Lease termination Flashcards
What is effluxion of time?
This means that the lease ends at the end of the contractual term. A fixed term tenancy which does not have security of tenure will expire at the end of the contractual term.
When a fixed term lease expires by effluxion of time, what happens to the tenant’s right to occupy?
The tenant’s right to occupy ends unless the landlord agrees to a new lease or other arrangement.
If the landlord consents to an unprotected tenant remaining in occupation, will they be holding over?
No, the tenant will be a tenant at will.
What is surrender?
When the tenant gives up its leasehold interest to the landlord-an express surrender must be made by deed.
A surrender by operation of law occurs when the landlord and tenant act in a way that is inconsistent with the continuation of the tenancy.
What is a reverse premium?
A premium payable by the tenant to give up its interest.
What is a merger?
A merger happens when either the tenant acquires the landlord’s superior interest or a third party acquires both.
What are the landlord’s choice of remedies when a tenant breaches the lease?
-Damages
-Action in debt
-Guarantor and rent deposit
-Commercial Rent Arrears Recovery (CRAR)
When can CRAR be used?
It can be used where:
-the premises are purely commercial
-a minimum of seven days principal rent is owed
-the lease has not been forfeited
What is forfeiture?
Forfeiture is the right of the landlord to re-enter the premises and take them back from the tenant. It brings the lease to an end before the contractual term.
When can the landlord forfeit for non-payment of rent?
As soon as the lease allows.
What must the landlord do in order to forfeit for breaches of the tenant’s obligations?
Must serve a Section 146 notice of its intention to forfeit, detailing the remedy and giving the tenant reasonable time to remedy the breach.
When will an implied waiver of the right of forfeiture arise?
It can arise if:
-the landlord does some unequivocal act recognising the continuing existence of the lease;
-with knowledge of the breach in question; and
-communicates that act to the tenant.
What is a once and for all breach and what happens if the landlord waives the right of forfeiture in relation to such a breach?
If a breach is a once and for all breach, once the landlord waives the right of forfeiture, it will never be able to regain it for that breach.
Examples include:
-non-payment of rent (but a new right will arise after each non-payment)
-unlawful assignment or underletting
-insolvency event
What is a continuing breach and provide an example?
This means that each day the breach continues, the landlord regains the right of forfeiture, examples include:
-failure to keep premises in repair
-breach of the user covenant
-failure to comply with an insurance obligation
What leases does the Leasehold Property (Repairs) Act 1938 apply to?
-the lease is for a term of seven years or more; and
-there are at least three years of the term left to run;
If so, the tenant has 28 days to serve a counter-notice in response to a Section 146 notice. This means that the landlord must get leave from the Court before proceeding.
What is a self-help (Jervis v Harris) clause?
A clause that will give the landlord the right to:
-enter the property
-carry out any repairs
-recover the cost of doing so from the tenant
What are the advantages, disadvantages and limitations of a debt action for non-payment of rent?
Reasonably simple-can separate debt from landlord/tenant relationship.
Court action-potentially costly and time consuming.
Limited to any sum owed under the lease.
What are the advantages, disadvantages and limitations of CRAR for non-payment of rent?
Quick and efficient-no need to involve Court.
Care must be taken to observe correct procedure.
Limited to principal rent.
What are the advantages, disadvantages and limitations of forfeiture for non-payment of rent?
Quick and efficient-no need to involve Court and threat of forfeiture might be sufficient.
Risk that tenant will not comply and may lose tenant.
Depending on the lease, may extend to other sums treated as rent.
What are the advantages, disadvantages and limitations of damages for repairing breaches?
Not many advantages.
S146 notice required, if lease qualifies tenant can serve counter-notice.
Damages limited to reduction in value of landlord’s reversion and if tenant serves counter-notice, Court will only give leave to continue in exceptional grounds.
What are the advantages, disadvantages and limitations of forfeiture for repairing breaches?
Not many advantages.
S146 notice required, if lease qualifies tenant can serve counter-notice.
Damages limited to reduction in value of landlord’s reversion and if tenant serves counter-notice, Court will only give leave to continue in exceptional grounds.
What are the advantages, disadvantages and limitations of a self-help (Jervis v Harris) clause for repairing breaches?
Quick and efficient-no need to involve Court and landlord recovers full cost of repairs.
Landlord must take care not to exceed powers.
Can only be used when provided for by the lease.
What are the advantages, disadvantages and limitations of specific performance for repairing breaches?
May be the only option.
Rarely granted unless exceptional circumstances.
Discretionary remedy-last resort.
What are the advantages, disadvantages and limitations of damages for all other breaches?
May be helpful in separating issue and preserving landlord/tenant relationship.
Court action-potentially costly and time consuming.
Any breach that can be compensated in financial terms.
