Lease anatomy Flashcards
What are the basic components of a lease?
- Parties, date, definitions and interpretation provisions
- Demise and rents
- Tenant covenants
- Landlord covenants
- Guarantor’s covenants
- Provisos, agreements and declarations
- Rights granted
- Rights excepted and reserved
- Other provisions
- Execution
What is the basic rule regarding tenant covenants?
Tenant may do all things an owner can do unless lease prohibits it
This means leases are drafted in a prohibitory manner to define what the tenant cannot do.
What is the most common landlord covenant?
Quiet enjoyment
What is the purpose of a forfeiture clause in a lease?
It allows the landlord to bring the lease to an early end in the event of a tenant breach
This clause also deals with security of tenure provisions.
What rights may a tenant need in a lease?
• Right of way to access premises
• Car parking rights
These rights ensure the tenant can utilize the property effectively.
What are implied covenants for tenants?
• Rent and taxes
• Repair
• Not committing waste
These are obligations that are automatically included in a lease unless expressly stated otherwise.
What does the non-derogation from grant covenant entail?
The landlord must not allow the tenant to do anything that undermines the specific purpose of the lease
This obligation is crucial for maintaining the intended use of the leased property.
What are the 3 types of tenant covenants?
Absolute, qualified, fully qualified
What does LTA 1927 s19(2) imply into qualified covenants against improvements?
Landlord’s consent is not to be reasonably withheld
This ensures that tenants can make improvements without undue restriction.
What is the method by which a tenant can dispose of their interest in the property?
Alienation
This involves transferring lease rights, often subject to restrictions in shorter leases.
What are the landlord’s remedies for breach of rent covenant?
• Action for debt
• Forfeiture
• Distress and Commercial Rent Arrears Recovery (CRAR)
These remedies allow landlords to recover owed rent and manage breaches effectively.
What is required for a notice to quit in a periodic tenancy?
• For a yearly tenancy – at least half a year’s notice
• Other periodic tenancies – full period’s notice to expire
This governs the termination of periodic tenancies.
What is required for a landlord to forfeit a lease in legal leases?
An express forfeiture clause must be included in the lease
What must a s146 notice specify?
- the breach complained of
- if capable of remedy, require remedy within a reasonable time (up to 3 months)
- require compensation if the LL requires
This notice is a formal step in addressing breaches of covenant.
What are prescribed lease clauses?
These are clauses that must be included at the start of the lease to speed up registration
How must a lease be executed?
By deed (s52 LP(MP)A) unless it falls under the short lease exception
What is a covenant for quiet enjoyment?
This covenant ensures that the landlord does not interfere with the tenant’s possession or enjoyment of the property.
What is the case for the test of reasonableness in fully qualified or upgraded covenants?
International drilling v Louisville
What can the LL require alongside granting permission for alienation?
- Payment of compensation for loss in value
- Reinstatement of the premises if reasonable
- Payment of landlord’s expenses in giving consent
What is the effect of s19(3) LTA
- Prevents the landlord from requiring payment for granting its consent unless the change of use also involves a change to the structure of the property (Unless change of use involves change of structure)
- Does not imply a reasonableness proviso into qualified user covenants
What is required to exercise a LL’s right under CRAR?
- Requires a landlord to serve an enforcement notice on the tenant giving seven clear days notice that it will seize goods
- Once notice has been served, tenant can apply for it to be set aside for execution or be delayed
What are the remedies available to a LL for breach of a non-rent covenant?
- injunction
- specific performance
- forfeiture
- damages
What are the ways in which a lease can come to an end?
- effluxion of time (no notice required unless there is SoT)
- notice to quit
- breack clause
- surrender –> handing back lease to LL, often by deed with a surrender premium
- merger –> T acquires LL’s interest
Is there a need for forfeiture clauses in equitable leases?
The right to forfeit for non-payment of rent is implied into the lease
How can the LL’s right of re-entry exercised?
- peceable re-entry (only available for purely business properties)
- obtaining a court order
What is the procedure for forfeiture of a rent clause?
- has there been a breach?
- is there a forfeiture clause?
- Has there been a waiver
- formal demand
- exercise the right
- relief?
How can the LL waive the right to forfeit?
- LL is aware of the acts or omissions giving rise to the forfeit
- and does some unequivocal act recognising the continued existence of the breach
- if a breach is non-continuing, the LL can never again forfeit for that specific breach (e.g each individual payment of rent)
What are the requirements for a formal demand for rent before the right to be forfeiture can be exercised?
Landlord mut have made formal demand for the exact amount of rent due on the day when it becomes payable between the hours of sunrise and sunset unless
- The lease expressly waives this requirement
- At least six months rent is in arrears and there are insufficient seizeable goods on premises to satisfy arrears due
When will the court allow the lease to continue after forfeiture of a rent clause?
- If arrears and costs are paid before trial
- Or at or after the court order – if the arrears are paid - relief usually given unless circumstances are exceptional
- After peaceable re-entry – if rent and landlord’s costs are paid and it is just and equitable to grant relief
what happens to the sub-lease if the head-lease is forfeited?
The sub-lease is also destroyed. However, the sub-tenant can apply for relief
What additional information is required in a s146 notice when complaining of a breach of a repair covenant in a lease which is granted for at least 7 years and with more than 3 years left to run?
- T must be informed of their right to serve a counter notice within 28 days
- if T does this, LL cannot forfeit without the leave of the court
How can the tenant apply for relief after service of a s146 notice?
Under s146(2)
- If landlord has applied for court order – tenant must apply for relief before court order is made
- If landlord has exercised peaceable re-entry – relief under s146(2) can be given (same for subtenant)
