Leases-covenants Flashcards
What is a leasehold covenant?
A leasehold covenant is a promise contained in a lease given by a landlord or tenant.
What are the four usual covenants found in most leases?
- Repair
- Alteration and user
- Alienation
- Assignment
What is a tenant required to do under a general repairing covenant?
The tenant must keep the premises in the condition in which they would be kept to by a reasonably minded owner, having regard to:
-character and type of premises at the beginning of the lease
-age of the premises
-express words of the covenant
If repair work constitutes renewal, will this fall within a tenant’s repair obligation?
A covenant to repair does not require renewal of the whole or substantially the whole of the property.
If the work constitutes renewal rather than repair, it will not fall within the tenant’s repair obligation.
If a lease is silent on alterations & user covenants, is a tenant free to carry out alterations?
Yes, leases will normally allow the tenant to make some alterations to the premises.
Unless the lease stipulates otherwise, the tenant is free to carry out alterations subject to the legal doctrine of ‘waste’.
What is assignment of a lease?
An assignment is the transfer by the tenant of the remainder of the lease to another party.
Does a covenant against assignment prohibit subletting of the whole or part?
No, it does not.
Does a covenant against subletting the whole part prohibit a subletting of the part?
No, it does not.
What are the formalities for assignment?
Deed and registration.
What is an authorised guarantee agreement (AGA)?
A promise from an outgoing tenant to perform the incoming assignee’s obligation under the lease in the event of default.
What does subletting mean?
Subletting means that the tenant would always be responsible for performing the lease covenants and still be in the picture at the end of the lease term, maybe because they are away for a temporary period and want to earn an income.
What are the formalities for a sublease?
Deed and registration (if over 7 years).
What is an absolute covenant?
When the tenant is completely prohibited from doing something.
What is a qualified covenant?
The tenant may do something but only with the consent of the landlord, who doesn’t have to give it.
What is a fully qualified covenant?
When the tenant may do something but only with the consent of the landlord, who has to be reasonable if it is going to withhold its consent.
What kind of grounds can a landlord refuse its consent under a qualified/fully qualified covenant?
A landlord is not entitled to refuse its consent on grounds which have nothing to do with the landlord and tenant relationship.
Example: the proposed assignee supporting a different football team would not be reasonable but their ability to pay the rent or bad references would be reasonable.
What is privity of contract in the context of leases?
All the terms, regardless of their nature, can be enforced by the original landlord against the original tenant and vice versa.
What is privity of estate in the context of leases?
Where the landlord and tenant are each owners of a legal estate in the same property, there is said to be privity of estate between them.
This exists between any current landlord and current tenant and lasts only for the period while the lease is vested in the tenant.
In old leases created before 1 January 1996, describe the nature of continuing liability of the original landlord and tenant.
In old leases, the liability of the original landlord and the original tenant continues for the full duration of the lease term regardless of an assignment or sublease.
This continuing liability of the original contracting parties led to both absurdities and hardships for the original parties.
When is a lease deemed to be a ‘new lease’?
If the lease is granted on or after 1 January 1996, it is a new lease.
What did the LTCA 1995 abolish?
The LTCA abolished privity of contract for all new leases, meaning that the original landlord and tenant are no longer liable for the covenants for the full duration of the lease term.
When will a tenant with a new lease be automatically released from the tenant’s covenants?
Upon assignment, its liability for breach of covenant caused by any subsequent assignee ceases when it assigns the lease (s5 LTCA 1995).
Is there an automatic release of the landlord upon assignment of the reversion of a new lease?
No, the landlord must apply for such a release and can apply to the Court if the tenant refuses.
What does LTCA 1995, S3 provide for in respect of the benefit and burden of all landlord & tenant lease covenants?
LTCA 1955, s3 provides for the automatic transmission of the benefit and burden of all landlord covenants to the new owner of the reversion, and of the benefit and burden of all tenant covenants to the assignee.
