Property 7: Landlord’s Remedies and Lease Termination Flashcards
What are landlords remedies for breach of covenant to pay rent
*Action for debt
*Commercial rent arrears recovery (CRAR)
*Forfeiture
*Persue guarantors
*Use rent deposit
Where does the LL get the authority for an action for debt
Lease likely to contain express cov to pay rent OR will be implied in parole lease
Will an action for debt bring the lease to an end?
NOT a damages claim and doesn’t bring lease to an end
Limitation period for briniging claim for action for debt?
6 years
Who can be sued for an action for debt
□ Current tenant
□ Former tenant (via privity of contract/AGA)
What is Commercial rent arrears recovery (CRAR)
Enter prop and seize and sell goods belonging to current tenant and rent paid from proceeds of sale
What are the procedural rules for Commercial rent arrears recovery (CRAR)
- Rent must be due for min 7d
- Give tenant 7d notice
- use enforcement agency to seize goods
- if tenant doesnt pay, give 7d notice and sell at public auction
What cannot be seized in Commercial rent arrears recovery (CRAR)?
◊ Items up to value of £1350 which are necessary for tenants business (eg computers/phones)
◊ Items not belonging to tenant (eg leased/hired)
Can Commercial rent arrears recovery (CRAR) be used to cover service charge/insurance premiums?
no, only ‘normal’ rent
What is the effect of Forfeiture
Brings lease to end and enable landlord to gain vacant possession of prop
conditions for forfeiture
*Can only be exercised against tenant in possession
*lease must contain forfeiture clause
*right must not be waived
Procedure for forfeiture?
- LL make formal demand for rent due by presenting at premises on date due between sunrise/sunset UNLESS lease dispenses with this
- Then forfeit via:
a. Peaceable re-entry
b. Court order (required where premises partly/wholly a dwelling and occupier resides there) - Tenant can apply to court for relief from forfeiture
How many days does the rent need to be outstanding before forfeiture?
Lease can vary how many days
When will the landlord have waived their right to forefiture?
Via act demonstrating an intention to continue the relationship of landlord/tenant
Eg demand/accept rent after breach
Effect of tenant being granted relief from forfeiture?
T can retake premises on terms of original lease
How does a tenant apply for relief from forfeiture?
◊ T pays all arrears before trial where LLs suing for possession (court MUST)
◊ apply to court within 6mo of landlord re-entry pursuant to court order (court has discretion)
(6mo limit n/a If LL forfeits non-residential lease without court proceedings)
What form must a guarantee be in?
In writing
What will a guarantee oblige guarantor to do?
◊ pay rent/other sums due under lease if tenant doesn’t
◊ OR indemnify landlord against loss caused by breaches of tenant cov
How long will a guarantee last?
*Old lease: extend through duration of the lease, regardless of assignment
*New lease: guarantor automatically released from liability on an assignment (BUT landlord may require guarantor of outgoing tenant to guarantee the outgoing tenant’s obligations under AGA)
When perusing former tenant/their guarantor, what must the landlord comply with?
s17 of Landlord and Tenant (Covenants) Act 1995:
1. serve default notice on former tenant/their guarantor if landlord intends to recover ‘fixed charge’ (monetary payment such as rent, service charge or other liquidated sum)
2. within 6mo breach
Guarantors: How can you regain control of a property after having a default notice served on you?
*Paying sum claimed under default notice
*Calling for ‘overriding lease’ (headlease between the landlord and the former tenant/guarantor)
What is a rent deposit
cash tenant deposited at start of lease as security for payment of rent and performance of tenants cov contained in lease
How much is a rent deposit usually?
6-12mo rent
What will a rent deposit deed normally require?
*Tenant to top up deposit
*Deposit balance returned to tenant at end of lease/on lawful assignment
What are landlords remedies for breach of repair covenant?
- Specific performance
- Damages
- Self help/Jervis v Harris clause
- Forfeiture
What is needed for specific performance?
Court order
What type of breach is specific perfomance appropriate for?
For breach of positive cov
Limits on specific perfomance as a remedy
Equitable remedy=Will only be granted where other remedies inappropriate
Example of when specific perfomance was granted for breach of repair cov
*there was no forfeiture or landlord’s self- help clause
AND damages weren’t adequate, particularly where the condition of the property was deteriorating;
AND court was sure that the order was not being sought by the landlord simply to harass or otherwise put pressure on the tenant
what are damages for breach of repair cov limited to?
amount by which landlords reversion has diminished in value as a result of disrepair
When must notice of a damages claim be served on the tenant and what can the tenant then do?
