Land Law - Leases

Question 1

What is the basic rule regarding what a tenant can and cannot do?

Answer 1

The tenant can do anything that the owner can do, unless it is restricted/prohibited in the lease.

If there is no mention of it / express provision in the lease, the tenant can do it.

Question 2

What is a common landlord covenant that most tenants look for?

Answer 2

“Covenant for quiet enjoyment” which means the landlord cannot interfere with the tenant’s POSSESSION and ENJOYMENT of the property during the lease.

Breaches have included:

• erecting scaffolding hindering access to the property.
• persistent intimidation of the tenant to induce him to leave.

Question 3

What is “security of tenure”?

When does it apply?

Answer 3

The right of the tenant to remain in the property after the lease ends and to request the grant of a new lease.

Applies:
- tenancy is occupied by the tenant for PURPOSES OF A BUSINESS.

Does NOT apply to:
- tenancy at will (tenancy forever but either party can terminate immediately)
- assured tenancies (tenancy for the rest of one’s life, e.g. elderly).
- fixed-term tenancies less than 6 months (unless been there for 12 months)
- where occupier has no business purpose for the tenancy.

Question 4

What does “business purposes” include and not include when considering security of tenure?

Answer 4

This does not include a tenant taking lodgers or Sunday school sessions free of charge), but would include things like:
- running a charity shop
- members-only sports club
- residential use that furthers the tenant’s business like accommodation for students or lease of a shop, part of which can be used residentially.

Question 5

Is it possible to contract out of the security of tenure provisions?

Answer 5

Yes, but only for fixed term tenancies.

Also, the landlord must serve a notice on the would-be landlord, in a prescribed form, detailing the consequences of contracting out of security of tenure.

Any valid periodic tenancy will always be eligible for security of tenure.

Question 6

What sort of leases are excluded from security of tenure?

Answer 6

• Agricultural tenancies (these have their own statutory regime, so CAN NEVER BENEFIT FROM SECURITY OF TENURE, even if they try!)
• Mining leases
• Service leases (where the service provider / employee gets the tenancy from their job, e.g. security guard or boarding school teacher)
• Fixed-term tenancies of 6 months or less (unless the tenant has been there for 12 months or more on multiple renewals or successive tenancies).

Question 7

What is “forfeiture”?

Answer 7

Right of the landlord to bring the lease to an early end due to tenant’s breach of the lease terms.

Question 8

What sorts of “rights granted” must be clearly detailed in the lease?

Answer 8

Rights granted like easements must be clearly detailed in the lease, e.g. if the tenant requires a right of way to access the property; right to park one’s car in a nearby car park; right to use common parts of the property held with the landlord.

The landlord may also reserve rights like easements, e.g. to run cables through the property; to carry out repairs to the rest of the building.

Question 9

What is the relevance of Insurance vs Service Charge?

Answer 9

Landlord is responsible for insuring the building, including payment.

The tenant(s) will pay a service charge (landlord’s way of effectively getting back payment for the insurance).

Question 10

What is a rent review?

Answer 10

Mechanism to increase rent at regular intervals.

Common in commercial leases, e.g. FRI leases (full repairing and insurance leases).

The provision should be detailed, e.g.
- “rent review after X years”;
- “rent review calculated according to market rate / turnover rate / etc…”

Question 11

What are the execution formalities for leases? Who must sign?

Answer 11

Landlord, tenant and any guarantors must sign.

Leases must be executed by DEED unless it is a short-term lease:

• term of 3 years’ or less;
• market rate rent;
• immediate possession for tenant.

Question 12

What are the 3 key requirements for creating a lease?

Answer 12

1. Certainty of term
2. Exclusive Possession
3. Correct execution formalities

+ nemo dat rule.

Question 13

What are some common tenant covenants?

Answer 13

• payment of rent
• use of premises
• payment of service charge
• covenant against assignment and subletting.

Question 14

What is exclusive possession?

Is the right to possess enough?

Answer 14

The right to possess is not enough (Street v Mountford), for example, if you possess the premises but could be forced to move into a different but equivalent flat - this is not EXCLUSIVE possession!

Question 15

What is meant by “certainty of term”?

Answer 15

The term of the lease can be anything from 2 days to 8 weeks to 6 months to 1,000 years.

If we do not know when the term will end SPECIFICALLY, the term will be invalid.

EG: “you have a right to occupy the premises for as long as you are at university”.
This is a LICENSE, not a lease (no proprietary right to the land!).

