Leases: remedies and ending a lease

Question 1

What are tenant covenants in a lease?

Answer 1

Tenant covenants in a lease are the actions that a tenant is prohibited from doing. Leases are often drafted in a prohibitory or negative manner, setting out what the tenant cannot do.

Question 2

What is the purpose of a s 146 notice in relation to breach of covenant?

Answer 2

A s 146 notice is served by the claimant’s solicitor on the defendant to inform them of a breach of covenant. It specifies the breaches, including the breach of the alterations covenant, and states whether the breach is capable of remedy or not.

Question 3

What is the purpose of a Jervis v Harris clause in a lease?

Answer 3

A Jervis v Harris clause in a lease provides the landlord with a self-help remedy in case of a breach of the tenant’s repair covenant.

Question 4

What is a forfeiture right in the context of a lease?

Answer 4

A forfeiture right is a powerful right for a landlord to terminate a lease prematurely for breach of covenant by the tenant. It allows the landlord to exercise the right to forfeit the lease.

Question 5

What was the decision of the judge at first instance regarding the breach of the alterations covenant?

Answer 5

The judge at first instance held that the breach of the alterations covenant was incapable of remedy and granted an order for possession in favor of the claimant.

Question 6

How can a lease end early?

Answer 6

One way a lease can end early is if a landlord exercises a forfeiture right. This right allows the landlord to terminate the lease prematurely for breach of covenant by the tenant.

Question 7

What remedies are available to a landlord in the event of a tenant breach?

Answer 7

In the event of a tenant breach, a landlord has various remedies available. For a breach of a rent covenant, the landlord can take action for debt or pursue forfeiture. For a breach of a non-rent covenant, the landlord may seek an injunction, specific performance, or consider forfeiture. Damages may also be awarded in both cases.

Question 8

How can a landlord enforce a repair covenant in a lease?

Answer 8

If the lease contains an express right for the landlord to enter and inspect the premises and give notice for repair, the landlord can undertake the works and recover the cost from the tenant if the notice is not complied with.

Question 9

What is forfeiture in the context of a lease?

Answer 9

Forfeiture is the process by which a landlord can terminate a lease before the expiry date by exercising its right of re-entry. It is a powerful right that landlords usually reserve in a lease.

Question 10

What is the procedure for forfeiting a lease?

Answer 10

The procedure for forfeiting a lease involves either peaceably re-entering the property or obtaining a court order. The specific rules may vary depending on whether the landlord is forfeiting for non-payment of rent or for breach of covenant other than non-payment of rent.

Question 11

What is the difference between distress and Commercial Rent Arrears Recovery (CRAR)?

Answer 11

Distress was an ancient common law self-help remedy that allowed a landlord to enter the premises and seize goods to the value of the rent owed. However, from April 2014, distress was abolished and replaced with Commercial Rent Arrears Recovery (CRAR). CRAR requires the landlord to serve an enforcement notice on the tenant, giving seven clear days’ notice before seizing goods.

Question 12

What was the court’s decision regarding the capability of remedy for the breach of the alterations covenant?

Answer 12

The court held that the breach was capable of remedy, with the ultimate question being whether the harm suffered by the landlord could be effectively remedied by the tenant complying with a s 146 notice and making proper compensation.

Question 13

What was the court’s decision regarding the capability of remedy for the breach of the alterations covenant?

Answer 13

The court held that the breach was capable of remedy, with the ultimate question being whether the harm suffered by the landlord could be effectively remedied by the tenant complying with a s 146 notice and making proper compensation.

Question 14

What is the difference between legal leases and equitable leases in terms of forfeiture?

Answer 14

Legal leases must contain an express forfeiture clause, which creates a legal right of re-entry for the landlord. On the other hand, equitable leases do not require an express forfeiture clause because the right to forfeit for non-payment of rent is implied into them as one of the implied usual covenants.

Question 15

What is the difference between a legal lease and an equitable lease?

Answer 15

A legal lease grants the landlord the right to forfeit in the event of tenant breach of covenant, while an equitable lease is much rarer and usually arises in the context of a failed legal grant. In equitable leases, a right to forfeit for non-payment of rent only will be implied.

Question 16

What additional protection does the Leasehold Property (Repairs) Act 1938 provide for tenants?

