Land Law - Easements, Covenants, Mortgages and Leases

Question 1

Easements

What is required for an easement to be legal?

Answer 1

• Registered against the servient title.
• Granted either by deed or by implication.
• For equivalent period of either the freehold or leasehold estate (i.e. forever, or for a certain period).

For unregistered land, no need for registration.

Typically, the easement is also registered against the dominant title.

Question 2

What are the three essential characteristics of an easement?

Re Ellenborough Park

Answer 2

1. The dominant and servient lands are not owned and occupied by the same person.
2. The easement accommodates the dominant land.
3. The easement is capable of forming the subject of the grant.

Question 3

Easements

In determining whether the easement accommodates the dominant tenement, the guidelines are that the easement:

Answer 3

1. improves the marketability of the land; and/or
2. would benefit any owner of the land

Must not be personal benefit.

Question 4

Easements

The easement must be capable of forming the subject matter of the grant. Four features of the easement will satisfy this criteria:

Answer 4

(a) Capable of reasonably exact definition
(b) No expenditure by the servient owner.
(c) Not too extensive.
(d) Not a new type of negative easement.

Note: there is no automatic right to light, but it can be created by easement.

Question 5

Harrison grants by deed the right for his neighbour to park her large pizza van on a small area of a land next to his farm. She uses the van to cook and deliver pizza as part of her business.

Is this an easement?

Answer 5

(a) There is a dominant and servient land, owned by different people.
(b) Questionable whether the right accommodates the dominant land.
(c) Right may be too extensive.

The neighbour simply has a licence.

Question 6

Easements

What are the 6 ways that an easement can be created?

Answer 6

• Express grant/reservation
• Implied by necessity
• Implied by common intention
• Wheeldon v Burrows
• s.62 LPA 1925
• Prescription

Question 7

Easements: Implied by necessity

What is the requirement and when could a claim to necessity be defeated?

Answer 7

Requirement: The property cannot be used at all without the easement.

Can be defeated if there is an alternative route, even if dangerous.

E.g. no means of access other than the right claimed.

Question 8

Easements: Implied by common intention

What are the two requirements?

Answer 8

• The land is conveyed for a common purpose known to both parties.
• The easement is needed for the common purpose to be fulfilled.

Question 9

Easements: Wheeldon vs Burrows

When does Wheeldon vs Burrows apply?

What are the requirements for it to be created?

Answer 9

When a landowner sells part of their land and had a quasi-easement at the time. That right implicitly passes to the buyer if it:

(a) existed prior to sale;
(b) is continuous and apparent;
(c) is necessary to the reasonable enjoyment of land sold;
(d) was in use at the time of sale.

Meaning of continuous and apparent: habitual enjoyment obvious from inspection.

Question 10

Andrew owns land and builds a cottage on it to accommodate hotel guests. He and his guests regularly use a track running across the land to access the cottage to avoid use of a busy main road. Later, he sells the cottage to Helen.

Would Wheeldon v Burrow apply?

Answer 10

Yes:

(a) Quasi-easement exists.
(b) Use of track continuous and apparent.
(c) Necessary for reasonable enjoyment of land.
(d) Right of way may have been used at the time of sale.

Helen can claim that there is a grant of easement to her cottage.

Question 11

Easement: s.62 LPA

This is a word-saving provision. If nothing is stated in the deed, a conveyance will include any existing rights implicitly. The conditions are:

Answer 11

1. There is a conveyance (not merely a contract)
2. A privilege existed at the date of conveyance that is capable of being an easement.
3. Some diversity of occupation at the time of the grant (unless easement of light or the rights are continuous and apparent)

The claimant does not need to show the right is necessary for the reasonable use of the land (so it’s an exception to Re Ellenborough).

Question 12

Easement: Prescription

What property does prescription apply to?

Answer 12

Freehold property only.

Question 13

Easements: Prescription

For prescription to occur, the right must be exercised:

Three conditions

Answer 13

(a) Continuously
(b) As of right.
(c) for 20 years or more

Continuously - Use can be by a number of freehold owners in succession and can be intermittent.