Question 16

If a lease does not specify an upper limit on the duration (e.g. no maximum, like 50 years) but it is clear that the lease will terminate on certain events, e.g. tenant gives 6 months’ notice - will this be a valid lease.

Answer 16

Yes, this is a valid lease because the lease terminates on a sufficiently certain event (Ashburn Ansalt v Arnold).

Leases often have, but are not required to specify a term of years absolute (LPA 1925).

Question 17

EG: “you have a right to occupy the premises for as long as you are at university”.

• Will this confer a license or a leasehold right?

Answer 17

License, as we do not know the exact date the term will end.

Question 18

What is a periodic term?

Answer 18

The term is agreed for one set period (e.g. a year) but there is an EXPRESS or IMPLIED term that the lease’s term will renew periodically.

For example, you rent a storage locker for one month and you can terminate this by giving 3 weeks’ notice.
This is an EXPRESS periodic term because the term (“one month”) is known from the outset.

An implied periodic tenancy is where there is nothing set out in writing, but the certain term arises by looking objectively at all relevant circumstances including payment and acceptance of rent on a periodic basis.

EG: You enter into a lease “for as long as the tenant is trading”. The tenant moves in and pays the annual rent by quarterly installments”. This is an IMPLIED periodic tenancy of 1 year.

Example: monthly payments of rent (without agreement on a fixed term from the outset) may create an implied monthly periodic tenancy.

Question 19

If the landlord reserved the right to introduce others to a flat share up, would this count as exclusive possession?

Answer 19

No, this is not exclusive possession and they were licensees. This is because they merely had the right to share the flat with one another (who was a stranger to them; not someone they knew and agreed this with - which could be a joint lease) and therefore this prevented their rights from being combined.

Question 20

Can parties sign a lease whilst contracting out of the LPA / Rent Act legislation?

Answer 20

No, you cannot contract out of landlord & tenant legislation as this is designed to protect leaseholders, prevent coercion, and sham practices.

On this basis, the courts look at substance (not form) to construe whether a document was a license or a lease.

Antoniades v Villiers:
- A + B shared a double bed but both signed two separate agreements (in which they were described as “licensees”)
- A + B covered half the rent each.
- On the facts, UKHL held that they were joint tenants of the bedroom; not mere licensees.

Question 21

Where the parties have a “sharing clause”, what does this mean?

Answer 21

The landlord is seeking to add other parties to the agreement (e.g. additional licensees / tenants).

It is important to determine whether this is a legitimate clause or a sham clause.

It is likely, but not guaranteed, that sharing clauses defeat exclusive possession.

Question 22

What factors indicate a sham clause, e.g. landlord’s sharing clause.

Answer 22

1. Size and Nature of Accommodation
   - would it be realistic to introduce others?
   (Could be valid for a large flat share, obiter in AG Securities v Vaughan)
2. Wording of Clause
   - the wider the clause, the more likely it is a sham
3. Relationship between the Occupiers
   - where the occupiers are total strangers, it is more likely to inappropriate to add them; thus, a sham.
4. Was the clause used?
   - if a clause is not exercised, it is more likely to be a sham.

Question 23

If a commercial tenant entered into a lease of service station garages, but the landlord reserved the right to perform alterations on the premises, install a car-wash (and did this!), and change the layout of the shop - would this be a valid lease?

Answer 23

No, it would be invalid because the commercial tenant does not have “exclusive possession” (Esso Petroleum v Fumegrange).

Question 24

If the landlord retains a key, will this undercut the tenant’s exclusive possession?

Answer 24

Not necessarily - it depends on the purpose for which the landlord has a key.

If access is restricted to “carrying out repairs”, this acknowledges that the tenant has exclusive possession (Street v Mountford).

The courts look at whether any rights of access (for the landlord) are restricted or unrestricted.

Question 25

If the landlord provides services or attendance, what does this mean?

Answer 25

The agreement is a LICENSE; not a lease. The occupier is simply a lodger because there is no exclusive possession.

Question 26

What happens if the landlord reserves a right to relocate the tenant?

Answer 26

The agreement is a LICENSE; not a lease. This is not exclusive possession.

Question 27

If two people rent a flat, they might have two separate leasehold interests OR a “joint tenancy”.

What are the requirements for joint tenants?

