2.4 Leases - Licence to Assign/Underlet

Question 1

What is the difference between assignment and sublease?

Answer 1

Assignment

• Sell remainder of term
• Tenant loses interest

Sublease

• At least one day shorter than own lease
• Tenant retains interest (as landlord of new tenant)

Question 2

What is the licence to assign/sublet?

Answer 2

Landlord grants licence to assign/sublet

• In writing (deed)
• Must be completed => Takes effect

Question 3

How may Tenant avoid liability if Assignee tenant breaches Tenant’s (TP) covenants?

Answer 3

Registered land
- TP indemnity covenant (implied)

Unregistered land

• TP indemnity covenant (implied - transaction for valuable consideration)
• TP indemnity covenant (express - gift/NOT implied)

Question 4

What is Tenant’s liability if he breaches Assignee landlord’s (TP) covenants?

Answer 4

TP may sue Tenant
- Landlord’s benefit passed to TP

Landlord may NOT sue Tenant
- Landlord’s benefit passed to TP

Question 5

What is Landlord’s liability if Assignee landlord (TP) breaches Tenant’s covenants?

Answer 5

Tenant may sue Landlord

• Privity of contract
• UNLESS express indemnity included > TP indemnifies Landlord

Tenant may sue TP
- Privity of estate

Question 6

What are the key provisions in a licence to assign?

Answer 6

Admin

• Cover page
• Parties’ details
• Definition
• Operative provisions

1) L’s consent
2) Conditions > T’s ability to assign
3) TP > Rent + obligations > L (direct covenant - old lease assignments)
4) Personal indemnity (TP > T)
5) TP > Notice + fee > L
6) AGA
7) T > App for consent (L’s costs)
8) TP > L (register at HMLR)
9) TP + T > L (indemnity - losses from breach of licence)

Question 7

What are the key provisions in a licence to sublet?

Answer 7

1) Consent
- Time limited
2) L’s approval of sublease
3) Sublease
- Draft annexed to licence
- Approved in L’s writing
4) TP’s covenants
- Rent
- Obligations to L + T
5) Sublease > Opted out of security of tenure
6) T’s covenant > NOT to vary terms/rent (UNLESS L consents)