As of right -Not without force, secrecy or permission.

Question 14

Easement: Prescription

Prescription may arise by virtue of:

3 types

Answer 14

1. Common law
2. Prescription Act 1832.
3. Doctrine of Lost Modern Grant

Question 15

Easement: Prescription

At common law, the dominant land owner is entitled to the presumption where he used the easement for 20 years or more. However, the servient land owner can rebut that presumption by:

UNIMPORTANT

Answer 15

Showing that at some time since 1189:
- The right was not or could not have been exercised
- The dominant and servient tenement were vested in the same owner.

Question 16

The Prescription Act 1832 applies as a default, but what must the claimant prove?

UNIMPORTANT

Answer 16

Uninterrupted enjoyment for 20 years or more (other than interruptions lasting one year or less)

If there is an interruption for more than one year, the doctrine of lost modern grant may assist instead.

Question 17

Easement: Prescription

When is the doctrine of Lost Modern Grant applied? What is it?

IMPORTANT

Answer 17

When both common law prescription and the Prescription Act have been rebutted.

A last resort presumption granting the easement where the dominant owner has fulfilled all three conditions of prescription (continuous and uninterrupted use, as of right, for 20 years or more)

In practice, this is the only way you need to claim an easement.

Question 18

Freehold Covenants

Is a covenant capable of being legal?
What are the relevant formalities for covenants to be effective?

Answer 18

No.
Formalities: In writing and signed.

Question 19

Freehold Covenants

When can the burden of a covenant pass to a successor at common law?

Answer 19

Never.

Question 20

Restrictive Covenants: Tulk v Moxhay and the burden in equity

The burden of a covenant can pass to a successor in equity when:

5 conditions

IMPORTANT

Answer 20

(a) it is restrictive
(b) it touches and concerns the dominant land.
(c) it was created with the intention of burdening the servient land.
(c) the dominant land was retained by the covenantee at the time of creation.
(e) The servient land owner has notice of the covenant.

Whether notice is given depends upon whether it is registered or unregistered land.

Intention to burden the servient land can be express or implied

Question 21

Restrictive Covenants: Tulk v Moxhay and the burden in equity

A sells all of his land subject to a covenant not to build on it. The original covenantor sells the land to B, who starts to build on the land.

Can A prevent B from building on the land?

Answer 21

No. He did not retain any of the dominant land.

Question 22

Restrictive Covenants: Tulk v Moxhay and the burden in equity

In determining whether the covenant touches and concerns the land, what three conditions must the covenant satisfy?

Answer 22

1. Benefits any dominant owner, and ceases to benefit him when he is separated from the land.
2. Affects the nature, quality, mode of user or value of the dominant land.
3. Not expressed to be personal.

Question 23

Restrictive Covenants: Tulk v Moxhay and the burden in equity

Mark owns 6 and 8 Tennison Avenue. He sells 8 Tennison Avenue to Stella, but retains 6. The transfer on sale contained the following:

“The Buyer and her successors in title covenants with the Seller to:
(a) Paint the exterior of the Property every five years;
(b) Not use the Property for any purpose other than a private dwelling house.

Stella sold the Property to Emma. Is Emma bound by the covenants?

Answer 23

Neither burden runs in common law.

In equity:

(a) cannot run in equity, as a positive covenant.
(b) runs in equity because:

• Mark retained ownership of the benefited land.
• The covenant benefits any owner of the dominant land and enhances the mode of user and value.
• There is an express intention for the burden to run.
• Provided Emma has been given notice, she will be bound.

Question 24

Positive Covenants: Alternative Methods for enforcement

How can positive covenants be enforced against a successor covenantor?

Answer 24

(1) Indemnity Covenant
(2) Landowner creates a lease instead of selling it.
(3) Doctrine of mutual benefit and burden arises.

