Leases: remedies and ending a lease Flashcards
What remedies are available for breachof covenant
1) who is in breach
2) what covenant has been breached
3) what does the non defaulting party want
In landlord is in breach of covenant like repair- tenant can get an order of specific performance/injunction. Discretionary and damages will apply.
No right for self help (non-payment of rent)
If tenant notifies landlord of repair and then does it themselves, they can withhold a certain portion of rent to cover the cost of the repair.
If tenant in breach of rent- sue tenant for debt, CRAR procedure.
If in breach of non-rent covenant, Landlord can use: 1) damages- in case of repair, only claim in reduction of disrepair to value.
2) specific performance- discretionary and unlikely
3) Self-hep- Jervis and Harris clause. Express right to enter and inspect, then give notice repair is required. If no compliance, the landlord can do the repair and get the repair cost from the tenant as a debt.
Most powerful power is forfeiture.
What is the right of entry
Has to be express in legal leases, and will only be implied into equitable leases.
Fristly, has the landlord waived their right of re-entry- if they have knowledge of a breach have they continued with the lease and therefore waive their right.
Whether this breach continues, will mean whether the waiver continues, eg repair. Every day of non-repair is a fresh breach, and therefore waiver could be re-established.
However if it is a one off, like an assignment, the waiver is permanent
If non payment of rent= formal demand for payment unless exemption or +6 months of arrears. if no momey, can physically re-entry; or possession proceedings (if whole or part residential).
The tenant may then apply for relief from fortiture
If it is breach of another covenant- s146 notice asking them to remedy the breach or compensation.
If the tenant does comply, landlord loses their right of waiver
The traditional approach taken by the courts is to ask whether compliance with a s146 notice, coupled with appropriate compensation, could effectively rectify the harm or damage caused by the breach. The starting point is therefore that the majority of breaches will be capable of remedy except breaches of covenants not to sublet and illegal or immoral user.
If the breach is incapable of remedy or is not remedied within a reasonable time then the landlord can proceed to forfeit by physical re-entry ( in the case of commercial premises only) or by court order.
What relief is there?
Tenant retains a right to apply for relief under s 146 (2) of the LPA 1925 before a court order is made, but not after.
Relief will usually be granted to a tenant who can show that it has in fact complied with the tenant covenants or, otherwise, where the court is persuaded that it is reasonable for the lease to continue in spite of the breaches. The courts power to grant relief is broad.
If the landlord exercises its right by peaceable re-entry, relief will be available within a reasonable time after the landlord’s re-entry.
What about breach of repair covenant?
If the breach is of a repair covenant, there is even more protection available for tenants under the Leasehold Property (Repairs) Act 1938, which applies to a covenant to repair in a lease of 7 years or more where there are at least 3 years left to fun.
The act limits the landlord’s ability to enforce a repairing obligation as the s146 notice must inform the tenant of its right to serve a counter notice under the act, and if the tenant serves a counter notice to the s 146 notice under the act, the landlord cannot then proceed to claim forfeiture without the leave of the court.
What about forfeiture?
If a headlease is forfeiture, then any sublease ceases to exist, it is destroyed.
A subtenant can apply for relief even if the tenant is not able to obtain relief.
The relief here would consist of the court vesting the headlease in the sub-tenant on such terms as the court thinks fit.
How can a lease end?
Forfeiture is not the only way a lease can end, and other reasons a lease may end include effluxion of time when the fixed term of a lease comes to an end; or the service of a notice to quit in the case of a periodic tenancy. One full period’s notice is generally required.
If the lease contains abreak clause, which is a right for either or both parties to serve notice to end the lease on a fixed date or on a rolling basis, this can end a lease if exercised.
Surrender is where the parties agree to end the lease before the end of the term and the tenant hands back the premises.
Finally, if the tenant purchases the freehold reversion and therefore is in effect both landlord and tenant at the time, this will end the lease by merger. The lease merges into the freehold title and is extinguished.
