Leasehold Covenants 4: Enforceability, New Leases

Question 1

General Info

Answer 1

The Landlord and Tenant (Covenants) Act 1995

New leases = leases granted on or after 01/01/1996

Question 2

Can an original party be sued when a successor breaches a covenant? Can T1 be sued when a successor breaches a covenant?

Answer 2

The general rule:
> s.5 –> T1 is automatically released from the burden of their covenants on assignment of his lease

The Exceptions:

S.11 Excluded assignments:
> Assignments in breach of covenant to assign (weren’t allowed to assign)
> Assignments by operation of law
> HOWEVER T1 will be freed on the next assignment of the lease which is not an excluded one

S.16 Authorised Guarantee Agreements (AGA)
> can be required if L’s consent to assignment of the lease is required
> T guarantees the performance of T’s assignee (only) –> SO T1 assigns to T2 (has burden) and if T2 fails to perform, then T1 guarantees that performance will fall on them (T1 has burden again) –> gives the L protection
> Note: an AGA can be required from ANY T as a condition of L giving consent

Question 3

Can L1 be sued when a successor breaches a covenant?

Answer 3

s.6: L1 may be released from their covenants on assigning her freehold reversion. Release is not automatic.

s.8 : statutory procedure:
> L1 must serve a notice on T before or within 4 weeks of the assignment, notifying T of the assignment and requesting release
> L1 is released:
1 - if T consents,
2 - or fails to object,
3 - or objects but the court orders release

Question 4

Can successor Ls and Ts directly sue or be sued?

Answer 4

S.3 –> The benefit and burden of all the covenants in the lease pass on an assignment of the lease or of the reversion –> (s.3 will move a benefit or burden to the new sucessor Ls and Ts upon assignment)

EXCEPTION:
S.3(6) –> other than those covenants which are expressed in the lease to be personal

Question 5

Provisions of the 1995 act which apply to both old and new leases

Answer 5

s.17 –> A former T will not be liable to pay any fixed charge (such as rent or a service charge) owed by a current T unless L serves a notice on the former T within 6 months of the fixed charge becoming due

s.19 –> If former T pays the charge in full he is entitled to the grant of an ‘overriding lease’ of the property