Question 25

Positive Covenants: Doctrine of mutual benefit and burden

This doctrine dictates that:
There are two conditions for this doctrine to arise:

Answer 25

A person wishing to benefit from the other land must also comply with any corresponding burdens.

(1) The burden is relevant to the exercise of rights enabling the benefit to be obtained.
(2) The covenantor’s successors must have the opportunity to elect whether to take the benefit and accept the burden or to renounce it.

Question 26

Covenants: Running of benefit at common law

The benefit of a covenant (whether positive or restrictive) passes to the successor covenantee under the following conditions:

This would allow the successor covenantee to pursue the original covenantor for any breach of covenant.

Note: it would never be relevant to successor covenantors, as the burden cannot run in common law.

Answer 26

1. The covenant touches and concerns the land.
2. The benefit was intended to run with land.
3. The original covenantee held a legal estate in the benefited land.
4. The successor covenantee obtained legal title to the benefited land from the original covenantee.

Question 27

Covenants: Running of benefit at common law

How can “an intention for the benefit to run with the land” be shown? Set out the requirements for each of these.

Answer 27

Express annexation

Requires that the whole of the dominant land is identified.

Statutory annexation (s.78 LPA)

Requires that the covenant was created after 1925, and the benefited land is sufficiently identified in the transfer.

Think of annexation as ‘acquisition’ of the right.

There is also implied annexation at common law, but this is hardly relevant. Courts may imply annexation where it was obviously intended and it would be unjust to ignore that intention.

Question 28

Covenants: Running of benefit at common law

How else can the benefit of a covenant pass to a successor covenantee, and what are the requirements?

Answer 28

By assignment, provided:
- it takes place at the time of transfer of land.
- it is in writing. and signed by the assignor.
- written notice of the assignment given to the original covenantor.

Question 29

Covenants: Running of the benefit in equity

In what three ways can the benefit of a covenant pass to the successor covenantee in equity?

It is necessary to for the benefit to run in equity if there is a change of ownership of both dominant and servient lands, and the successor covenantee wants to enforce his right. That’s because the burden passes in equity, not at common law.

Also note: it only applies to restrictive covenants, as the burden of positive covenants do not run with the land.

Answer 29

1. Annexation
2. Assignment
3. Building schemes.

Question 30

Covenants: Annexation example

Joeeta is the freehold owner of 6 and 8 Woodbury Road. She lives in number 6 and sold number 8 to Cameron. The transfer contains the following:

“For the benefit and protection of the Seller, the Buyer and his successors in title covenants with the Seller and her successors in title not to keep any animals on the Property”.

Elsewhere in the transfer, number 6 is identified as land retained by Jooeta.

Cameron sells number 8 to Eloise. Joeeta has sold number 6 to Matthew. Does Matthew have the benefit in equity?

Answer 30

As a restrictive covenant, both the burden and benefit must pass in equity.

Does the benefit pass?

• No assignment.
• No express annexation (as it is expressed toward Joeeta and not Number 6.)
• Statutory annexation likely to apply: Post-1925, and the land is identified in the transfer.

Question 31

Covenants: Running of the benefit in equity

Apart from annexation and assignment, building schemes may impose covenants (including positive) between buyers of different plots. What are the two main prerequisites to establish whether a building scheme exists?

Rare

Answer 31

• Evidence of a common intention between all purchasers that the area of land is to be sold in plots
• Clear intention that all purchasers of individual plots are subject to reciprical covenants.

Question 32

Covenants: Matching benefit and burden

Maurice is the freehold owner of 14 and 16 Barnet Crescent. He lives at number 14. Ten years ago, he sold number 16 to Louise. The transfer contained the following:

“For the benefit and protection of 14 Barnet Crescent the Buyer and her successors in title covenant with the Seller and his successors in title to use the Property only as a private dwelling house.

Eight years ago, Louise sold 16 Barnet Crescent to Desmond and Maurice sold 14 Barnet Crescent to Amanda. Last year, Desmond sold the property to Ola. Ola is running her business from the property.

