12.12: Leasehold Covenants & Remedies

Question 1

Leasehold Covenants & Remedies

Answer 1

Liability: Depends on lease date.
Pre-1996 (“old”): Original landlord & tenant remain liable.
Post-1995 (“new”): Tenant usually released upon assignment (Landlord and Tenant (Covenants) Act 1995).
AGAs (Authorised Guarantee Agreements) may require outgoing commercial tenants to guarantee assignee’s performance.

Question 2

Landlord Remedies (Breach of Covenant)

Answer 2

• Rent: Debt action, taking possession of goods (CRAR - commercial), forfeiture (no s 146 notice needed), rent deposit deduction, pursue guarantors.
• Other Covenants: Injunction, specific performance, damages (LTA 1927 s 18 limit), forfeiture (s 146 notice required), pursue guarantors, self-help (Jervis v Harris clause).
• Tenant Remedies (Breach): Injunction, specific performance (LTA 1985 s 17 for repair), damages, repudiation (fundamental breach), set-off (repair costs against rent - after notice).

Question 3

What is a self help remedy for a Landlord

Answer 3

has to be expressly included in a lease
remedy for a Landlord which allows them to enter the property and carry out the work. Afterwards, they would recover the fees from the tenant.
Not implied by law or as a right

Question 4

self help clauses are also referred to as

Answer 4

Jervis v Harris [1996] case which held that a landlord could recover from the tenant as a debt the costs of carrying out work.

Question 5

Liability on Leasehold Covenants - Old Leases (Pre-1 Jan 1996)

Answer 5

*Based on privity of contract.

*Original landlord and original tenant remain liable to each other for the entire lease term, even after assignment.

*Landlord can pursue the original tenant for breaches by subsequent tenants.

Question 6

Liability on Leasehold Covenants - New Leases (On or After 1 Jan 1996)

Answer 6

Governed by the Landlord and Tenant (Covenants) Act 1995.

Tenants are automatically released from their covenants upon assignment.

Assignor remains liable for breaches that occurred before the assignment.

Question 7

What is the significance of an Authorised Guarantee Agreement?

Answer 7

• In commercial leases dated on or after 1 January 1996, a landlord can require an outgoing tenant to enter into an AGA.
• Outgoing tenant guarantees the performance of tenant covenants by their immediate successor (assignee).
• Landlord can pursue the outgoing tenant if the assignee breaches the lease.
• Generally not permitted in residential leases.

Question 8

Authorised Guarantee Agreement’s only apply to

Answer 8

Commercial leases

Question 9

If a landlord wants to bring a forfeiture action, what notice must they serve?

Answer 9

first serve a notice under s146 which:

o specify the breach
o require the breach to be remedied within a reasonable time (if capable of remedy), and
o require the tenant to pay compensation to the landlord for the breach if required by the landlord.

Question 10

What is the purpose of a section 146 notice?

Answer 10

warn the tenant of the landlord’s desire to forfeit to
give the tenant time to rectify the breach

Question 11

What can a Landlord do if a tenant fails to pay rent?

Answer 11

• Debt Action: Suing for rent owed (limit: 6 years’ arrears; notice to former tenant within 6 months of breach).
• Commercial Rent Arrears Recovery (CRAR): Bailiffs can seize and sell tenant’s goods in wholly commercial premises ( must give 7 days’ notice and can enter after the notice period is up).
• Forfeiture: Ending the lease (if express right of re-entry exists; no Law of Property Act 1925 (LPA) s 146 notice needed; tenant has right to relief).
• Rent Deposit Deduction: If a deposit was taken.
• Pursue Guarantors: If a guarantor is in place.

Question 12

Tell me what a Commercial Rent Arrears Recovery is

Answer 12

statutory procedure which applies to commercial leases regardless of whether it is mentioned in the lease

requires 7 days notice and after the notice has cleared landlord can enter the premises to cover rent arrears from the commercial premises with a bailiff

Question 12

What are the Tenant’s remedies for a Landlord’s breach?

Answer 12

• Injunction: To prevent breach of a negative covenant.
• Specific Performance: Court order for repair (Landlord and Tenant Act 1985 s 17).
• Damages: To restore tenant to pre-breach position.

*Repudiation: Ending lease for fundamental breach by landlord.

• Set Off: Deducting repair costs from rent (after landlord notice and failure to act).