Alienation

Question 1

What is assignment?

Answer 1

Lease assigned to the new tenant. Assignee may pay for the leasehold interest, or consideration may simply be assignee agreeing to pay rent and perform other obligations of a tenant under the lease.

Question 2

What is alienation?

Answer 2

Disposal of all or part of the tenant’s interest in the lease.

Question 3

If the lease is silent, is tenant free to assign?

Answer 3

Yes.

Question 4

Are there statutory regulations for qualified covenants against assignment?

Answer 4

s19(1)(a) LTA 1927 converts a qualified covenant into a fully qualified covenant - landlord must act reasonably if deciding to withhold consent.

s1 LTA 1899 = must give decision on consent within a reasonable time.

Question 5

When is it reasonable for a landlord to withhold consent re alienation?

Answer 5

• Would-be assignee’s proposed use of premises may be reasonable grounds.
• Landlord cannot withhold consent on grounds not related to landlord/tenant relationship.
• Likely reasonable to withhold if there are justifiable concerns about assignee’s ability to pay rent.

Question 6

Tenant’s remedies if landlord does not act reasonable in withholding/delaying consent?

Answer 6

Damages including costs for agents and solicitors.

Question 6

What is privity of contract?

Answer 6

Ability of original parties to contract to enforce obligations against each other, even after contract has been assigned (Assignor - Landlord).

Question 7

What is privity of estate?

Answer 7

Ability of landlord and tenant for the time to enforce provisions of the lease against each other.

Question 8

What was the common law position for old leases regarding assignor and assignee’s liabilities after assignment?

Answer 8

OG tenant remained liable to pay rent and perform other obligations under privity of contract. Limited obligations directly passed to new tenant under privity of estate.

Question 9

What counts as a ‘new lease’

Answer 9

Granted on or after 1 January 1996.

Question 10

What happens on assignment of new leases?

Answer 10

OG tenant is released from liability, all tenant covenants are passed to new tenant.

Question 11

With new leases, how can the original tenant agree to guarantee the obligations of the incoming tenant?

Answer 11

By an authorised guarantee agreement (AGA).