Answer 16

The Leasehold Property (Repairs) Act 1938 provides additional protection for tenants in relation to a covenant to repair. It applies when the lease is granted for at least seven years and there are at least three years still to run. The act limits the landlord’s ability to enforce a repairing obligation until the last three years of the lease.

Question 17

What is the purpose of a s 146 notice in the forfeiture process?

Answer 17

A s 146 notice is served by the landlord to the tenant in cases other than non-payment of rent. It specifies the breach complained of, requires remedy within a reasonable time if capable, and may require compensation.

Question 18

What is waiver in the context of lease forfeiture?

Answer 18

Waiver occurs when the landlord, with knowledge of the breach of covenant, does an act that recognizes the continued existence of the lease. Accepting rent from the tenant in default or serving a notice that presupposes the continued existence of the lease are examples of acts of waiver.

Question 19

What is the purpose of a notice to quit?

Answer 19

A notice to quit is used to determine a periodic tenancy. The length of notice required depends on the type of tenancy, such as yearly, quarterly, monthly, or weekly. It allows either party to terminate the tenancy at the end of a complete period.

Question 20

What is waiver in the context of lease forfeiture?

Answer 20

Waiver refers to the landlord’s act of recognizing the continued existence of the lease despite a breach. It can occur if the landlord is aware of the breach and does an unequivocal act, such as demanding or accepting rent after the breach.

Question 21

What is the purpose of relief from forfeiture?

Answer 21

Relief from forfeiture is the court’s discretion to allow the lease to continue, thereby ending the forfeiture process.

Question 22

Under what circumstances can a tenant be relieved of liability for internal decorative repairs?

Answer 22

If the landlord serves notice under LPA 1925, s 146 and the notice relates to internal decorative repairs, the tenant may apply to the court and be wholly or partially relieved of liability to the extent that the court thinks the notice unreasonable (LPA 1925, s 147).

Question 23

Can waiver occur inadvertently?

Answer 23

Yes, waiver can occur inadvertently. For example, if the landlord’s agent sends out a rent demand despite the landlord being aware of the breach, it can be considered inadvertent waiver.

Question 24

What is the difference between surrender and merger?

Answer 24

Surrender is the handing back of the lease by the tenant to the landlord with the landlord’s consent, resulting in the premature termination of the lease. Merger, on the other hand, occurs when the tenant acquires the landlord’s interest, becoming its own landlord, and the lease is absorbed by the reversion and destroyed.

Question 25

What factors are considered when granting relief from forfeiture?

Answer 25

Relief from forfeiture can be applied for regardless of whether the right has been exercised by court order or peaceable re-entry. It is usually granted if the tenant can pay off the arrears.

Question 26

What is the process for forfeiture in case of non-payment of rent?

Answer 26

In case of non-payment of rent, the landlord must make a formal demand for payment unless there is an express exemption in the lease, the rent is expressed as payable whether formally demanded or not, or if there are more than 6 months of rental arrears. The landlord can then proceed to forfeit the lease by physically re-entering the property and changing the locks or by possession proceedings to court.

Question 27

What happens if there is a continuing breach in relation to waiver?

Answer 27

If there is a continuing breach, such as failure to repair, waiver only lasts until the next day the breach continues. At that point, the landlord can choose to reject the rent and forfeit the lease.

Question 28

What happens to a sub-lease when a head-lease is forfeited?

Answer 28

If a head-lease is forfeited, any sub-lease will also be destroyed. However, a sub-tenant in the premises has the right to apply for relief from forfeiture.

Question 29

What is relief from forfeiture?

Answer 29

Relief from forfeiture is the court’s discretion to allow the lease to continue even after the landlord has exercised its right to forfeit. The tenant can apply for relief before any court order, after any court order within 6 months, and after peaceable re-entry without time limit. Relief will usually be granted if the arrears can be paid.

Question 30

What happens if the breach is non-continuing in relation to waiver?

Answer 30

If the breach is non-continuing, such as sub-letting without consent, waiver is permanent. Once rent is accepted, the landlord can never again forfeit for that specific breach.

Question 31

What is the purpose of an injunction in relation to tenant covenants?

