7): Key Covenants and the Law Relating to their Breach Flashcards
What are prescribed clauses and where must they appear?
Required by HMLR for registrable leases.
Must be at the start of the lease.
Include:
LR1–LR14 e.g., date, parties, title no., property, term, restrictions, etc.
When are prescribed clauses mandatory in leases?
Leases granted out of registered land & compulsorily registrable.
Leases requiring first registration (e.g., superior title just registered).
Post 19 June 2006.
What happens if prescribed clauses are incorrect or missing?
HMLR will reject registration.
What does a typical repair covenant in a lease require?
Keep premises in repair.
Includes obligation to put into repair, not just maintain.
What does a “full repairing lease” mean in different contexts?
Whole building: tenant responsible for entire property’s repair.
Part of building: tenant responsible for their specific part only.
What’s the difference between ‘good repair’ and ‘good repair and condition’?
‘Good repair and condition’ = more onerous, may include modernisation.
Tenant must put into repair, not just maintain.
Disrepair must exist before obligation arises.
How does a full repairing lease vary in whole vs part leases?
Whole building: tenant repairs entire property.
Part only: tenant repairs only their demised area.
Who chooses the method of repair?
Normally tenant, unless lease requires repair to landlord’s surveyor’s satisfaction.
Who insures in a lease of the whole building, and what is insurance rent?
Landlord insures, tenant pays insurance rent.
Covers:
Full reinstatement value.
Loss of annual rent if building unusable.
Landlord uses proceeds to reinstate.
How is insurance handled in a multi-tenanted building?
Landlord insures entire structure; tenants cannot insure separately.
Tenant obligations:
Pay premium.
Let landlord handle claims & reinstatement.
Why do landlords retain insurance control in multi-let buildings?
Avoid conflicts:
Multiple insurers.
Inconsistent applications.
Rebuilding overlap.
Can tenants make alterations if the lease is silent?
Yes, but not waste or breach boundaries.
What are typical lease restrictions on alterations?
No alterations to structure/exterior.
Allow non-structural interior changes.
Restrict changes to service media (e.g. electricity).
What rights does the LTA 1927 give tenants regarding improvements?
If lease covers trade/business premises:
s.19(2): landlord can’t unreasonably withhold consent for improvements.
s.3: tenant may make improvements even if forbidden.
s.1: tenant may claim compensation at lease end.
What about alterations outside LTA 1927?
Repairs under a repairing covenant don’t count.
Landlord may insert covenants requiring tenant to:
Comply with landlord’s requirements.
Notify landlord and provide plans.
What restrictions are usually included in commercial leases regarding use?
Permitted purposes (e.g. retail, office).
Tenant’s right to request change of use.
Why is user clause flexibility important for tenants?
To meet current/future business needs.
To allow assignment/subletting to others with different uses.
What should leases clarify about Use Classes Orders?
Whether reference is to the Use Classes Order in effect at lease date, and in England or Wales
What additional user restrictions might landlords impose?
Shopping centres: control of tenant mix.
Compliance with law and bans on illegal/nuisance use.
What rent-related matters are typically included in leases?
Rent amount and payment dates.
Whether paid in advance or arrears.
Start date for rent (may differ from lease start due to rent-free period).
Apportionment and first rent calculation.
Method of payment.
VAT on rent.
Whether tenant may deduct/withhold rent for landlord breaches.
What is typically included in rent review provisions?
Usually upward-only rent reviews.
May be based on open market value.
What remedies does a landlord have for non-payment of rent?
Sue for rent + interest/damages.
Forfeit the lease.
Use CRAR (Commercial Rent Arrears Recovery):
Instruct enforcement agent to seize goods to recover rent value.
What does “alienation” mean in leasehold property?
Disposal of leasehold interest. Includes:
Assignment (transfer of lease to another).
Underletting/Subletting (grant of new lease out of the original).
Charging lease to a lender.
Parting with possession (sharing occupation).
