Leasehold Covenants 3: Old Leases Flashcards
What is enforcing a covenant?
To enforce a covenant = to sue someone (because the covenant was broken)
Benefit and Burden of covenants
A party with the benefit of a covenant has the ability to sue
A party with they burden of a covenant is liable to be sued
Benefit + burden = enforceability of a covenant
Enforcement - 2 sets of rules
Old Leases – for leases granted before 01/01/1996
New Leases – for leases granted or after 01/01/1996
Scenario
Kim owned a freehold property which she rented out to Sven. But now:
> Sven has started keeping a greyhound and 3 cats at the Property.
> Kim has failed to pay last year’s council tax and Sven has had to pay it instead following the threat of council action.
Terms of the lease:
Tenant Covenants:
> not to keep any pets
> to pay rent of £400 per month
> not to assign the lease without L’s consent
Landlords Covenants:
> to pay all council tax
> insure property against fire
> keep structure of property in repair
Issue 1 - Can original party’s sue / be sued while they are tenant and landlord?
Can Kim make Sven get rid of his greyhound and cats?
Can Sven get the money he paid out in council tax back from Kim?
YES, because they are original parties who made the promise /agreement so enforceability of a covenant is allowed due to their contractual rights
Issue 2 - Can an original party be sued when a successor breaches a covenant? ( Tenant Scenario)
In 2023 Sven assigned the lease to Ted.
Since June 2024 Ted has failed to pay any rent.
Can Sven be sued for the rent that Ted owes?
YES T1 (Sven) can be sued for a breach of covenant by any later tenant under the lease BECAUSE S.79 Law of property act 1979 –> when sven entered into his covenant, he did so on behalf of himself and all of successors so he carries the burden for himself and everyone else
Another Example: Issue 2 - Can an original party be sued when a successor breaches a covenant? (Landlord Scenario)
In 2024, Kim assigned the freehold reversion to Lyn
Last month, high winds caused damage to the property roof . Lyn has still not had any repairs done.
Can Kim be sued for cost of the repair that Lyn should have carried out?
YES, Kim (L1) can be sued for the breach of a covenant by any later landlord under the lease because of s.79 LPA
S.79 LPA: “A covenant…shall be deemed to be made by the covenantor on behalf of himself his successors in title and the persons deriving title under him or them…”
> Only applies to the original covenantor!
Can the original tenant get back what he had to pay out?
Yes, if there is an indemnity covenant
E.g. Sven –> assigns –> Ted –> assigns –> Will
IF Ted indemnifies Sven, Ted is essentially saying ‘if you have to pay out because of my breach, you can then pursue me for that money and you (Sven) will get it back
If indemnity chain is broken –> it won’t work
Indemnity Covenants
Implied by statute –> s.77 LPA 25 AND LRA 2002 s.134 & schedule 12 para 20
AND
Maybe expressly states in the deed of assignment between tenants
Issue 3 - Can Successors directly sue and be sued? - SUCCESSOR TENANTS
E.g. Can Ted be sued directly for the rent he owes the land?
It may be possible for sucessor Tenant to be sued & to sue, if certain conditions are met which are found in the rule in Spencers Case, which include:
> The lease must be a legal lease; &
There must be privity of estate; &
The covenants must touch and concern the land
Spencers Case - Privity of estate
Privity of estate = a current relationship between Landlord and Tenant
SO Kim and Sven have privity of estate AND privity of contract because they have a current relationship as Landlord and Tenant
BUT once Sven assigns to Ted and Kim sells the freehold reverson to Lynn
Lyn and Ted now have privity of estate as they have a current relationship and L and T but they DON’T have privity of contract as they are not the original contracting parties
Spencer’s Case - Touch and Concern the land
P&A Swift Investment v Combined English stores PLC 1989:
A covt will touch and concern the land if:
1. It benefits covtee only while he has the reversion. If covtee sold the reversion it would cease to benefit him/her
- It affects the NATURE, QUALITY, MODE OF USER OR VALUE of the land
- It is NOT PERSONAL in nature (that is to say not being given only to a specific L, nor in respect of the obligations only of a specific T)
Issue 3 - Can Successors directly sue and be sued? - SUCCESSOR LANDLORDS
E.g. can Lyn be sued directly for roof disrepair and Tenants ruined carpets?
It may be possible for successor L to be sued and to sue, if certain conditions are met which include:
s.141 (deals with moving the benefit) and s.142 (deals with moving the burden) LPA 1925 - ONLY IF the covenants have ‘reference to the subject matter of the lease’ (essentially talking about how it must touch and conern the land
Scenario
In May 1994 Amy granted Bill a 45 year legal lease of a house. The lease contained a covenant to repair within the ‘Tenant Covenants’ section of the lease. In 2020 Amy assigned by deed the freehold reversion in the house to Doris. The property is now in a state of disrepair.
Can Doris enforce the repairing covenant against Bill?
Scenario - Does Bill have the burden of the covt?
Yes he does have the burden as he the orignal party tenant
Remeber Amy is L1, Bill is T1 and Doris is L2
Amy = benefit while Bill = burden as he he can be sued for not repairing anything