Answer 31

An injunction can be sought by a landlord to prevent an unauthorized sublease or assignment, among other breaches of tenant covenants. It is a legal remedy that aims to stop the tenant from engaging in prohibited actions.

Question 32

What are the steps involved in the forfeiture procedure?

Answer 32

The forfeiture procedure involves determining if there has been a breach, checking for a forfeiture clause, and assessing if there has been a waiver. These steps apply to all breaches of covenant.

Question 33

What is the purpose of a s 146 notice in relation to forfeiture?

Answer 33

A s 146 notice informs the tenant of their right to serve a counter notice within 28 days. If the tenant serves a counter-notice, the landlord cannot proceed to claim forfeiture or damages without first obtaining the leave of the court.

Question 34

What is the procedure for exercising the right of forfeiture in case of breach of other covenants?

Answer 34

The landlord must serve a notice (a s 146 notice) specifying the breach, requesting compensation if desired, and requesting that the tenant remedy the breach within a reasonable time. This provides the tenant with one last chance to comply with the lease and remedy the breach. If the breach is not remedied within a reasonable time, the landlord can proceed to forfeit by physical re-entry or by court order.

Question 35

When can specific performance be ordered in relation to a repairing covenant?

Answer 35

Specific performance, which is the fulfillment of a contractual obligation, is very rarely ordered in respect of a repairing covenant. In most cases, damages will be considered adequate compensation.

Question 36

What are the steps involved in the forfeiture process for breach of covenant?

Answer 36

The steps involved in the forfeiture process for breach of covenant include: 1) Identifying a breach of covenant, 2) Ensuring there is a forfeiture clause in the lease, 3) Determining if the landlord has waived the right to forfeit, 4) Serving a demand for payment or ensuring the lease waives this right, 5) Forfeiting the lease by peaceable re-entry or court order, and 6) Allowing the tenant to apply for relief from forfeiture.

Question 37

What factors determine whether a breach is capable of remedy in the context of forfeiture?

Answer 37

The courts consider whether compliance with a s146 notice, coupled with appropriate compensation, could effectively rectify the harm or damage caused by the breach. The majority of breaches are capable of remedy, except breaches of covenants not to sublet and illegal or immoral use.

Question 38

What are the steps involved in exercising the right to forfeit a lease?

Answer 38

The steps involved in exercising the right to forfeit a lease are: 1) There must be a breach of covenant. 2) There must be a forfeiture clause in the lease. 3) The landlord must not have waived the right to forfeit. 4) The landlord must serve a LPA 1925, s 146 Notice. 5) The landlord can then forfeit the lease by peaceable re-entry or court order. 6) The tenant, and any sub-tenant, can apply for relief from forfeiture.

Question 39

What are the available remedies for a landlord in the event of a breach of a rent covenant?

Answer 39

In the event of a breach of a rent covenant, a landlord has the following remedies available: action for debt and forfeiture. Action for debt involves suing the tenant on their covenant to pay rent, while forfeiture allows the landlord to bring the lease to a premature end.

Question 40

What happens if the breach is incapable of remedy or not remedied within a reasonable time?

Answer 40

If the breach is incapable of remedy or not remedied within a reasonable time, the landlord can proceed to forfeit the lease by physical re-entry (in the case of commercial premises only) or by court order.

Question 41

What factors does the court consider when granting relief from forfeiture?

Answer 41

When granting relief from forfeiture, the court considers factors such as the wilfulness and blatancy of the breach, the gravity of the breach, the landlord’s motives for wanting forfeiture, the damage to the premises, and whether the breach can be remedied. Relief is usually given on the condition that the breach is remedied and the tenant undertakes not to breach the covenant again.

Question 42

What is the purpose of the Leasehold Property (Repairs) Act 1938?

Answer 42

The Leasehold Property (Repairs) Act 1938 provides additional protection for tenants in case of a breach of a repair covenant. It limits the landlord’s ability to enforce a repairing obligation and requires the landlord to inform the tenant of their right to serve a counter notice.

Question 43

What is the purpose of a break clause in a lease?

Answer 43

A break clause is a provision in a lease that allows either party to serve notice during its currency to bring the lease to a premature end. It provides flexibility for both the landlord and the tenant to terminate the lease before the fixed term expires.

Question 44

What is the process for applying for relief from forfeiture?

