Covenants in a lease Flashcards
What is the general rule in the way that leases are drafted?
Tenant can do all the things that an owner of an estate can do unless the lease prohibits such actions
Leases are drafted in a prohibitory way as a result and contain covenants on what a tenant can or cannot do
What is a leasehold covenant?
A promise contained in a lease given by a landlord or a tenant
Repair covenants
Tenant must keep the premises in the condition in which they would be kept by a reasonable minded owner having regard to :
- the character and type of premise at the beginning of the lease
- age of the premises
- express words of the covenant
What is the obligation to keep the premises in repair?
To put the premises in repair first if at the time of letting they were out of repair
This can be very onerous if the premises are in a state of disrepair at the beginning
How can a repair obligation be limited?
By the schedule of condition
which is photographs and descriptions of the premises prepared by the surveyor and annexed to the lease
What is the difference between repair and renewal?
Covenant to repair does not require renewal of the whole or substantially whole of the property
If work constitutes renewal then it will not fall within the tenant’s repair obligations
Whether works require repair or renewal depends on if the whole or substantially the whole needs to be replaced.
What are some case law points on repairs?
Likely that something may not be a repair if the cost to repair is close to the value of the premises itself
Repair is restoration by renewal or replacement of subsidiary parts. Renewal, as distinguished from repair, is reconstruction of the entirety.
What are alteration covenants
Allow to make tenants some alterations
Unless lease stipulates otherwise, tenant is free to carry out any alterations to the premises, subject to the legal doctrine of waste - which prevents alterations which would devalue the premises
What is a user covenant?
A landlord will want control over what the tenant is to use the premises for eg residential use or specific business purpose
What is an alienation covenant?
method for the tenant disposing of the whole or part of their interest in a leasehold property
used to describe assignment, subletting and parting with the possession
restrictions on alienation are common in short hold tenancies
What is an assignment of a lease?
Transfer by the tenant of the remainder of their lease to another party
New party (assignee) becomes the tenant of the landlord but it is not necessary to amend the lease to show this
For registered leases, the change of the tenant is shown in the proprietorship register of the leasehold title
When can you assign a lease?
If the lease is silent as to assignment the benefit of the lease is freely assignable
Most leases contain a restriction where landlord has to consent to the assignment
The covenant is constructed in tenants favour so that
- a covenant against assignment does not prohibit subletting of the whole or part
- a covenant against sub letting the whole does not prohibit a subletting of part
What are the formalities to assign a lease?
A deed has to be used to transfer a legal estate - NO SHORT LEASE EXCEPTIONS and even if the lease being assigned does not fall within the short lease exception, the assignment must still be by deed
Land registry transfer form TR1 is used
If the lease is registered at the land registry, the deed of assignment must also be registered to update the registered proprietor of the lease as the assignee
What is an authorised guarantee agreement?
Often a condition attached to a commercial lease that requires a landlord consent for assignment
it promises to perform the incoming assignees obligations under the lease in the event the assignee defaults
Can a tenant sublet a lease rather than assign it?
Yes.
Tenant has to create a lease out of their own lease = known as an underlease or a sublease
The lease out of which it is granted is called the headlease
