Lease Termination Flashcards by Berke Elmaz

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What are the methods of lease termination?

1) Effluxion of time
2) Break clause
3) Notice to quit
4) Express surrender
5) Surrender by law
6) Merger

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What happens at effluxion of time for unprotected tenant if landlord allows continued occupation?

Tenancy at will unless rent is accepted, which then becomes a periodic tenancy

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What is the risk for landlords accepting rent post-term?

May unintentionally create a periodic tenancy with security of tenure

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What happens in break clause if tenant / protected tenant breaks lease?

Lease ends (even if protected)

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What happens in break clause if landlord breaks lease?

Only ends contractual term – protected tenant may still hold over

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What is notice to quit?

Used to terminate periodic tenancies

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What is effect of notice to quit in a protected tenancy?

Only ends the periodic tenancy, not occupation – tenant can hold over

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What is the default notice period for periodic tenancies?

1) Weekly (residential) – 4 weeks
2) Weekly (others) – 1 week
3) Monthly – 1 month
4) Quarterly – 1 quarter
5) Yearly – 6 months

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What else must be served with notice to quit for protected periodic tenancies?

Hostile s25 notice

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What are the types of surrender?

1) Express surrender
2) Surrender by operation of law

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What is an express surrender? What is needed?

Voluntary agreement between landlord and tenant to end lease – deed required

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What is a surrender by operation of law?

Both parties act in inconsistent way with lease continuing – no deed required

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Is surrender effective if protected tenancy?

Yes

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What are the different remedies for breach of lease available to landlord?

1) Damages (Contractual claim)
2) Action in debt
3) Guarantor & Rent deposit
4) Commercial rent arrears recovery (CRAR)
5) Equitable Remedies (Discretionary)

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What are tenant’s covenants seen as in Dispute Resolution?

Contractual obligations

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What is the measure of loss if suing for damages in Court?

Loss suffered by landlord due to tenant’s breach

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What is the negative of court proceedings for damages?

1) Costly
2) Time consuming
3) Recovery of legal costs not guaranteed

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What is the time limit for action in debt?

6 years from date debt became due

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Former tenant
AGA

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What are the requirements for CRAR?

1) At least 7 days rent owed
2) Lease must not be forfeited

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What must a landlord do in CRAR?

1) Appoint certified enforcement agent
2) Serve 7 clear days’ notice before entering premises
3) Serve another 7 clear days’ notice before selling the seized goods

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What must CRAR notice contain?

Debt details
Repayment options
Enforcement power details
Agent contact

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What are the two types of equitable remedies?

1) Specific performance
2) Injunction

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What is forfeiture?

Landlord’s right to end lease early, before expiry, allowing landlord to retake possession of premises due to tenant default

Is the right to forfeit automatic?

No, must expressly be provided for in the lease

What are common grounds for forfeiture?

Non-payment of rent Breach of lease obligations Insolvency event

Why is a court order good / bad for forfeiture?

More secure legally, but more time-consuming and costly

What is a waiver of forfeiture?

Landlord loses right to forfeit if it acts in a way that acknowledges the lease continues, with knowledge of the breach

What is the test for waiver?

1) Unequivocal act recognising lease 2) Landlord had knowledge of breach 3) Act is communicated to tenant

What are the types of breach that have an effect on waiver?

1) Once-and-for-all breaches 2) Continuing breaches

What are examples of once-and-for-all breaches?

1) Non-payment of rent 2) Unlawful assignment / underletting 3) Insolvency event

What are examples of continuing breaches?

1) Failing to keep in repair 2) Breach of user covenant 3) Failing to comply with insurance obligations

What is a section 146 notice?

A notice required for forfeiture for breaches other than non-payment of rent

What must be provided in a section 146 notice?

1) Specify the breach 2) Give reasonable time to remedy 3) Warn of forfeiture if not remedied

What remedy is available to court for relief from forfeiture?

Discretionary remedy available once landlord takes steps to forfeit

What is the effect of relief from forfeit?

Lease is restored as if never forfeited

Tenant pays rent arrears and landlords legal costs -> Court usually grants relief

What should a mortgage lender do if leaseholder falls behind and freeholder decides to forfeit?

Mortgage lender should apply for relief from forfeiture

What are the different remedies for breach of repair covenant?

1) Forfeiture 2) Damages 3) Specific performance 4) Self-help

What must landlord serve for forfeiture for breach of repair covenant?

Section 146 notice

What must s146 notice include for breach of repair covenant?

1) The breach 2) The remedy required 3) Reasonable time to remedy breach

What leases does the Leasehold Property (Repairs) Act 1938 apply to?

Applies to leases where 7 years or more and at least 3 years remain on the term

What is the effect of the Leasehold Property Repairs Act 1938 on forfeiture?

Tenant can serve a counter-notice within 28 days, which means that the landlord would have to get leave of the court to proceed with forfeiture

What level of damages are given to landlord for breach of repair?

Loss in value to landlord's reversion (not cost of repair) - so however much less the property will be worth at the end.

What is the effect of Leasehold Property Repairs Act 1938 on damages?

Tenant can serve 28 day counter-notice with same effect

What is specific performance for breach of repair covenant?

Court order requiring tenant to carry out repairs – rarely granted

Why is self-help clause the best remedy for breach of repair covenant?

1) No need for notice 2) No opportunity for counter-notice 3) Recoverable cost not limited to loss in reversion

What are the landlord’s option for non-payment of rent breaches?

1) Debt action 2) CRAR 3) Forfeiture

What are pros of debt action for rent?

Simple, clear amount due

What are cons of debt action for rent?

Costly and time-consuming court process

What can debt action be used for in rent?

All lease sums (rent, service charge)

What are pros of CRAR?

Quick, efficient, avoids court

What are cons of CRAR?

Must follow strict procedure

What can CRAR be used for?

Principal rent only (no insurance, service charge)

What are pros of forfeiture for non-payment?

Quick, no court, strong deterrent

What are cons of forfeiture for non-payment?

Risk of losing tenant

What are landlord’s options for repairing breaches?

1) Damages 2) Forfeiture 3) Self-help 4) Specific performance

What are pros of damages for repairing breaches?

Minimal

What are cons of damages for repairing breaches?

1) S146 notice 2) Tenant may counter-notice 3) Damages limited to reduction in reversion value

What are pros of forfeiture for repairing breaches?

Minimal

What are cons of forfeiture for repairing breaches?

S146 + counter-notice issues

What are pros of self-help clause?

Quick, avoids court, full cost recoverable as debt

What are cons of self-help clause?

Must not exceed lease powers

What are pros of specific performance for repairing breaches?

Only option in rare cases

What are cons of specific performance for repairing breaches?

Exceptional cases

What are the remedies involving security?

1) Guarantor 2) Former tenant 3) Rent deposit deed

What are pros of having guarantor?

Better covenant strength

What are cons of having guarantor?

May become tenant via overriding lease

What are pros of going after former tenant?

May be more solvent

When can landlord go after former tenant?

Old lease or AGA

What are pros of rent deposit?

Quick, short term cash relief

What are cons of rent deposit deed?

Limited in amount, but tenant must top up