Leasehold

Question 1

3 types of leasehold covenants

Answer 1

1. Absolute - absolutely can’t carry out the action, LD has total discretion
2. Qualified = with landlords consent
3. Fully qualified = can with landlords consent but landlord can’t withhold consent unreasonably [ideal for T]

Question 2

What is a full repairing and insuring lease (FRI)

Answer 2

• LD gets clear rental stream (all profit) and does not have to dip into it to pay for repairs/insurance/maintenance contributions
• Places tenant in full repairing obligation

Question 3

Meaning of covenant to repair:

Answer 3

1. There must be DISREPAIR first - before T can be in breach of cov = means physical condition of property must have DETERIORATED from some previous physical condition (Post office v Acquaris Properties ltd)
2. Need not be kept in PERFECT repair - if building is brand new and will inevitably deteriorate from previous condition
3. Renewal or improvement works go BEYOND REPAIR
   * question of fact and degree
   * Work that T has to carry out depends on age and nature of the property, at the date of lease
   * repair = restoration/renewal of parts of a whole not of the whole

Question 4

Types of repair covenants /wording of lease - advice to T

Answer 4

Extent of obligation = don’t have to give back a completely different property but if its the only way to repair is by fixing an inherent defect in design/construction of building then you might have to

Question 5

If wording of the repair covenant including (a) “keep” a building in repair or “put” into repair// (b) “keep property in good condition”

Answer 5

(a) May involve tenant putting building into a better state of repair than when they entered the lease
(b) More onerous - can mean T has to carry out some works even if there is no actual direpair

Question 6

Landlord’s covenant to insure the property against defined risks (the “insured risks”)

Answer 6

1. Inclusive list but should also include “such other risks as the landlord may reasonably require”
2. LDs obligation to insure should be limited so that it does not include exclusions, limitations, excesses and conditions imposed by insurer and any risks not commonly available > liability for any shortfall in proceeds caused by these are passed to the t in the repairing covenant
3. Should be insured to its full reinstatement value

Question 7

A covenant by landlord to reinstate the property - what is it

Answer 7

A covenant to use the insurance proceeds to reinstate the property after damage

Question 8

What is rent suspension?

Answer 8

*Whether rent will continue to be payable even if the property is rendered unusable
* May be time-limited

Question 9

Termination clause

Answer 9

Determines who has the right to terminate the lease if reinstatement is impossible

Question 10

Options for the term of a lease

Answer 10

1. Fixed term
2. Periodic tenancy
3. Tenancy at will

Question 11

Assignment: What is the effect of S19(1)(a) LTA 1927 [Implies term into lease by statute]

Answer 11

Implies into any qualified covenant (not to assign without landlord’s consent) a provisio that such consent is not to be UNREASONABLY WITHHELD
> Effect = turns a qualified cov into a fully qualified covenant

Question 12

Assignment: What is the effect of S19(1A) LTA 1929

Answer 12

Allows Landlord and tenant to agree in advance the conditions and circumstances in which it would not be unreasonable for the landlord to refuse consent > effect: these would be considered reasonable for consent

(Conditions often include:
* assignor agrees to give AGA for assignee
* and/or assignee has sufficient financial strength to comply with T’s covenants in the lease)