfeiture - specific performance - injunction

What is a Jervis v Harris clause?

A clause in a lease or tenancy agreement which allows the landlord to serve a notice on a tenant to carry out repairs

A landlord lets an industrial unit to a tenant on a 10 year lease, which has four years left to run. One of the tenant’s employees backed a fork lift truck into the shuttered doors, causing damage that will cost £3,000 to repair. There is negligible effect on the value of the landlord’s reversion. what is the most suitable remedy?

The landlord should rely on the Jervis v Harris clause to give notice to enter the premises and carry out the work and recover the cost from the tenant as a debt.

A tenant has applied for consent to assign to a tenant of poor covenant strength who is offering no guarantor or rent deposit. The landlord has reasonably withheld consent, but has found out that the tenant intends to proceed with the assignment in any case. what is the best remedy?

The landlord cannot seek damages nor start the process of forfeiture, as nothing has yet happened. If the landlord wants to act, then it may however apply for an injunction to prevent the tenant from proceeding with the unlawful assignment.

The seller of a property with a registered title has exchanged contracts for the sale. The contract provides that payment of 15 per cent of the purchase price can be deferred for two months. The remaining 85 per cent must be paid on completion. Completion has just taken place on the agreed date. Which one of the following statements in relation to the provision in the contract for deferred payment is correct? a) It gives rise to a lien in favour of the seller. b) It prevents the legal title to the property vesting. c) It must be protected by registration as a legal charge. d) It may be enforced by the grant of an injunction. e) It must be protected in its own right as a C(iv) land charge.

Contracts have been exchanged in respect of the sale of a parcel of land. The contract utilises the Standard Conditions of Sale (5th edn, 2018 revision) (SCS). The title is registered. An issue has arisen regarding one of the terms of the contract, which does not reflect the intention of the parties. Which one of the following statements correctly describes a method of rectifying the contract? a) By verbal agreement between the parties. b) By application to the Upper Tribunal (Lands Chamber). c) By application to the court. d) By application to HM Land Registry. e) By application to the Law Society under the SCS.

A buyer has exchanged contracts for the purchase of a property which has an unregistered title. The buyer's solicitor claims that certain entries revealed in the pre-completion land charges search cast doubt on the seller's title. The seller's solicitor disputes this. The buyer wishes to proceed with their purchase, but also wants this title issue resolved before doing so. Which of the following best describes the remedy available to the buyer to have the title issue determined by the court? a) Injunction. b) Award of damages. c) Rescission. d) Vendor and purchaser summons. e) Order for rectification.