How do leases control tenant alienation?
May contain:
Absolute prohibition (no alienation at all).
Qualified prohibition:
tenant may assign/underlet with landlord’s consent.
What does s.19(1)(a) of the LTA 1927 provide?
If lease contains qualified prohibition, landlord’s consent cannot be unreasonably withheld.
What is the effect of s.19(1A) LTA 1927?
Applies to commercial leases from 1 Jan 1996.
Allows landlord & tenant to pre-agree:
Circumstances where consent may be withheld.
Conditions under which consent may be granted.
When will landlord not be deemed unreasonable under s.19(1A)?
If acting in accordance with pre-agreed terms.
What are the landlord’s duties under s.1 of the LTA 1988 (assignment only)?
Must give consent unless it’s reasonable not to.
Must respond within a reasonable time.
Must give written reasons if:
Consent is conditional; or
Consent is withheld.
What types of lease terms can be granted?
Fixed-term lease: ends automatically, no notice needed.
Periodic tenancy: renews automatically unless terminated.
Leases may include break clauses allowing early termination.
What statutory issues arise with lease terms?
<6 months: generally not protected under LTA 1954.
Leases ≤7 years: no substantive HMLR registration required.
What is the purpose of the Lease Code for business premises?
Improve fairness and clarity in commercial lease negotiations.
Promote use of heads of terms.
Is the Lease Code mandatory?
Mandatory for RICS members (e.g. landlords/agents).
Others must justify departures from best practice terms.
Not binding unless incorporated into the lease.
What liabilities arise under leases granted before 1 Jan 1996?
Privity of contract: original tenant always liable unless released.
Privity of estate: successor tenants/landlords liable for covenants that touch and concern the land.
How does the Landlord and Tenant (Covenants) Act 1995 apply?
Replaces privity of contract and estate.
On assignment:
All covenants pass to assignee (except personal ones).
Assignor is released from liability automatically.
Can the landlord require further security after 1996?
Yes, via an Authorised Guarantee Agreement
(AGA) where:
Lease has qualified covenant against assignment.
Landlord reasonably requires assignor to guarantee assignee.
Guarantee lasts while assignee holds lease.
What is an action in debt for breach of a lease?
Landlord can sue:
Current tenant (for unpaid rent).
Former tenant (via privity of contract).
Guarantor (under AGA).
Lease continues – not terminated.
What is forfeiture and when is it used?
Landlord’s right to re-enter and terminate the lease.
Requires:
Express forfeiture clause in lease.
May occur by peaceable re-entry or court order.
What is CRAR and how is it enforced?
Landlord can seize tenant’s goods to recover rent arrears.
Lease not terminated.
Must follow statutory process via enforcement agent.
How do guarantees protect the landlord?
Guarantee ensures payment of rent and performance of covenants.
Creates direct contractual claim against guarantor.
What is the purpose of a rent deposit deed?
Tenant pays cash deposit held by landlord as security.
Used without court action if breach occurs.
Terms are governed by the rent deposit deed.
When is specific performance available?
Discretionary remedy.
Used to enforce positive covenants.
Only if damages are inadequate.
When can a landlord claim damages for breach of covenant?
For breach of repairing covenants, claim allowed but:
May be costly/litigious.
Limited by statute:
s.18(1), LTA 1927 – limits to diminution in value.
Leasehold Property (Repairs) Act 1938 – only applies to leases ≥7 years with ≥3 years left.
What is a Jervis v Harris clause (self-help)?
Allows landlord to:
Enter the property.
Do repairs.
Recover costs from tenant as debt (not damages).
Not subject to statutory limits on damages.
What is termination by effluxion of time?
Lease ends automatically when the fixed term expires.
No notice required.
What is a surrender of a lease?
Tenant yields up the lease.
Landlord accepts the surrender.
Usually by deed of surrender.
What is merger in leasehold termination?
Tenant acquires freehold, lease merges into landlord’s (reversionary) title.
