Landlord's Remedies Flashcards
Action in debt (for non-payment of rent)
Landlord can issue court proceedings to recover a debt
- includes unpaid rent, service charge or insurance rent
- Action for debt is limited to 6 years before issue of proceedings
Guarantor and rent deposit
If landlord had concerns about covenant strength of tenant or assignee - landlord may have obtained a guarantor or rent deposit
- Landlord can rely on contractual terms of guarantee to claim its losses from guarantor
- Landlord can also draw on a rent deposit if there are arrears
Commercial rent arrears recovery
Self-help remedy
CRAR may be used where:
- premises are purely commercial
- minimum of 7 days’ principal rent is owed
What can be recovered under CRAR?
Can only recover annual rent + VAT + interest
- minimum of 7 days owed
- can only recover no more than 6 years
CANNOT recover service charge or any other sum reserved as rent (e.g., insurance rent)
Can CRAR be used with forfeiture?
NO
- the lease cannot have been forfeited to use CRAR
CRAR requirements
- cannot be used to seize goods belonging to subtenant
- landlord appoints enforcement agent
- 7 clear days notice of entry and 7 clear days notice of intention to sell
Statutory demand for rent arrears
If tenant fails to pay rent, landlord may petition for the winding up
- if tenant does not pay within 21 days and fails to apply to restrain the landlord - can use statutory demand to present the petition
Forfeiture
Forfeiture is the right of the landlord to re-enter the premises and take them back from the tenant
- it is not an automatic right - only permitted insofar as the lease provides for it
Forfeiture for non-payment of rent
Landlord is entitled to forfeit as soon as lease allows
Forfeiture for any other breach of tenant’s obligations (anything other than non-payment of rent)
Landlord must serve a s146 notice
The notice:
- details the alleged breach
- gives tenant a reasonable opportunity to remedy it
Waiver of right to forfeiture
If landlord acts in a way that acknowledges the existence of the lease
Breach is a once and for all breach
Once landlord waives the right to forfeiture - never able to regain it for that breach
Example:
- non-payment of rent
- unlawful assignment or underletting
- insolvency event
Other breaches are continuing breaches
Each day that the breach continues, the landlord regains the right of forfeiture
Examples:
- failure to keep premises in repair
- breach of user covenant
- failure to comply with insurance obligation
What are breaches not capable of being remedied?
Subletting and illegal/immoral use
Right to forfeit of breach of lease by subletting
Subletting is not capable of remedy
- landlord serves s146 notice on tenant
- landlord only needs to wait 14 days and then can forfeit
Additional safeguard for tenant in breach of repair obligation
Landlord must serve s146 notice AND
LPA 1938 applies for lease of more than 7 years with at least 3 years left to run
- Tenant has 28 days to serve a counter notice
Damages for breach of repairing obligation
The measure of damages is the loss of value to landlord’s reversion, not the cost of putting premises into full repair
(Landlord must have served s146 notice and informed tenant of right to serve counter notice)
Jervis v Harris Clause
Commercial lease almost always contains a self-help clause (Jervis v Harris)
Gives landlord right to:
- enter property
- carry out repairs
- recover cost from tenant as a debt (it can be recovered in full)
Advantages for landlord of self-help remedy
- Can recover full amount (not limited to loss in value to reversion)
- no need to serve a s146 notice