Can Amanda take action in respect of the breach?

Restrictive Covenant

Answer 32

Has the burden passed?

Restrictive covenant, therefore burden can only pass in equity if criteria in Tulk v Moxhay is met:

(a) Restrictive covenant
(b) Maurice retained ownership of the benefited land when creating the covenant.
(c) Benefits any owner, arguably enhances mode of user and value of dominant land;
(d) Express intention for the burden to run with the land;
(e) Provided Ola has notice of the restrictive covenant, she is bound.

Has the benefit passed

As it is a restrictive covenant, Amanda must demonstrate that she has the benefit in equity.

No assignment present.
No express annexation.
Statutory Annexation exists: there are words of annexation which clearly identify the benefited land. Therefore she has the benefit and can pursue Ola for breach of covenant.

Question 33

Covenants: Matching benefit and burden

Tom is freehold owner of 22 and 24 May Road. He sells number 24 to Caitlin. The transfer contains the following:

“The Buyer and her successors in title covenant with the Seller and his successors in title not to allow the Property to fall into disrepair”

Caitlin sells number 24 to Siobhan. Tom sells number 22 to Archie. Siobhan has allowed number 24 to fall into disrepair.

Who can Archie sue for the breach?

Answer 33

Caitlin.

The burden of a positive covenant cannot pass to a successor in title in common law nor in equity.

HOWEVER, Caitlin remains bound as the original covenantor due to privity of contract.

Archie can pursue Caitlin provided that he can show that the benefit of the covenant passed at common law.

Question 34

Covenants: Remedies for breach

What are the two remedies against breaches of positive covenants?

Positive covenants

Answer 34

1. Damages.
2. Specific performance.

Question 35

Covenants: Remedies for breach

The original covenantee disposes of his land, and transfers to the successor, who has the benefit of the covenant. The original covenantor breaches a positive covenant. Who can sue the covenantor for damages?

Positive Covenant

Answer 35

The successor covenantee. The original covenantee would not be able to demonstrate that they suffered loss.

Question 36

Covenants: Remedies for breach

Suppose there is a positive covenant against the original covenantor to maintain the fence. If the covenantor sells the property to a successor in title, who then fails to maintain the fence, who can be sued with specific performance as the remedy?

Positive Covenant

Answer 36

Not the successor covenantor: the burden of a positive covenant cannot pass in common law nor equity.

The original covenantor can be, although they will only be able to pay - they will probably not be able to perform as they have no control over the property.

Question 37

Covenants: Remedies for breach

As restrictive covenants only run in equity, the principal remedy is:

Restrictive Covenants

Answer 37

Injunction

Question 38

Covenants: Remedies

A court will award damages instead of injunction where four conditions are met:

Restrictive Covenant

Answer 38

• injury is small;
• capable of being estimated in money;
• adequately compensated by money
• an injunction would be oppressive to the respondent.

Question 39

Covenants: modification and discharge

The 4 methods of removing or limiting the effects of a freehold covenant are:

Answer 39

1. Express release by deed
2. Common ownership
3. s.84 application.
4. Insurance.

Insurance relates to restrictive covenants only. It is purchased for a one-off premium: in the event of the dominant owners seeking to enforce the breach of covenant, the insurer accepts the risk.

Question 40

Covenants: modification and discharge

What are the grounds for an s.84 LPA application to the Lands Chamber?

Relates only to restrictive covenants

Answer 40

(a) Covenant is obsolete;

(b) Covenant impedes some reasonable use of the land, money is adequate compensation, and either

• secures no practical benefit to the persons it should benefit; or
• contrary to public interest

(c) Those entitled to the benefit have expressly or impliedly agreed to discharge;

(d) The discharge will not injure the persons entitled to benefit.

Question 41

Mortgages

What are the lender’s five remedies in relation to a legal mortgage?

Answer 41

1. possession
2. power of sale
3. debt action
4. appointing a receiver
5. foreclosure

Question 42

Mortgages

Out of the lender’s powers, which ones bring the mortgage to an end?

