Remedies for Breach of Leasehold Covenants Flashcards
Under an old lease (pre 1 Jan 1996), who is liable for breach of a leasehold covenant?
The current tenant (& any guarantor)
+
Original tenant (will be liable for full term regardless of whether have assigned)
Under a new lease (on or after 1 Jan 1996), who is liable for breach of a leasehold covenant?
Current tenant (& any guarantor)
+
An outgoing tenant who has given an AGA
(Original tenant released as soon as assign if no AGA)
What are the 5 possible remedies for breach of covenant to pay rent?
- Action for debt
- Commercial Rent Arrears Recovery
- Pursue guarantors
- Deduct from rent deposit
- Forfeiture
What is the limitation period for an action for debt?
6 years
(non payment of rent is a debt)
What is the remedy of Commercial Rent Arrears Recovery?
Landlord can get enforcement agency to seize & sell goods belonging to current tenant where there are at least 7 rent days outstanding
Applies to: commercial premises only in relation to rent paid for possession & use
Must give 7 days notice of intention to enter (& also of sale of their goods at public auction)
Which premises and which type of rent does the remedy of Commercial Rent Arrears Recovery apply to?
Commercial premises only in relation to rent paid for possession & use
(not eg. insurance rent)
What are the notice requirements for Commercial Rent Arrears Recovery?
Must give 7 days notice of:
- Intention to enter
- Sale if landlord sells tenant’s goods at public auction
What does a tenant’s guarantor promise to do in the guarantee? (2)
- Pay the rent & any other sums due under lease if tenant does not pay
- Remedy or indemnify landlord against loss caused by any breaches by tenant
Can a landlord sue the guarantor of a current tenant?
Yes - sued in same way as tenant
Can a landlord sue a guarantor of a former tenant?
Old lease: yes - liability of original guarantor likely extends thru duration of lease
New lease: guarantor automatically released from liability on assignment
If pursuing former tenant / guarantor of former tenant for fixed charge, must serve default notice within 6 months of current tenant’s breach
What are the notice requirements for pursuing the guarantor of a former tenant?
If pursuing former tenant / guarantor of former tenant for fixed charge, must serve default notice within 6 months of current tenant’s breach
What is the remedy of deducting from rent deposit?
Landlord may have reuqired T to deposit cash sum as security for payment of rent & performance of covs
Rent deposit deed sets amount & circumstances (eg. which breach) entitle landlord to withdraw
What is the effect of forfeiture?
Ends lease & enables landlord to gain vacant possession of the property
Is forfeiture an automatic right?
No - lease must contain forfeiture clause setting out circumstances
What is the process of forfeiture in relation to non-payment of rent?
Landlord effects forfeiture by taking possession either thru peaceable re-entry or by obtaining court order
- T can apply to court for relief
- L can waive right to forfeit by carrying out any act demonstrating intention to continue relationship
How can a landlord waive their right to forfeit?
By carrying out any act demonstrating intention to continue relationship of landlord & tenant (eg. demanding or accepting rent after breach)
What is the forfeiture process for breach of a covenant other than non-payment of rent?
Landlord must serve s146 notice on tenant:
- Specifying breach
- Requiring breach to be remedied within reasonable time if capable of remedy and
- Requiring tenant to pay compensation for breach
If T doesn’t comply, landlord can forfeit by peaceable re-entry or court order
What are the extra requirements for the s146 notice in a breach of repair claim?
s146 notice must include notification of tenant’s right to serve counter-notice within 28 days where claim is for:
1. Breach of repairing covenant
2. Lease is for more than 7 years &
3. Has at least 3 years left
If T serves counter notice, landlord can only bring forfeiture claim with leave of court
When must a s146 forfeiture notice include notification of the tenant’s right to serve a counter-notice within 28 days?
Where claim is for:
1. Breach of repairing covenant
2. Lease is for more than 7 years &
3. Has at least 3 years left
How much can a landlord recover in damages?
Limited to the reduction in value of the landlord’s reversion as a result of the breach
When must a landlord serve a s146 notice on a tenant as part of an action for damages claim?
Where claim is for:
1. Breach of repairing covenant
2. Lease is for more than 7 years &
3. Has at least 3 years left
Notice must include notif of tenant’s right to serve counter-notice within 28 days
When will specific performance be granted?
Where
i. positive covenant (eg. to repair)
ii. Performance or supervision over period of time not required and
iii. Damages not adequate remedy
What is a self-help / Jervis v Harris clause?
Allows landlord to recover cost of repairs as debt (instead of damages)
Rather than wait for specific performance, landlord may enter & carry out the works
Is self-help an automatic right?
No - must be expressly reserved in lease