Answer 27

Joint tenants are viewed as a single entity, meaning they must hold:

1. unity of possession
   (no one has exclusion possession of any part, e.g. their own bedroom);
2. unity of interests
   (same term under same conditions and must be jointly liable for the rent);
3. unity of time
   (occupiers’ interests start at the same time);
4. unity of title
   (same title from same document terms).

Question 28

What factors defeat a lease?

Answer 28

1. No intention to create legal relations

• presumed in domestic cases, e.g. family arrangement; act of friendship or generosity.

Rent being paid, or a formal element (e.g. lease drafted) will evidence their ICLR.

Example: If the agreement would be a lease ordinarily but it is an act of generosity between family members, it will likely be a license instead.

2. Service/Work Occupancy

• gardener lives on premises to help his work
• domestic staff live on elderly man’s estate

Purpose must be for the better performance of the worker’s duties; e.g. boarding teacher.

This would not count: banker living above his office for convenience, or hairdresser living above her shop as a perk.

Question 29

If someone buys a flat but it later transpires the flat was originally rented out - what is the legal status of the lease?

Assume the lease is 7 years or less.

Answer 29

Leases under 7 years are generally not registered; it is not a requirement.

Such leases still take effect as legal leases and will be binding on a new freehold estate owner as an overriding interest.

Question 30

A landlord and a tenant enter into a ten year lease of Apartment 22 by deed. The tenant takes no further action in respect of the lease. The landlord sells the freehold estate of the apartment block (of which Apartment 22 forms part) to a new owner. Will the tenant’s ten year lease bind the new freehold owner of the apartment block?

Answer 30

No, any lease over 7 years must be registered to be legal. It will not therefore bind the new freehold owner.

Question 31

What are the time limits for contracting out of security of tenure?

Answer 31

Normal notice - over 14 days before completion/signing

Statutory declaration by solicitor - if under 14 days from completion/signing.

(The statutory declaration must refer to both notice and statutory declaration procedures!).

Question 32

What are the 3 types of covenants in leases, i.e. how strictly can covenants be drafted?

Answer 32

ABSOLUTE - cannot be done; entirely restricted by landlord.

QUALIFIED - requires consent of the landlord

FULLY QUALIFIED - landlord will not unreasonably withhold consent

Question 33

What is included in a tenant covenant to “keep the premises in repair”?

Answer 33

1. Premises must be kept in the condition a “reasonably minded owner” would keep them.

This is affected by the character of the building, the age of the premises and wording of the covenant.

2. An obligation to “keep premises in repair” would also include an obligation to “put” the premises in repair, if they break during the tenancy.
3. You can have more strict covenant, e.g. “repair AND REPLACE” covenants, which impose greater obligations on the tenant.

Question 34

What is not required under a tenant “repair” covenant / how far does it extend?

Answer 34

It will not include RENEWAL of the property, or substantially / effectively the whole property.

Repair can include reconstruction of subsidiary parts:
(e.g. 200 year-old house and its front external wall falls in). (Lurcott v Wakely).

Repair DOES NOT include reconstruction of the entirety:
e.g. if repair works would be just under the value of the whole property (Brew Brothers Ltd v Snax).

Question 35

How “reasonableness” assessed when it comes to the landlord not unreasonably withholding its consent [fully qualified covenants]?

Answer 35

Reasonableness must relate to something to do with the land/finances, e.g. the proposed action would diminish the value of the land, or the proposed action would impact the tenant’s ability to pay rent; or the tenant wants to assign the lease but the landlord has received a bad credit reference from the potential assignee.

If a reasonable person might come to the same conclusion, the landlord does not need to PROVE that his conclusions were justified (International Drilling Fluids).

It cannot be personal or superficial, e.g. the landlord hates the tenant personally, or disagrees with their favourite football team.

Question 36

What is the “waste” doctrine when it comes to alterations?

Answer 36

Tenant alterations cannot diminish the value of the property.

Question 37

Imagine you have a qualified alteration covenant.

What does statute do to this?

Answer 37

Provided it only relates to “improvement” alterations, the LPA will implied convert this wording into an unqualified alteration covenant.

“improvements” is widely defined as “Anything that will improve the premises FROM THE TENANT’S PERSPECTIVE”.

“The landlord’s consent must be obtained…”

–>

“The landlord’s consent must be obtained… AND WILL NOT BE UNREASONABLY WITHHELD”

Question 38

Imagine you have a qualified use of premises covenant.

What does statute do to this?

Answer 38

Statute does NOT imply reasonableness (so it remains “qualified”).

Statute implies that the landlord cannot demand payment from the tenant for giving his consent.

