Leases: remedies and ending a lease MCQs Flashcards
10 years ago, a landlord granted a legal commercial lease for 25 years to a tenant. The lease contains a requirement that the tenant must maintain the premises in a good state of repair. The landlord is in disrepair. The property market is currently slow and the landlord explains it would be hard to find a new tenant.
Which of the following options is the best advice to the landlord as to the remedy it should pursue in the circumstances?
The landlord should seek an injunction to stop the breach of covenant by the tenant.
The landlord should forfeit the lease.
The landlord should pursue a claim for damages for breach of repair against the tenant.
The landlord should seek the remedy of specfic performance to force the tenant to carry out the repair.
The landlord should pursue the tenant through the Commercial Rent Arrears Recovery (CRAR) regime.
The landlord should pursue a claim for damages for breach of repair against the tenant.
This is correct and the best advice in the circumstances. The landlord does not wish to end the lease so forfeiture is not a good option. An injunction is not the appropriate remedy as it is an order which forces something to stop, which is not relevant to this breach. Specific performance is very rarely ordered against a tenant, so is not the best advice to the landlord. Finally, CRAR is only relevant where there is a beach of a rent covenant.
A landlord granted a 5 year legal lease to a tenant. Last week, the landlord and tenant entered into an agreement by deed in which they agreed to end the lease 2 years early on the condition the tenant paid £10,000 to the landlord.
Which of the following option correctly describes how the lease has been brought to an end?
The lease has ended by service of a notice to quit
The lease has ended by merger
The lease has ended by forfeiture
The lease has ended by exercise of a break clause
The lease has been surrendered
The lease has been surrendered
The is correct. Surrender is the handing back of the lease by the tenant to the landlord with the landlord’s consent. This results in premature termination of the lease, which has occurred on the facts. A deed of surrender is often entered into and sometimes a surrender premium will be paid by the tenant to the landlord, which again is the case on the facts.
A landlord granted a tenant a 2 year legal lease of commercial premises with an annual rent payable quarterly in advance. The landlord’s agent issues a rental demand each quarter. The latest demand was issued last month. The lease does not contain an express forfeiture clause.
The tenant has breached the repair covenant, which the landlord became aware of two weeks ago month.
Which of the following options best explains whether the landlord is able to forfeit and what steps (if any) it needs to take?
The landlord is not entitled to forfeit the lease because there is no express right to forfeit
The landlord is not entitled to forfeit until it has served a written demand
The landlord is not entitled to forfeit the lease because it has waived its right
The landlord is not entitled to forfeit the lease until it has served a s 146 notice
The landlord is not entitled to forfeit the lease until it has served a s 146 notice and complied with the Leasehold Property (Repairs) Act 1938
The landlord is not entitled to forfeit the lease because there is no express right to forfeit
This is correct. A legal lease, which the landlord and tenant have entered into on the facts, must contain an express right to forfeit in the event of tenant breach. A right to forfeit will not be applied on the facts.
If there was a right to forfeit, the landlord would not have waived this on the facts as the rental demand is served before the landlord is aware of the breach. The landlord would need to serve a s 146 notice, but would not need to comply with the Leasehold Property (Repairs) Act 1938 as the lease was only granted for 2 years, so it would not apply.
A tenant has sub-let its leased premises in breach of the lease alienation provisions. The landlord would like to forfeit the lease, but it’s agent just sent out the rent demand unaware of the breach.
Which of the following best describes the advice to the landlord about whether it can forfeit in the circumstances?
The landlord has not waived its right to forfeit by sending out the rent demand because of the timing of when the demand was sent
The landlord has waived its right to forfeit, but this will only last until the next rent day when the right will arise again
The landlord has not waived its right to forfeit the lease because the agent did not know about the breach
The landlord has waived its right to forfeit and it can never again forfeit for this specific breach
The landlord has waived its right to forfeit and it can never forfeit again because this is a continuing breach
The landlord has waived its right to forfeit and it can never again forfeit for this specific breach
This is correct. The landlord’s agents has sent out a rent demand. This is an acknowledgement of the continued existence of the lease and evidence of the landlord’s intention that the lease should continue despite the breach. The breach (unauthorised subletting) is classed as a ‘non-continuing’ breach, which means waiver is permanent and it can never again forfeit for this specific breach. It does not matter that the waiver is inadvertent and that the agent was unaware of the breach.
