Covenants in leases Flashcards
Express covenants of the tenant:
Pay rent, insure, use premises for stated purposes, repair, not to be a nuisance, not to assign or sublet (absolute or qualified; qualified only forbidden without consent - not to be unreasonably withheld s.19(1)).
Implied covenants of the tenant:
Pay rent, pay rates and taxes, not to commit waste, to use the property in a tenant-like manner (Warren v Keen), to allow the landlord to enter.
Express covenants of the landlord:
1) To allow quiet enjoyment, Perera v Vandiyar, but only covers substantial interference (Southwark LBC v Mills).
2) To sell the reversion.
Implied covenants of the landlord:
1) Quiet enjoyment;
2) To repair/ensure fit for human habitation (at the start of the term - Smith v Marrable).
Tenant covenants in old leases, legal standing:
LPA 1925, s. 79: “all successors in title”.
Original tenant recovering directly from most recent assignee:
Moule v Garrett: “where one is compelled to pay damages by the legal default of another, he is entitled to recover from that person the sum so paid.”
Original tenant recovering from their assignee to indemnify for breach of covenant:
Unregistered land: LPA 1925, s. 77;
Registered land: LRA 2002, s. 134.
Exceptions to privity of contract for original tenant under 1995 Act s. 17-20:
1) s. 17 prevents accumulation of arrears. Landlord must notify former tenant within 6 months of money becoming due that it will be collected.
Two requirements to be satisfied before a leasehold covenant can be enforced by or against an assignee:
1) Privity of estate: arises when there is a direct relationship of landlord and tenant between the parties;
2) Must ‘touch and concern’ the land.
‘Touch and concern’ the land:
Common law rule in Spencer’s Case: applies when a tenant assigns a lease, all covenants that ‘touch and concern’ the land will bind and benefit the assignee of the new lease.
Lord Oliver set out a ‘satisfactory working test’ in P&A Swift Investments v Combined English Stores Group plc [1989], 3 condtn:
1) Does covenant benefit any owner of estate (not just original tenant)?
2) Does it affect the nature, quality, mode of use or value of land?
3) Is the covenant expressed to be personal?
‘Have reference to the subject-matter of the lease’:
When a landlord assigns a reversion, the statutory provisions under LPA 1925, s 141-142 apply - all covenants that ‘have reference to the subject-matter of the lease’ will bind and benefit the assignee.
Leases granted orally or in writing, rule:
Elliott v Johnson - covenants did not run on the assignment of a parole lease, Spencer’s Case applies only to those of deed.
Boyer v Warbey held that the rule in Spencer’s applied to a written lease, and probably also oral leases.
Breach committed before assignment:
Assignee bound by covenant in future, but not the pre-existing breach. Duncliffe v Caerfelin Properties Ltd.
The right to take action passes to the new landlord with assignment of reversion, under s. 141 LPA 1925.
New lease - release of the original tenant:
s. 5 of 1995 Act, from date of assignment, tenant is released from the burden of the covenants and ceases to be entitled to the benefits.
S. 30(4) of the Act provides that LPA 1925, s. 79 shall not apply to new tenancies.
New lease - circumstance when tenant remains liable:
Assignments in breach of a covenant, in breach of absolute/qualified covenant against assignment.
Authorised Guarantee Agreement - landlord can require the tenant to enter into an AGA by which the original tenant guarantees the immediate assignee’s performance of the covenants in the lease (s. 16).