*For leases granted for 7y with 3y left
*Tenant can serve counter notice within 28d meaning landlord needs leave of court to peruse claim
Is the amount that can be reocvered under a Self help/Jervis v Harris clause limited?
no, can get all money back
What must the landlord do to forefit a lease for breach of repair covenant
- Serve s146 notice specifying breach, requiring it to be remedied within reasonable time and for tenant to pay compensation
- if tenant doesnt comply, forfeit via:
a. peaceable re-entry
b. court order - Tenant can apply for relief from forfeiture
What and when must exra things be added into a s146 notice to forefit for breach of repair covenant
□ Where lease was for 7y with 3y left, notice must inc. notification of the tenant’s right to serve a counter notice within 28 days.
□ If they do, landlord can only proceed to forfeit with the leave of the court.
How may a lease be surrendered?
Requires mutual act which treats the lease as no longer being in existence
eg.
□ Informally-ie handing keys back
□ Commercial-best formally by deed of surrender ( will deal with issues eg: Arrears)
Possible remedies for breach of other covenants
- Damages (normal contractual rules)
- Specific performance (where obligation sufficiently precise and doesnt require supervision)
- Forfeiture (if right reserved in lease)
- Injunction (breach/anticipated breach of negative cov )
What will the choice of landlord remedy depend on?
*Cost
*Time
*Want to continue relationship?
*Likelihood of problem occurring again
*Tenants financial position
What is security of tenure?
generic name for statutory protection meaning leases can only be terminated in prescribed ways
How may a lease be terminated at common law?
- Effluxion of time
- Notice to quit (periodic)
- Surrender (tenant yields lease to landlord which merges with their reversion)
- Merger (Tenant acquires lanlords estate in land)
Is notice needed to terminate a lease due to effluxation of time?
no
When may the common law methods of lease termination not apply?
If the tenancy is protected by the LTA 1954
When does the 1954 act apply?
- There’s a tenancy (exclusive possession +certain duration)
- of a property
- Which is occupied by tenant
- For business purposes
For the 1954 act, what does the condition ‘occupied by the tenant’ include?
personally or via agent or manager
For the 1954 act, what does ‘business’ include?
Trade, profession or employment, need not be a business or commercial activity, can be clubs and charities
1954 act: can a property still come within ‘business purposes’ if theres a residential aspect of occupation?
Yes if dominant use is business and residential component is incidental to dominant business use
What types of business tenancy are NOT protected by the 1954 act?
- Tenancies at will which can be terminated at any time by either party
- Fixed term tenancies under 6mo (will gain protection if same business in occ for 12mo/lease can be extended beyond 6mo)
- Agri/farm/mining leases
- Fixed term tenancies that are contracted out of the Act
How can you contract out of the 1954 act?
- LL give T notice (in prescribed form) warning theyre agreeing to a lease without security of tenure and advising them to obtain professional advice.
- T makes declaration in a prescribed form that theyve received notice and agree
- If T given notice less than 14 d before grant of lease, Ts’s dec must be made a statutory declaration before an independent solicitor.
- Reference to service of notice and tenant’s declaration must be contained or endorsed on lease itself.
Broadly, what are the important sections under the 1954 act?
s25: landlords notice
s26: tenants request for renewal lease
s30: landlords grounds for opposition (termination)
What are the only 7 METHODS of termination under the 1954 act can be terminated?
- landlords notice under s25
- tenant request renewal for renewal under s26
- forfeiture
- surrender
- periodic tenancy: tenant giving notice to quit
- fixed term: T 3mo written notice under s27 (if notice doesn’t expire before the contractual expiry date)
- fixed term: tenant ceasing to be in occupation for business purposes at the end of lease under s 27(1A)
What will a s25 notice include?
◊whether LL opposes grant of a new tenancy
◊ LL proposals abt terms of new lease
◊ If opposing: s30 ground
◊ Proposed termination date
What are the conditions for the proposed termination date under s25 notice?
*Cant be earlier then date tenancy could have been terminated at common law
*Doesn’t have to coincide with exact date fixed term lease expires
Time limit of service of s25 notice
no less than 6mo but no more than 12mo before proposed termination date
What happns if a 25 isnt served in time to terminate on contractual expiry date?
The tenancy will continue until the expiry of 6mo after the notice was served (or landlord can specify date at least 6mo but less than 12mo from when notice was served)
If the landlord is opposing the grant of a new tenancy in a s25, what must the tenant do (and what can the landlord do to pre empt this)?
*Must apply (usually to county court) before expiry of s25 notice or will loose rights under 1954 act
*Landlord can pre-empt this by applying for order to terminate lease on grounds stated in s25 (if app not already made by tenant)
If the landlord is not opposing a new tenancy in a s25, what will happen?