Answer 44

Under LPA 1925, s 146(2), the tenant may apply to the court for relief. The court may grant or refuse relief based on all the circumstances. The tenant applies for relief under LPA 1925, s 146(2) in cases of breach of covenants other than rent. The tenant must apply for relief before a court order is made. If the landlord has exercised its right by peaceable re-entry, relief can still be given under s 146(2) if the tenant applies within a reasonable time.

Question 45

What is the purpose of a deed of surrender?

Answer 45

A deed of surrender is often entered into to document the agreement between the landlord and the tenant when a lease is surrendered. It formalizes the handing back of the lease by the tenant to the landlord, resulting in the premature termination of the lease.

Question 46

What are the remedies available to a tenant if the landlord is in breach of covenant?

Answer 46

If the landlord is in breach of a covenant, the tenant has several remedies available, including specific performance or injunction, damages, and self-help. Specific performance or injunction may be sought if the landlord is in breach of repair or maintenance obligations. Damages can be claimed, and self-help can be exercised in the case of repair obligations.

Question 47

What remedies does the landlord have for breach of a rent covenant?

Answer 47

If the tenant is in breach of a rent covenant, the landlord can sue the tenant for the debt or use the Commercial Rent Arrears Recovery (CRAR) process. CRAR allows the landlord to serve notice and take control of the tenant’s goods at the premises to recover the arrears.

Question 48

How does the purchase of the freehold reversion affect a lease agreement?

Answer 48

If the tenant purchases the freehold reversion and becomes both the landlord and tenant at the time, this will end the lease by merger. The lease merges into the freehold title and is extinguished.

Question 49

Why would a tenant choose to exercise a break clause in a lease agreement?

Answer 49

A tenant might choose to exercise a break clause in a lease agreement to have the option to terminate the lease on a fixed date or on a rolling basis. This provides flexibility and allows the tenant to end the lease if needed.

Question 50

How does surrender affect the obligations of the parties in a lease agreement?

Answer 50

When surrender occurs in a lease agreement, the parties agree to end the lease before the end of the term. This releases both parties from their obligations under the lease.

Question 51

A tenant fails to carry out repairs to the property in accordance with their repairing covenant. Which remedy should the landlord be advised to pursue?

Damages

Distress

Inhibitory injunction

Specific performance

Answer 51

Damages

Question 52

What is the definition of commercial rent arrears recovery?

Answer 52

Seven days’ notice served on a commercial tenant that the landlord is going to seize goods from the leasehold property because of a failure to pay rent.

Question 53

Which of the following would not be an appropriate remedy for a landlord to pursue in respect of a tenant’s failure to pay the rent due under the lease?

Forfeiture

Specific performance

Commercial rent arrears recovery

Action for debt

Answer 53

Specific performance

Question 54

What is a break clause?

Answer 54

When either a landlord or a tenant is allowed by the lease to bring the lease to a premature end.

Question 55

A tenant is in breach of its rent covenant and the landlord wishes to bring the lease to an end. Which method of terminating the lease would you advise the landlord to use?

Forfeiture.

Surrender.

Effluxion of time.

Notice to quit.

Answer 55

Forfeiture.

Question 56

How much notice must either a landlord or a tenant serve to bring an annual periodic tenancy to an end?

Answer 56

Half a year’s notice.

Question 57

A tenant pays rent monthly in advance under the terms of their lease. The tenant has failed to pay the rent for the last three months and the landlord now wishes to forfeit the lease. The landlord’s agent has sent a rent demand for the next month’s rent but is unaware of the breach of the rent covenant.

Which of the following statements is correct about whether the landlord has a right to forfeit?

The landlord may forfeit the lease as the landlord did not send out the rent demand; therefore there has been no waiver.

The landlord may not forfeit the lease as the agent (who acts for the landlord) has waived the right to forfeit. The landlord’s right to forfeit will arise in the subsequent month if no rent demand is sent out for that month’s rent payment.

The landlord may not forfeit the lease as the agent (who acts for the landlord) has permanently waived the right to forfeit as this is a non-continuing breach.

The landlord may forfeit the lease as the agent, who acts for the landlord, was unaware of the breach of covenant; therefore there has been no waiver.