Answer 42

• Power of sale
• Foreclosure

Question 43

Mortgages: Possession

(1) What is the meaning of possession?
(2) What are the two ways in which possession can be lawfully obtained?

Answer 43

(1) Meaning of possession
- Taking physical possession; or
- Where the property is let, directing that tenants pay their rent to the lender (rather than the borrower)

(2) How to lawfully obtain possession:
- Without court order, if peaceable entry is possible.
- With court order

Rarely used in isolation. Usually as a pre-cursor to other rights.
Peaceable entry only possible if property is empty or when the property is let and lender directs tenants to pay rent to lender)

Question 44

Mortgages: Possession

Section 36 of the Administration of Justice Act 1970 allows the borrower to ask the court to exercise its discretion to: (2 requests)

This section applies where the following three circumstances are met:

A “reasonable period” is defined to include:

Answer 44

(1) The two requests of the borrower:

• Adjourn proceedings; or
• On making an order, suspend execution or postpone date of possession.

(2) Three circumstances allowing such requests:
(a) Lender started proceedings
(b) Property includes a dwelling-house; and
(c) Borrower is likely to pay arrears within a reasonable period.

The full remaining period of the mortgage.

Question 45

Mortgages: Possession

Where the property is producing income, the lender can use the income to pay the debt owed. However, this is subject to the strict duty to account. To that end, the lender is required to do two things:

Strict Duty to Account

Answer 45

a. Account to borrower for any sum beyond that which is due; and
b. manage property with due diligence.

This is why, in relation to income-producing property, the lender would typically prefer to appoint a receiver, which does not have the strict duty to account.

Question 46

Mortgages: Power of sale

Before exercising this power, the lender may need to obtain possession. The three condions for power of sale to be exercised are that it must:

Answer 46

1. Exist.
2. Have arisen.
3. Become exercisable.

Question 47

Mortgages: Power of sale

What does it mean for the power of sale to exist?
What does it mean for the power of sale to have arisen?

Answer 47

Power of sale exists
- expressly stated within mortgage deed or;
- implied if it is a legal mortgage.

Power of sale has arisen: the mortgage money is due.

Legal date for redemption = paying off outstanding balance in full

More specifically, the power of sale arises where the legal date for redemption has passed, or any instalment has become due.

Question 48

Mortgages: Power of sale

The power is exercisable if it is expressly set out in the mortgage deed or one of the three conditions under s.103 LPA 1925 are met:

Power sale must be exercisable.

Answer 48

• Lender has given the borrower notice to repay a debt in full and borrower hasn’t paid it for three months after such notice;
• Interest is in arrears for two months after becoming due; or
• Borrower has breached a mortgage term other than payment of mortgage money.

Question 49

Mortgages: Power of sale

(1) What does a prospective buyer need to check after the lender has exercised their powerof sale?

(2) In exercising the power, the lender has two duties toward the borrower:

(3) The two effects of the sale upon the buyer are that they take the whole estate:

Answer 49

(1) That the power exists and has arisen.

(2) Duties toward borrower:
- Act in good faith;
- Take reasonable care to obtain true market value.

(3) Effect of sale on buyer:
- free of any estates or interests which the lender took priority over; but
- subject to estates and interests that took priority over the selling lender.

The lender is under no obligation to delay sale in order to maximise price.

Question 50

Mortgages: Power of Sale

The lender is the trustee of the proceeds of sale and must distribute in accordance with s.105 LPA 1925 to pay:

What is the equity of redemption?

Proceeds of Sale

Answer 50

a. Cost of redeeming any prior mortgages;
b. Lender’s expenses of sale;
c. lender’s own mortgage;
d. balance to any person entitled to the equity of redemption (i.e. a subsequent lender or borrower).

Equity of redemption: The right in equity for the borrower to recover the balance after the sale.