A landlord applies for a court order for possession of commercial premises for tenant breach of the rent covenant. The tenant would like to apply for relief as it can now pay the arrears due.
Which of the following best describes whether the tenant is likely to be successful in the circumstances?
The court can grant relief under s 146(2) of the LPA 1925 in the circumstances
The court has total discretion whether to grant relief in the circumstances
The court will stay the proceedings in the circumstances
The court cannot grant relief in the circumstances
The court will grant relief under its inherent equitable jurisdiction
The court will stay the proceedings in the circumstances
This is correct. If, on the landlord suing for possession, the tenant pays into court all arrears and costs before the trial, all further proceedings are stayed. This is the best option as the order has not yet been made.
Question 2
In 2015, a freehold owner granted a 30-year commercial lease (by deed) to a clothes retailer. In 2017, the lease was assigned to a sweetshop. In 2018, the lease was assigned to a newsagent. In 2019, the lease was assigned to a bookseller. Each assignment was by deed and with the freehold owner’s consent. The freehold owner required the provision of an authorised guarantee agreement as a condition of giving consent on each assignment. The bookseller has failed to pay the latest quarter’s rent.
From whom can the freehold owner recover the outstanding rent?
A From the newsagent and the bookseller only.
B From the bookseller only.
C From the clothes retailer and the bookseller only.
D From the clothes retailer, the sweetshop, the newsagent and the bookseller.
E From the newsagent only.
Answer
The correct option is A.
The lease was created after 1 January 1996 and is, therefore, governed by the LT(C)A 1995. This means that, upon each assignment, the outgoing tenant is released from liability under the lease unless they have provided an AGA (ss 5 and 16 LT(C)A 1995). The benefit and burden of all covenants pass to the assignee (s 3).
An AGA only guarantees the immediate assignee. Upon a further assignment the AGA ceases to have effect (s 16(4) LT(C)A 1995).
The result is that the AGAs given by the clothes retailer and the sweetshop are no longer of any effect and the freehold owner can only pursue the bookseller (the current tenant) and/ or the newsagent as a consequence of the AGA.
Options B, C, D and E are, therefore, wrong.
Question 3
In 1995, the freehold owner granted a commercial lease (by deed) to a company for a
term of 40 years. The lease contained a repair obligation on the part of the tenant. The company quickly expanded its business and moved to larger premises and assigned the lease to a distributor in 2010. In 2015, the lease was assigned to a warehouse business. Each assignment was by deed and with the consent of the freehold owner. The property is in disrepair and the warehouse business does not have the financial resources to undertake the work. The freehold owner does not wish to bring the lease to an end as it would be hard to find a new tenant.
Which of the following provides the best advice to the freehold owner?
A Forfeit the lease and relet the property.
B Enter the business
C Pursue a estate.
D Pursue a privity of
E Pursue a contract.
property, conduct the repairs and recover the cost from the warehouse as a debt due.
claim for damages for breach of repair against the distributor via privity of
claim in damages for breach of repair against the warehouse business via estate.
claim in damages for breach of repair against the company via privity of
Answer
The correct option is E.
The freehold owner does not wish to end the lease so forfeiture is not a good option. Option A is, therefore, wrong.
The warehouse business does not have the resources to pay for the repairs so it is not sensible to pursue it either via privity of estate or a Jervis v Harris self-help remedy. Options B and D are, therefore, wrong.
The freehold owner can pursue a damages claim against the original tenant via privity of contract. As the business expanded, the original tenant seems a better target to recover the cost of repair. Option E is, therefore, the best answer.
The distributor was only responsible for the covenant to repair whilst the lease was vested in him. Option C is, therefore, wrong.
