Leases-remedies & ending a lease Flashcards
What remedies does a landlord have available in the event of a breach of the rent covenant by the tenant?
Action for debt-maximum of 6 years’ arrears
Forfeiture
CRAR (Commercial Rent Arrears Recovery)
What is Distress and Commercial Rent Arrears Recovery (CRAR)?
A self help remedy and may be used where the premises are purely commercial, a minimum of seven days principal rent is owed and the lease has not been forfeited.
Describe effluxion of time as a method of ending a lease.
This is the usual common law way in which a lease for a fixed term comes to an end. The tenant may have security of tenure however.
Describe notice to quit as a method of ending a lease.
This is the method for ending a periodic tenancy. For a yearly tenancy, either side must give at least half a year’s notice to quit.
Other period tenancies, must be determined by a full period’s notice to expire at the end of a complete period.
Describe break clause as a method of ending a lease.
A lease or a fixed term may contain a provision allowing either party to service notice during its currency to bring it to a premature end.
Describe surrender as a method of ending a lease.
The handing back of the lease by the tenant to the landlord with the landlord’s consent, resulting in a premature termination of the lease.
Describe forfeiture as a method of ending a lease.
A right for the landlord to terminate the lease prematurely for breach of covenant by the tenant.
Describe merger as a method of ending a lease.
The converse of surrender; the tenant acquires the landlord’s interest, thus becoming its own landlord and the lease is absorbed by the reversion and destroyed.
What type of forfeiture clause is required in a legal lease?
There must be an express forfeiture clause in the lease allowing the landlord to forfeit the lease in the event of breach of covenant by the tenant. This is also called a legal right of re-entry.
What type of forfeiture clause is required in an equitable lease?
No need for an express forfeiture clause because a right to forfeit for non-payment of rent is implied into equitable leases.
How is the right of forfeiture exercised by a landlord?
Forfeiture is exercised by the landlord by either:
-peaceably re-entering the property; or
-by obtaining a Court order.
Can a landlord forfeit where the premises are residential without a Court order?
No, the landlord cannot forfeit without a Court order and this includes where the premises are mixed residential and commercial.
What are Steps 1 & 2 in the forfeiture procedure?
Step 1: Has there been a breach?
Step 2: Is there a forfeiture clause?
What is Step 3 in the forfeiture procedure?
Step 3: Has there been a waiver?
How might a landlord waive their right to forfeit and provide an example?
The landlord may do this if:
-he is aware of the acts or omissions giving rise to the right to forfeit; and
-he does some unequivocal act recognising the continued existence of the lease.
Example: demanding, accepting or suing for rent due after the breach; or distraining for rent due, despite knowing about the breach.
How can waiver of the right to forfeit take place inadvertently?
Central Estates v Woolgar (1972): the landlord’s agent sends out a rent demand where the landlord is aware of the breach.
Where there is a continuing breach such as failure to repair, how long does the waiver last?
Waiver only lasts until the next day the breach continues at which point the landlord can choose to reject the rent and forfeit the lease.
Where there is a non-continuing breach, such as subletting without consent, how long does the waiver last?
Waiver is permanent e.g. once rent is accepted the landlord can never again forfeit for that specific breach.
Outline Step 4-formal demand in the forfeiture procedure for breach of a rent covenant.
The landlord must have made a formal demand for the exact amount of rent due on the day when it becomes payable, upon the premises, between the hours of sunrise and sunset unless:
-The lease expressly waives this requirement
-At least six months’ rent is in arrears and there are insufficient seizable goods on the premises to satisfy all the arrears due
Outline Step 5-exericse the right in the forfeiture procedure for breach of a rent covenant.
The landlord can proceed to exercise its right to forfeit by Court order or peaceable re-entry provided a formal demand has been served.
How can a tenant ensure relief from forfeiture before a Court order is handed down?
If, on the landlord’s suing for possession, the tenant pays into Court all arrears and costs before the trial, all further proceedings are stayed.
What is the time limit for an application for relief from forfeiture where the landlord has re-entered under a Court order?
The application for relief must be made within six months of re-entry and is usually given unless the circumstances are exceptional.
When must the Court grant relief from forfeiture to a non-residential tenant after peaceable re-entry by the landlord?
The Court has an inherent equitable jurisdiction to grant relief if:
-the rent and landlord’s costs are paid; and
-it is just and equitable to grant relief.
What is the effect on any sub-lease if the head lease is forfeited?
If a head-lease is forfeited, any sub-lease will also be destroyed.