Question 51

Mortgages: Debt Action

The debt can be recovered by an action for repayment. For this to occur the legal date for…

The Limitation Act 1980 limits the lender’ ability to recover the debt to: (two considerations)

Answer 51

…redemption must have passed;
- six years for recovery of interest;
- twelve years for recovery of capital.

Question 52

Mortgages: Appointment of receiver

(1) When would the lender appoint a receiver?

(2) What conditions must be met for the power to be used?

(3) The receiver has the power to demand and receive income from the property. The income must be applied to pay:

Answer 52

(1) When the property produces income.
(2) The power must exist, have arisen and be exercisable, and the receiver must be appointed in writing.

(3) s.109(8)

• Outgoings;
• Interest on prior mortgages;
• Insurance premiums, repair costs and their own costs;
• Interest on current mortgage;
• Capital on current mortgage;
• Balance to borrower (equity of redemption)

Question 53

Mortgage: Appointing Receiver

Can the receiver sell the property?

Is the receiver agent for lender or borrower? What is the practical effects of this?

Answer 53

No, unless expressly given in the terms of the mortgage.

Borrower. Practical effects: borrower has no recourse to lender for acts/omissions of receiver.

Question 54

Mortgages: Appointing a receiver

What are the four duties of the receiver to both lender and borrower?

These duties extend to…

Where there is conflict between interests of lender and borrower, the receiver is permitted to…

Answer 54

(a) Ensure personal interests do not conflict.
(b) Act in good faith.
(c) Act with reasonable competence;
(d) Take reasonable care to obtain true market value;

Put lender’s interests first.

These duties extend to anyone with an interest in the equity of redemption

Additionally, may take steps to increase value of the property.

Question 55

Mortgages: Foreclosure

How and when does the power of foreclosure arise?

What are the two stages of foreclosure?

What is the effect of foreclosure?

Answer 55

By an application to the High Court, once the legal date of redemption has passed.

(1) Foreclosure Nisi - court orders borrower to pay within six months (usually)
(2) Foreclosure Absolute - court officially vests title to lender and extinguishes the equity of redemption to the borrower.

But equally, if the sale proceeds is less than the sum owed, the borrower is released from liability. Hence, the lender would only use this if there is positive equity.

Question 56

Mortgages: Foreclosure

How is the borrower protected from the draconian effect of foreclosure?

Answer 56

a. Discretion of court to re-open foreclosure proceedings.
b. Application for adjournment of foreclosure where the property is a dwelling house.
c. Application for judicial sale, preserving the equity of redemption for the borrower.

On a. it can even be re-opened after foreclosure absolute, in exceptional circumstances.
On c. This can be made by any person with an interest in the equity of redemption.

Question 57

Leases: Formalities for legal lease

What is required for leases for more than three years?

What are the 4 requirements for a short-term (parol) lease to be valid?

Answer 57

(1) A deed.

(2) Parol lease
- Three years or less.
- Must give tenant immediate right to possess and enjoy the land;
- Must be at market rent;
- Must not include a charge or premium.

Question 58

Leases: Equitable lease

An equitable lease is created where (2 situations):

In both cases, what are the three requirements?

Answer 58

a. There is a contract to create or transfer a legal estate.
b. There is an attempt to use a deed but the deed is not valid.

Three requirements for equity to intervene:
- A contract
- Complying with s.2 LPMPA.
- Clean Hands (capable of specific performance)

In case of the ‘failed’ deed, the law essentially implies a contract.

Question 59

Leases: Essential Characteristics

What are the three essential characteristics of a lease?
If one or more of these are absent, what has been created?

Answer 59

1. Estate is for a certain period (cannot last forever)
2. Exclusive possession.
3. Correct Formalities.

A license.

Question 60

Leases: Essential Characteristics

Permitted Duration: Are leases for life valid?

Exclusive Possession is the ability for the tenant to exercise control over land. Who can the tenant exclude under this condition?

Does exclusive possession extend beyond exclusive occupation?

