Lease Termination Flashcards
What are the different methods whereby a lease can be terminated?
- effluxion of time
- a break clause
- surrender
- notice to quit
- merger
What is termination by effluxion of time?
Where tenancy without security of tenure comes to end on expiry of contractual term.
Landlord can require tenant to vacate the premises and can treat the tenant as a trespasser
What happens if the landlord consents to a tenant remaining in the property after the expiry of the term in an unprotected lease?
Tenancy at will created and if rent accepted then potential periodic tenancy
What is termination by break clause?
Clause which if exercised will lead to termination of lease before contractual term expiry.
Is a break clause effective with a protected tenancy?
Yes - if exercised by tenants
Only effective if landlord exercises it if not security of tenure so no.
What is notice to quit?
For periodic tenancies where either landlord or tenant gives notice that they intend for tenancy to end.
What happens with notice to quit and protected tenancies?
If tenant serves notice, then still effective
If landlord serves notice, then tenant can still hold over
What notice period is required for notice to quit?
Depends on length or periodic tenancy:
- weekly period - 1 week’s notice (4 weeks for residential)
- monthly period - 1 month’s notice
- quarterly period - 1 quarter’s notice
- yearly period - 6 month’s notice
When must notice to quit expire?
On first or last day of tenancy period
If a landlord serves notice on a tenant who has secured tenancy who then holds over, how can they get them to quit?
They must serve hostile section 25 notice supported by one or more of the statutory grounds
What is termination by surrender?
Tenant can give up leasehold interest to landlord.
What is the process for surrender?
- express surrender requires a deed
- premium may be payable
- surrender by operation of law also effective and occurs where landlord and tenant act in a way that is inconsistent with continuation of tenancy
What happens if in advance of deed for surrender, there is an agreement to surrender?
Similar procedure as to contracting out of protected tenancies must be followed ie must be notice and declaration.
What is termination by merger?
Either tenant acquires the landlord’s superior interest or a third party acquires it
When can the landlord claim damages for breach and what can they recover?
For all breaches damages will be available.
Landlord can recover damages that put them back in a position they would have been in had it not been for the breach of covenant
When will a landlord issue an action in debt?
Can do so to recover any debt, such as unpaid rent, service charge or insurance rent
Can only recover rent due in the six years before issue of proceedings
Who can an action in debt be brought against?
- tenant
- former tenant if old lease or tenant gave authorised guarantee agreement
- guarantor
Is a landlord limited to recovering unpaid rent from a guarantor?
No - can go after them for any breach of tenant’s covenants
How can the landlord use the rent deposit as a remedy?
Can draw on rent deposit if tenant is in arrears.
Tenant then has to top up deposit
What is commercial rent arrears recovery and when can it be used?
Self-help remedy and can be used where:
- the premises are purely commercial
- a minimum of seven days’ principal rent is owed (cannot be used to recover service charge or other sums)
- the lease has not been forfeited
What are the requirements for using commercial rent arrears recovery?
- landlord must appoint enforcement agent who has required certificate from court or is exempt (eg police officer)
- seven clear days’ notice must be given of the intention to enter the tenant’s premises (clear days exclude Sundays and bank holidays)
- notice must include certain details, such as amount of the debt and how to repay it, details of power to enforce the debt and contact details of enforcement officer
- if notice expires without repayment of the debt, enforcement agent can enter premises and take control of goods belonging to the tenant up to value of debt owed
- landlord must give further seven clear days’ notice if it intends to sell the goods
Are equitable remedies eg specific performance and injunctions ever available for breach?
Theoretically possible but very unlikely
What is forfeiture?
It is the right of the landlord to re-enter the premises and take them back from the tenant
Is forfeiture an automatic right?
No - only permitted insofar as the lease permits it
Typically when tenant fails to pay rent, breaches other obligations of lease, or there is an insolvency event
When can a landlord exercise forfeiture?
- for non-payment of rent, as soon as lease allows
- for other breach of obligation, landlord must serve a section 146 notice
How can forfeiture be achieved?
- peaceable re-entry by landlord
- by court order for forfeiture
What is a s 146 notice? What will it detail?
Notice of potential forfeiture
Will detail alleged breach and gives the tenant a reasonable opportunity to remedy it, failing which the landlord will be entitled to forfeiture
When will the landlord waive their right to forfeiture?
When they act in a way that acknowledges the continuing existence of the lease.
Intention of the landlord is irrelevant
What are examples of once and for all breaches?
- non-payment of rent
- an unlawful assignment or underletting
- an insolvency event
What are examples of continuing breaches?
- failure to keep the premises in repair
- breach of the user covenant
- failure to comply with an insurance obligation
If a landlord waives their right of forfeiture in respect of a once and for all breach, can they ever regain it?
No - once waived lost forever
If a landlord waives their right of forfeiture in respect of a continuing breach, can they ever regain it?
Yes - for each the day the breach continues the landlord will regain it.
So if waived one day will regain the next
What is relief from forfeiture?
- Tenant may apply for relief from court (or any other party who derives interest in lease such as under tenant or mortgagee)
- discretionary remedy
- if awarded will be as if forfeiture never happened and court will aim to put parties in position they would have been in had forfeiture not happened
When will relief often be granted from forfeiture?
Will likely be granted for non-payment of rent if tenant settles all arrears and landlord’s costs
What additional steps may have to happen for forfeiture for breach of a repairing covenant?
If lease is for term of seven years or more and has at least three years left to run then tenant has 28 days to serve counter-notice meaning landlord must get leave from court to proceed.
Landlord has to advise tenant of this right in s 146 notice.
When can a landlord issue proceedings for damages for breach of a repairing obligation?
Only after landlord has served a section 146 notice and given the tenant 28 days to serve a counter-notice
How are damages to be measured in respect of breach of repairing obligation?
Loss of value to landlord’s reversion not the cost of putting the premises in full repair
What is a Jervis v Harris clause?
Self help remedy for breach of repairing covenant that allows landlord to:
- enter the property
- carry out any repairs
- recover the cost of doing so from the tenant which are to be treated as a debt so recoverable in full
- no s 146 notice is needed
