Enfroceability of leasehold covenants Flashcards
What is alienation in the context of leasehold property?
A method for the tenant disposing of the whole, or part, of their interest in a leasehold property (assignment, underletting, parting with possession)
Alienation often involves sale or transfer of lease rights.
What is an assignment in leasehold terms?
Sale by the tenant of the remainder of their lease to another party
No amendment to the lease is necessary to show that the lease has been assigned (but change proprietor if registered)
How are covenants against assignment construed?
In favour of the tenant, therefore they do not prohibit subletting
Church v Brown
What formalities are required to transfer a lease?
Deed (TR1) + Registration
If the lease is also registered, must register the deed of assignment to update the registered proprietor.
What is required for subletting a lease?
Lease must be granted by deed (LPA s52) which must be registered if the term is over 7 yrs - this is formally recorded in a deed called a Licence to Underlet
Tenant remains responsible for performing the covenants in the headlease.
What does LTA 1927, s19(1)(a) do regarding covenants against alienation?
Converts all qualified covenants against alienation to fully qualified covenants
Leases generally contain fully qualified covenants against underletting or assigning the whole property
What must landlords do upon a tenant’s application for consent?
Landlord must give written consent within a reasonable time per LTA 1988 s1
This is typically within 28 days from receipt of the application (and references by the LL (Dong Bang Minerva v Davina)
What is the effect of privity of contract?
It dictates that all terms can be enforced by the original LL against the original T and vice versa
What is privity of estate
Privity of estate exists between any current LL and current T of the property and lasts while the lease is vested
Up to when are leases deemed to be old leases
leases entered into before 1 Jan 1996
When are leases deemed to be new leases
If they were entered into on or after 1 Jan 1996
What is the position regarding liability of the original LL and T for old leases
- Liability of OG LL and OG T continues for the full duration of the lease term
- only covenants which touch and concern the land will be enforceable between successor LLs and Ts
What is the effect of the LTCA 1995, s5 regarding assignments?
Assignment automatically releases tenant from tenant covenant
NB there is no automatic release of landlord upon assignment of reversionary interest - they can apply to the tenant for release
What happens if an assignment is an excluded assignment (i.e in breach of the alienation covenant)?
There is no automatic release from liabilities
What happens if a tenant assigns their lease after they have breached a tenant covenant?
They remain liable for breaches of covenant ocurring before the release
What benefits and burdens does an incoming tenant get?
There is an automatic transmission of the benefit and burden of all LL and T covenants to the successor LL and T
What is the position if the outgoing tenant has provided an AGA?
The LL can look to the outgoing tenant for compenation in respect of subsequent breaches of covenant, but this will be limited to damages
What is an indemnity covenant in the context of lease assignments?
Outgoing tenant should ensure their assignee agrees to pay rent and perform all covenants for the remainder of the lease
This protects the assignor from liability.
How else could the outgoing tenant claim indemnity?
Under common law (Moules v Garrett) - this only works for assigness not sub-tenants and is in any case of limited practical value (if the assignee was worth sueing, the LL would have sued in the first place)
What is the relationship between landlords and subtenants?
No direct relationship exists
When can the LL enforce a right against a subtenant?
When there is a restrictive covenant - these can be enforced against any owner or occupier.
What is the time frame for a landlord to serve notice to a former tenant regarding charges under s17 LTCA?
Within six months of the charge becoming due
The charge must be a fixed charge - this includes rent arrears, service charges, or insurance premiums
What are former tenants and guarantors not liable for after lease variations?
They are not liable to pay amounts owed for variations made after assignment that they could not have anticipated
They are liable for rent increases in line with rent review.
What is an overriding lease?
A lease that a former tenant can request over an assignee to ensure compliance with the lease
What is the term of an overriding lease?
It is granted for a term equal to the remaining term of the lease in question plus three days
What covenants does an overriding lease contain?
Contains same covenants as the lease in question, except those personal to any person
This helps the former tenant manage the assignee’s compliance.
When is an overriding lease granted?
If the former tenant pays the rent or other fixed charges following a s16 notice.
How are covenants against subletting construed?
In favour of he tenant, therefore covenants against the whole do not prohibit subletting a part (Wilson v Rosenthal)
What are considered unreasonable grounds when considering fully qualified covennats
Grounds that have nothing to do with the relationship of the LL and T in regard to the subject matter of the lease
International Drilling v Louisville
When can s19(1A) be used and what is its effect
- in long leases only
- T and LL can agree conditions on which consent may be withheld or granted - these will automatically be deemed reasonable