If the use will involve a structural change to the property, the landlord CAN demand payment:
- either a lump-sum or increase in rent;
- AND the landlord can recover costs involved, e.g. surveyor or legal fees.

Question 39

What is meant by “alienation”?

Answer 39

Where the tenant disposes of their leasehold interest, either IN WHOLE or IN PART.

Examples: Tenant surrenders, mortgages/charges, assigns or underlets/sublets, or parts with possession in respect of their leasehold interest.

Alienation is often restricted by landlord in short-term tenancies.

Question 40

For a fully qualified covenant, when can the tenant expect an answer from the landlord?

Answer 40

The landlord must give a WRITTEN response within a “reasonable period”, deemed to be 28 DAYS.

If refused, REASONS must be given in writing.

N.B.: This all applies to ALL FORMS of alienation, e.g. assignment, mortgaging, underletting, etc…

Question 41

What formalities are involved with assignment OR sub-letting?

Answer 41

Deeds must be used for ALL ASSIGNMENTS (even for short leases under 3yrs - even though this is rare!).

This is because all disposals of legal interests in land must be done by Deed (TR1 Form).

If the current lease is registrable, the assignment must also be registered.

Question 42

Can you assign if the lease is silent as to assignment / has no provisions on it?

Answer 42

Yes - assume that the tenant can do anything the owner can do, unless it is restricted in the lease.

Question 43

Explain the ways in which a covenant against alienation will be construed in favour of the tenant.

Answer 43

A covenant against assignment will not prohibit SUB-LETTING, in whole or in part.

A covenant against sub-letting the whole premises will not prohibit sub-letting PART of the premises.

Question 44

What is the License To Assign document?

Answer 44

This document, to which the landlord, tenant and assignee are all parties, records the landlord’s consent, e.g. to the assignment OR sub-letting.

Question 45

What are the reasons for and against subletting vs assigning?

Answer 45

Both require Deeds as a formality, but:

A negative of sub-letting is that the leaseholder (headlease, or superior leaseholder) is still liable for performing the covenants - they are still on the hook and in the picture until the termination of their own lease.

A positive of sub-letting is that the head-leaseholder gets an income, e.g. if for a period of 3 months, they do not need their premises.

Question 46

What are the consequences if the landlord does not comply with his statutory duty to prove written consent/refusal/reasons re. alienation covenants?

Answer 46

Landlord could be liable in tort for damages for breach of statutory duty.

The burden is on the landlord to prove reasonable refusal.

Question 47

Give some examples of reasonable and unreasonable refusals of landlord consent re. a fully qualified alienation covenant.

Answer 47

Unreasonably withholding consent is where the landlord seeks to achieve some collateral purpose unconnected to the specific tenant and landlord relationship.

• Unsatisfactory tenant’s reference [reasonable]
• The proposed assignee’s use of the property would damage the landlord’s own commercial interests as the assignee proposed to run a rival business next door [reasonable]
• The proposed subletting was at a substantial premium and at a rent well below the open market value [reasonable]
• Where the existing tenant is already in breach of covenant – the landlord can insist upon the breach being remedied before giving consent unless it is clear that the assignee can remedy the breach [reasonable]
• Where the landlord’s intention was to bring the tenancy to an end and the landlord did not therefore propose to give consent to any assignee, not just to the particular assignee in question [unreasonable]
• Where the proposed assignee was already a tenant of the landlord in another property which would have been difficult to re-let [unreasonable]

Question 48

What is meant by a “new lease” and why is this relevant?

Answer 48

Any lease made after 1st January 1996 is a “new lease” and is subject to a new 1995 Statute (Landlord and Tenant (Covenant) Act 1995). The old law, based on privity of contract, made the current tenant REMAIN LIABLE for rent & covenants even if he assigned his lease to someone else.

This law gave greater flexibility to landlords re. covenants and alienation.

For example, the landlord and tenant can pre-agree the following, BEFORE entering into a lease:

• circumstances in which landlord may withhold consent to an assignment;
• if consent is granted, which conditions will attach to that consent;

(One of the conditions for granting consent may include that the outgoing tenant/assignor SIGNS AN AGA SO THAT HE REMAINS ON THE HOOK FOR THE RENT, in case the assignee/new tenant does not pay).

• Such circumstances and conditions will be automatically reasonable if imposed by the landlord when giving consent to [the tenant] assign [the tenant’s lease].

Question 49

What is meant by an “AGA” and what does this mean?