*parties negotiate
*but tenant should still apply top court to protect position
*time limit can be extended by agreement between parties
What type of lease may a s25 notice terminate?
term or periodic
Tenants options if they want to terminate the lease ON the contractural expiry date?
a. Cease to occupy for business purposes by end of lease
b. MAY serve s27 notice giving landlord 3mo prior written notice
Tenant options if they want to terminate the lease AFTER the contractural expiry date?
a. MUST serve s27 giving 3mo notice
b. OR agree a voluntary surrender with the landlord
What can a tenant do if they wish to remain in the property after the contractural expiry date?
a. Do nothing and wait for landlord to serve s25 notice
b. OR serve s26 request (brings current tenancy to end and requests a new one)
What must a s26 request state?
*Proposed start date of new tenancy
*Tenants proposals for new tenancy
Time limit for service of s26?
Same as s25: between 6 and 12mo of date they want new tenancy to start which cant be earlier then tenancy could have been terminated at common law
What happens if on recieving a s26, the landlord opposes the grant of a new tenancy?
- Serve counter notice within 2mo stating s30 ground
- Tenant must then apply to court for new lease before proposed start date of new lease in s26 or will loose rights under act (unless agree to extend time limit)
- Landlord can pre-empt by applying to terminate on grounds in counter notice
What happens if on recieving a s26, the landlord does NOT oppose the grant of a new tenancy?
*parties will negotiate
*but tenant should still apply to court (in time limit) to protect position
* Parties can agree to extend time limit
Can a landlord serve a notice to quit or s27 3mo notice on a tenant?
No, only vice versa
If a tenancy is protected by the 1954 act, how long will the tenancy go on for?
until terminated in accordance with act, even then, tenant has right to apply to court for new tenancy which can only be opposed by landlords on of 7 statutory grounds within s30
What are the landlords grounds of opposition under s30?
a. T failure to repair
b. T persistent delay in paying rent
c. T substantial breach of other obligations
d. L offered alternative accommodation suitable to Ts needs and on reasonable terms
e. Tenancy is an underletting of part
f. Landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession
g. Landlord intends to occupy the holding for its own business or as a residence
What is s30 ground f?
Landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession
What is s30 ground g
Landlord intends to occupy the holding for its own business or as a residence
Conditions on landlord relying on s30 ground g?
- Must have owned interest for at least 5y before ending of current tenancy (but is available to a landlord who buys prop with vacant possession, lets it and then seeks possession within 5y of buying it)
- Must have reasonable prospect of achieving its intention, although doesn’t have to show that its business will be a success in that location
What must a landlord show under s30 ground f?
- Firm settled intention to carry out relevant work (eg planning permission/finances arranged)
- Intends to demolish/reconstruct premises (or substantial part of them) or carry out substantial works of construction
- Cant reasonably carry out works without obtaining possession
What are the discretionary s30 grounds and what does this mean?
a,b,c,e =court will decide whether to allow tenant new lease
(Landlord has to est ground +that tenant shouldn’t be granted new tenancy in view of facts giving rise to ground)
What are the mandatory grounds under s30?
landlord just has to prove its offered alternative accom or intends to occupy itself
What is s30 ground d?
d. Landlord has offered alternative accommodation (must be suitable to tenant’s needs and on reasonable terms)
When being granted a new lease, what is the current tenant entitled to?
Tenancy of the holding (ie current tenancy, not part not occupied by tenant) HOWEVER, landlord has right to insist any new tenancy will be of whole of originally demised property (inc parts underlet)
What will the term of the new lease be?
such as is reasonable in circumstances but not exceeding 15y
When will a new lease commence?
3mo and 4 weeks after order
(3mo after proceedings finally disposed of plus 4w for appeal)
What will the rent in a new lease be?
Open market rent regarding terms of the tenancy other than:
(a) fact that the tenant and their predecessors have been in occupation;
(b) goodwill attached to holding;
(c) tenants voluntary improvements
(d) forlicensed premises: addition in value due to the tenant’s licence.
what can a court insert into a new lease?
rent review clause
In the absence of agreement, how are the terms of a new lease fixed?
By court who will take existing clauses as starting point
What are the options if a landlord or tenant is unhappy with the terms of a new lease fixed by the court?
□ tenant unhappy-may apply for order to be revoked
□ landlord unhappy-only remedy is to appeal
What are the no fault grounds under s30?
e-Tenancy is an underletting of part
f-Landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession
g-Landlord intends to occupy the holding for its own business or as a residence
What must the landlord do if it successfully opposes a new lease on a no fault ground?
*Pay tenant compensation
*Amount= rateable value of the holding, unless the tenant and their predecessors in the same business have been in occupation for at least 14 years, when it will be twice the rateable value.
*Any agreement restricting/excluding payment of compensation void if tenant/predecessors in same business have been in occupation for 5y or more