Answer 60

• Yes - they are converted to a term of 90 years ending on death of the tenant.
• Everyone, including the landlord.
• Yes. The tenant doesn’t need to be in occupation to enjoy exclusive possession.

Question 61

Lease vs License

(1) If the landowner retains a key, can there be exclusive possession?

(2)If the occupier lacks general control, can there be exclusive possession?

(3) If an employer allows an employee to live in the employer’s accommodation for the performance of their duties, is this a licence or lease?

(4) If there is a flat sharing agreement, in which all occupiers have signed a single agreement described as a licence, is this a licence or lease?

(5) Is there any significance to rent being paid?

Answer 61

(1) Yes.
(2) No.
(3) Licence.
(4) Depends on the context and the intention as to exclusive possession.

(5) Yes. While it is not an essential characteristic, it supports the view that there is a lease.

Question 62

Leases: Relatinship between landlord and tenant

In the absence of an express obligation, certain covenants are implied. What are the two implied covenants promised by the landlord?

Answer 62

1. Quiet enjoyment.
2. Obligations in respect of fitness of the property.

Question 63

Leases: Relationship between landlord and tenant

What are the landlord’s repairing obligations under s.11 Landlord and Tenants Act 1985?

Landlord covenant to respect fitness of property

Answer 63

(a) Keep in repair the structure and exterior of the dwelling.
(b) Keep in repair and proper working order the installations for heating and water heating.
(c) Keep in repair and proper working order supply of water, gas, electricity, sanitation.

Only liable where disrepair has been notified.

Question 64

Leases: Tenant’s Alienation Covenant

1. Assignment occurs where:

Is a new lease created?

2. Sublease occurs where:

Is a new lease created?

Assignment

Answer 64

1. The tenant passes all of their interest under the lease to a new tenant and steps out of the picture. No new lease created.
2. A lesser estate is carved out of the superior estate. A new lease is created.

In a sublease, the subtenant pays rent to the tenant, and the tenant has a dual capacity as tenant of headlease and landlord of sublease. Three legal estates exist concurrently.

Question 65

Leases: Tenant’s Alienation Covenants

1. What are the two other methods of alienation (apart from subleases and assignments)?
2. Explain the following four terms that affect the interpretation of lease provisions:

(a) Open contract position
(b) Absolute prohibition
(c) Qualified covenant
(d) Fully qualified covenant

Answer 65

1. Other methods of alienation:
   - Charge;
   - Parting with possession
2. Four terms determining nature of covenant:

(a) Open contract position = no covenant against alienation.
(b) Absolute prohibition = Covenant not to deal with lease
(c) Qualified covenant = covenant not to alienate without the landlord’s consent.
(d) Fully Qualified covenant = covenant not to alienate without the landlord’s reasonable consent.

Question 66

Leases: Tenant’s Alienation Covenants

What is the effect of s.19 of the Landlord and Tenant Act 1927?

Thus, where the landlord has received a written application in relation to a qualified covenant against alienation (of any kind), the landlord must do three things:

Answer 66

It translates any qualified covenant into a fully qualified covenant.

• give consent, unless unreasonable to do so;
• give written notice of their decision, including any conditions;
• where consent is withheld, give written reasons for refusal.

• Cannot unreasonably delay giving consent;
• Applies to both old and new leases.

Question 67

Leases: Tenant’s Alienation Covenants

(1) Section 19(1A) of the LTA 1927 enables the original landlord and original tenant of a ……. to agree in advance of drafting the lease upon:

(2) What is the most popular condition used by landlords, and what is its effect?

Answer 67

(1) Commerical new lease.
a. Circumstances for withholding consent to an assignment;
b. Conditions for consent to assign.

(2) An Authorised Guarantee Agreement (AGA). Its effect is to make the outgoing tenant the guarantor for the assignee for payment of rent and tenant covenants.

New lease: granted after 1 January 1996.

Neither the pre-agreed circumstances nor conditions are subject to the reasonableness test (s.19 LTA 1988). This is all covered in Property Law.