Answer 49

Authorised Guarantee Agreement

For “new leases” (i.e. made after 1st January 1996), the landlord requires that an outgoing tenant signs an AGA.

This is so the outgoing assignor of a lease [current tenant] remains liable for the covenants (e.g. payment of rent) in respect of the assignee [incoming tenant].

[This was the old law for old leases, based on the doctrine of privity; after the 1995 landlord & tenant statute, it is required for landlord to make their own contract to retain this security mechanism].
The landlord will only ever have the current and most recent outgoing tenant on the hook for the rent/covenants.

If the landlord gives a “new lease”, he will require that the current tenant signs an AGA (Authorised Guarantee Agreement) before he lets the current tenant assign the lease to someone else.

Question 50

What is assignment?

Answer 50

When a tenant sells the remaining portion of their lease (typical in longer leases of 5+ years).

It is done via deed and, if the leasehold is registered, the assignment must be registered at the LR.

Question 51

Under the 1995 Act, what must a landlord do before pursuing a former tenant for a “fixed charge”?

(s.17 LTA 1995)

Answer 51

A fixed charge includes rent arrears, insurance premiums and service charge. It does not include unascertained liabilities and damage / or which have become ascertainable after a court order.

The landlord must:

1. serve notice on the tenants
2. within 6 months of the charge becoming due

If not, the landlord is precluded from making a claim.

REMEMBER THAT THESE ARE RETROSPECTIVE PROVISIONS, so they apply to both OLD and NEW leases (pre-/post-1996).

Question 52

Under the 1995 Act, explain when former tenants and guarantors will be liable for variations made to the lease AFTER assignment.

(s.18 LTA 1995)

Answer 52

Former tenants and guarantors (under old lease or an AGA if new lease) are liable to pay any additional amounts PROVIDED THEY COULD BE ANTICIPATED AT THE TIME.

For example, an increase is rent IS ANTICIPATED at the time, especially if the lease had a rent review clause.

REMEMBER THAT THESE ARE RETROSPECTIVE PROVISIONS, so they apply to both OLD and NEW leases (pre-/post-1996).

Question 53

Under the 1995 Act, what is “overriding lease” and when are they made?

(s.19 LTA 1995)

Answer 53

Effectively means that the former tenant can recoup his loss from the defaulting party (acting as “overriding landlord” to the sub-tenant or assignee):

Landlord
Tenant
Sub-Tenant / Assignee

If the former tenant is liable to pay rent or other fixed charges from the assignee (new tenant), they can immediately request an overriding lease from the landlord.

This means that the assignor (old tenant) becomes the landlord over the assignee (new tenant) and can demand a reimbursement for paying the defaulting party’s rent.

REMEMBER THAT THESE ARE RETROSPECTIVE PROVISIONS, so they apply to both OLD and NEW leases (pre-/post-1996).

Question 54

A landlord sues a former tenant who is liable under an authorised guarantee agreement for the current tenant’s breach of the alterations covenant in the lease.

Can the former tenant request an overriding lease from the landlord under the statutory procedure (s.17 LTA 1995)?

Answer 54

Suing a former tenant for the current tenant’s breach of an alteration covenant, this is NOT suing for a “fixed charge”, so the former tenant cannot request an overriding lease.

As the landlord is not suing for a “fixed charge”, there is no requirement to serve notice on the former tenant under s.17 LTA 1995.

Question 55

What is the difference between privity of estate and privity of contract?

Does this influence why AGAs exist?

Answer 55

Privity of contract is between the landlord and ORIGINAL leaseholder (until that lease comes to an end, e.g. after 10 years).

Privity of estate is between the landlord and current estateholder, e.g. when the original tenant has sub-leased or assigned or mortgaged their lease, the new holder of the legal estate will be the assignee, mortgagee or sub-tenant.

[The privity of contract remains, even after legal estateholder changes!]

Privity of estate may end between landlord and original tenant (e.g. when the tenant sub-lets or assigns the lease; or where the landlord sells his freehold reversion to a new party (“the reversioner”) [freehold reversion is the right to own a property when a lease comes to an end], but this is why things like AGAs exist (so the landlord can secure payment of rent!).

Question 56

In the context of a new lease, what is the significance of an express indemnity covenant?

Answer 56

An outgoing tenant (assignor) should ensure that the assignee (new tenant) signs an express indemnity covenant with them.