Answer 57

The landlord may not forfeit the lease as the agent (who acts for the landlord) has waived the right to forfeit. The landlord’s right to forfeit will arise in the subsequent month if no rent demand is sent out for that month’s rent payment.

Question 58

Which of the following statements is correct in respect of exercising the right to forfeit?

In the case of mixed use business and residential premises, a landlord may forfeit by either peaceable re-entry or by court order.

In the case of business premises, a landlord may forfeit by either peaceable re-entry or by court order.

The type of premises is irrelevant; a landlord may choose to forfeit by either peaceable re-entry or by court order.

In the case of residential premises, a landlord may forfeit by either peaceable re-entry or by court order.

Answer 58

In the case of business premises, a landlord may forfeit by either peaceable re-entry or by court order.

Correct. In the case of residential or mixed use premises however, a landlord may only forfeit by court order.

Question 59

Which of the following breaches of covenant is classed as non-continuing?

Using the property to run a business instead of as a residence in breach of the user covenant.

Subletting the property without the landlord’s consent.

Failing to fix the roof of the property in breach of the repair covenant.

Using the property for an illegal use in breach of the covenant against immoral or illegal use.

Failing to insure the property in breach of the covenant to insure.

Answer 59

Subletting the property without the landlord’s consent.

Question 60

A landlord forfeits a lease for non-payment of rent via a court order.

Which of the following statements is correct in respect of when relief may be granted?

The tenant will not be granted relief after the date of the court order even if all the arrears and costs are paid.

The tenant may be granted relief up to a year after the date of the court order.

The tenant may be granted relief after the date of the court order if all the arrears and costs are paid even if the landlord has granted a new lease to a third party.

The tenant may be granted relief after the date of the court order if all the arrears and costs are paid.

Answer 60

The tenant may be granted relief after the date of the court order if all the arrears and costs are paid.

Question 61

A landlord forfeits a lease by peaceable re-entry for non-payment of rent. Which of the following statements is correct?

The tenant may be granted relief after the date of the peaceable re-entry if all the arrears and costs are paid.

The tenant will not be granted relief after the date of the peaceable re-entry even if all the arrears and costs are paid.

The tenant may be granted relief after the date of the peaceable re-entry if the circumstances are exceptional.

The tenant may be granted relief after the date of the peaceable re-entry if the application for relief is made within six months of the peaceable re-entry.

Answer 61

The tenant may be granted relief after the date of the peaceable re-entry if all the arrears and costs are paid.

Question 62

A landlord wishes to forfeit a lease for non-payment of rent by the tenant. Which of the following statements is correct?

The landlord must make a formal demand for the rent due on the day when it becomes payable unless the lease waives this requirement.

The landlord must make a formal demand for the exact amount of rent due on any day after it becomes payable upon the premises between the hours of sunrise and sunset.

The landlord must serve a s 146 statutory notice on the tenant.

The landlord can immediately forfeit the lease by court order or peaceable re-entry

Answer 62

The landlord must make a formal demand for the rent due on the day when it becomes payable unless the lease waives this requirement.

Question 63

Which of the following covenants is unlikely to be capable of remedy?

Subletting in breach of covenant.

Failure to insure the premises.

Change of use in breach of covenant.

Failure to decorate the premises.

Unauthorised alterations to the premises.

Answer 63

Subletting in breach of covenant.

Question 64

In which of the following scenarios is a s 146 notice required to be served on the tenant by the landlord?

Where there has been a breach of any covenant other then the covenant to pay rent

Where there has been a breach of the covenant to pay rent

Where the breach is capable of remedy by the tenant

Where there has been a breach of the covenant to repair

Answer 64

Where there has been a breach of any covenant other then the covenant to pay rent

This is correct. Whenever there has been a breach of a covenant other than the covenant to pay rent, the landlord must serve a s 146 notice on the tenant if it wishes to forfeit the lease. This applies regardless of whether the breach is capable of remedy or not. Note, there is additional protection if the breach is of a repair covenant. The landlord (in addition to serving the s 146 notice) must also inform the tenant of its rights (under the Leasehold Property (Repairs) Act 1938) to serve a counter notice within 28 days. If the tenant serves a counter notice, the landlord cannot proceed to claim forfeiture or damages without first obtaining the lease of the court.