Question 68

Leases: Enforcing Covenants

Old Leases where original tenant (T1) assigns to new tenant (T2)

(1) Original Tenant
- What is their liability?
- What relationship is this based on?

(2) New Tenant
- What is their liability?
- What relationship is this based on?

(3) If T2 defaults, who can the landlord pursue?

Old Leases

Note: for leases, this includes positive covenants.

Answer 68

(1) Original tenant
- Liable for the burden of all covenants for the duration of the lease.
- Relationship of privity of contract

(2) New tenant
- Liable to the burden of covenants that “touch and concern” the land while the lease is vested in them.
- Not liable for personal covenants.
- Relationship of privity of estate

(3) T1 via privity of contract of T2 via privity of estate, or both.

T1 also ceases to be entitled to the benefit of covenants.

Note: Most landlords will insist that each assignee covenants directly with them to observe and perform the covenants in the lease, thus creating privity of contract, but this situation is not the one tested on, as it is clearly unproblematic.

Question 69

Refresher: “Touches and Concerns the Land”

What does “touches and concerns” the land mean, according to P&A Swift Investments?

Answer 69

• Benefits only the dominant owner for the time being, so that if separated form the land it ceases to be advantageous to them;
• Affects the nature, quality, mode or value of the dominant land.
• Not expressed to be personal.

Question 70

Leases: Enforcing Covenants - Old leases

If the landlord sues T1 for a breach of T2’s, what three courses of action can T1 take?

In what way does this differ to a new lease, where T1 has signed an AGA?

Old Leases

Answer 70

1. Common law action against breaching tenant.
2. Express indemnity covenant against the person to whom they assigned the lease.
3. Implied indemnity covenant, contained in any assignment.

In relation to a new lease, there is no implied indemnity in the assignment.

Question 71

Leases: Enforcing Covenants - Old Leases

On a sale of the reversion, what are transmitted to the new landlord?

Old Leases

Answer 71

The benefits and burdens of covenant’s that touch and concern the land.

Question 72

Leases: Enforcing Covenants

In a new lease:

1. What is the liability of the original tenant (T1) where they have assigned a new tenant (T2)?
2. What is the liability of T2?
3. As such, if T2 defaults, who can the landlord pursue?

New Leases

Answer 72

1. T1 is bound only while the lease is vested in them.
2. T2 is bound to all covenants unless expressed to be personal.
3. Only T2.

Question 73

Leases: Enforcing Covenants -New Leases

On a sale of the reversion of a new lease, what are transmitted to the new landlord?

Is the outgoing landlord automatically released from the landlord covenants?

Answer 73

Burdens and benefits of his successor, provided they were not expressed to be personal.

No. He has to obtain a release. Otherwise, the tenant will have a choice of pursuing either landlord, or both.

Question 74

Leases: AGAs

(1) An AGA only requires the former tenant to guarantee…

(2) The landlord can, however, require the former tenant to enter a new lease in the event that the assignee is…

(3) A landlord can only seek an AGA where the lease contains…

(4) Does the landlord’s request for an AGA need to be reasonable?

Answer 74

(1) …their immediate assignee.
(2) …declared bankrupt and the lease is thereby disclaimed.
(3) …a qualified covenant against alienation.
(4) Not for a commercial lease, but must be reasonable for a residential lease.

Question 75

Leases: AGAs

In 2010, Lucy, the freehold owner, granted a lease to Tanveer for a term of 20 years. In 2015, Tanveer assigned the lease to Ashleigh. In 2016, Lucy assigned the freehold reversion to Freddie. In 2020, Ashleigh assigned the lease to Gabriel, and provided an AGA to Freddie. Gabriel hasn’t paid the rent since the date of assignment to him.

Who can Freddie recover from?

Answer 75

The current tenant Gabriel, or the former tenant Ashleigh or both.

Question 76

Leases: Retrospective provisions s.17, 18 and 19.

Question 77

Remedies for breaches of lease - see Property Law.