The outgoing tenant can then sue the new tenant if they fall behind on covenants and force the outgoing tenant to pay the landlord, e.g. payment of rent; payment of service charge.

(These indemnity covenants are of limited value because, if the defaulting tenant was worth suing, the landlord surely would have sued them!).

Question 57

Is there any remedy for an outgoing tenant whose assignee falls into arrears on rent, assuming there is NO express indemnity covenant?

Answer 57

Yes, the outgoing tenant could sue under common law (Moule v Garratt), but this is inconvenient.

Question 58

In a sub-lease context, there is no direct relationship between Landlord and Sub-Tenant (due to privity of contract vs privity of estate), but does this mean that restrictive covenant cannot be enforced?

Answer 58

Statute (s.3(5) LTA 1995) allows restrictive covenants to be enforced against any owner [landlord] or occupier [tenant or sub-tenant] of the premises, even if the lease or sub-lease does not provide express provisions for this enforcement.

Landlords cannot normally enforce positive covenants against sub-tenants.

A prudent landlord will ensure that the sub-tenant covenants directly with the landlord, AS A CONDITION TO CONSENTING TO SUB-LETTING.

Question 59

With regards to covenants contained in the lease, how can the tenant ensure protection visa-a-vis the sub-tenant?

Answer 59

Before sub-leasing, the tenant will ensure that the sub-lease contains a clause ensuring that “the sub-tenant covenants to observe and perform all the covenants contained in the head lease.”

This is because the tenant knows they are RESPONSIBLE for any covenant breaches by the sub-tenant.

Question 60

MCQ

A landlord granted a 40-year legal lease to a tenant on 1 January 1994.

Three years later, the tenant assigned the lease to Assignee 1.

Four years later, Assignee 1 assigned the lease to Assignee 2.

Assignee 2 made a direct covenant with the landlord to observe the leasehold covenants.

Ten years later, Assignee 2 assigned the lease to Assignee 3, who is still the tenant.

Question: Who can the landlord sue for breach of covenant?

Answer 60

Answer: original tenant, assignee 2 and assignee 3.

Old rules means tenant is liable as party to the original lease (neither privity of contract, nor privity of estate)

assignee 1 is under the new rules, so he is no longer liable - he no longer owns the legal estate [leasehold] after he assigns it.

assignee 2 is liable as he gave direct covenants to the landlord

assignee 3 is liable under privity of estate (current estateholder of the lease).

Question 61

Does the sub-tenant have privity of estate?

Can the sub-tenant sue, or be sued, by the landlord for breach of restrictive covenants?

Answer 61

No, the sub-tenant does not have either privity of estate (unlike an assignee), nor privity of contract.

Nonetheless, statute (s.3(5) LTA 1995) allows restrictive covenants to be enforced against any owner [landlord] or occupier [tenant or sub-tenant] of the premises, even if the lease or sub-lease does not provide express provisions for this enforcement.

Question 62

What is an “excluded assignment” and what are its effects?

Answer 62

An excluded assignment is where the tenant or assignor (e.g. Assignee 1) assigns their tenancy WITHOUT seeking the landlord’s consent.

The effect is that the assignment does not take effect; the assignor (tenant) is still liable / not released from their obligations.

Question 63

MCQ: Two years ago, a landlord granted a lease to a tenant. A year ago, the tenant granted a sublease to the subtenant. The sublease contains the same leasehold covenants as the headlease. The subtenant is now in breach of the user covenant and the decorating covenant.

Who can the landlord sue?

Answer 63

Sue tenant for breach of decorating covenant (this is positive, so does not generally run with the land).

Sue sub-tenant for user because this is a restrictive covenant (use of premises).

Question 64

MCQ.

A landlord granted a new lease to a tenant. The tenant assigned the lease to Assignee 1 with the landlord’s consent and gave the landlord an authorised guarantee agreement. Assignee 1 has recently assigned the lease to Assignee 2 without the landlord’s consent.

QUESTION: If Assignee 2 were to breach any of the tenant’s covenants, who could the landlord sue?

Answer 64

All of them: original tenant, Assignee 1 and Assignee 2.

Assignee 2 because of s.3 LTCA 1995 (implied right of any occupier to sue/ be sued by any owner, based on breach of restrictive covenants).

Assignee 1 because they have made an excluded assignment, so are not released from their obligations.

Tenant is still liable under the AGA because their assignee (Assignee 1) is STILL liable, as assignee 1 is STILL ON THE HOOK (as A1 made an excluded assignment).