U7. Leasehold Remedies (REMEDIES) Flashcards
What are the remedies for a breach of a leasehold covenant to pay rent? (Not paying rent)
- Debt Action or Insolvency Proceedings
- Forefieture
- Commercial Rent Arrears Recovery
- Pursuit Former Tenants and Gaurantors
- Recourse to Rent Deposit
What are the Remedies for a breach of other covenants (not covenant to pay rent)?
- Specific Peformance
- Damages
- Self Help - Jervis v Harris Clause
- Forefeiture
5.Pursuit of former tenants and Gaurantors
- Rent Deposit
- Surrender
What remedies can be used for both not paying rent, and other covenant breaches?
- Forefeiture
- Pursuit of former tenants and gaurantors.
- Rent Deposit
What is a debt action for a breach of covenant?
A remedy for a breach of the covenant to pay rent
A Debt Action Court Proceeding brought within the relevant limitation period of 6 years.
Costly, time-consuming
What is insolvency proceedings for a breach of covenant?
When can it be used?
Insolvency Proceedings are a Court Action used if Rent has not been paid.
The tenant must meet the insolvency thresholds of:
Personally be in £5000 of debt
Corporate winding up - £750
What is the right to forfeit for a breach of covenant to pay rent?
Known as Re entry, it allows the landlord to:
- Re enter and take possession
- Bring the lease to an end
It is the most dramatic remedy.
ONLY AVALIABLE IF THERE IS AN EXPRESS CLAUSE IN THE LEASE ALLOWING
When is the only time forefiture can be used?
There must be an express clause in the lease providing for it
What must you check on a forefiture clause for a breach of lease of non payment of rent?
There must be an express forefiture clause that has been breached (ie amount of time / rent conditions met)
If the clause requires a formal rent demand, one must be made before unless rent has not been paid for at least half a year + there is not enough goods on premises to recover.
What are the 2 ways for a landlord to use a forfeiture clase for non payment of rent?
- Court Order
- Peaceable Re-Entry (Enter and change locks)
What is the significance of ‘RentS’ being used instead of ‘Rent’ in a forfeiture clause regarding nonpayment of rent?
RentS will include non payment of service charges or insurance charges being included as a covenant to pay rent, thus non payment of such charges can allow for forfeiture to be used following the procedures of forfeiture for non-rent, which does not always require the need for ‘notice;
What type of breach is non-payment of rent in a lease?
What does this mean?
A ‘Once and For All Breach’
This means that it arrises once and for all on an individual breach.
What is the diffrence between a Once and For all Breach and a Continuing Breach
A once and for all breach arrises once and for all on a individual breach (such as the non-payment of rent)
A Continuing breach keeps the tenant liable as the breach continues (Such as a repair covenant)
This is significant, because if a waiver of a right for a breach has been made for a once and for all breach, the right will not arise again for that specific breach (but will for future breaches.)
What are the once and for all breaches?
- Breach of payment of rent
- Breach of Alienation clause
- Breach of alterations covenants
What is the effect of a non-payment of rent being a once and for all breach when considering forfeiture as a remedy?
If the right to forefit is waived by the landlord, he will not be able to use forfeiture again for that breach until a new future breach has occurred.
How can a landlord waive his right to forfeiture for a non-payment of rent?
By doing anything which acknowledges the landlord and tenant relationship to be continuing, such as:
1. Accepting or Demanding Rent 2. Dealing with tenant applications under the lease (ie request of consent for alterations), or 3. Pursuing Commercial Rent Areas Recovery
What is releif from forefiture?
Tenants may apply to the Court for relief from forfeiture.
The Court will decide to grant relief and continue the lease
What is Commercial Rent Arrears Recovery for non payment of rent?
Commercial Rent Arrears Recovery allows the landlord to enter commercial premises where there is a written tenancy in order to seize goods belonging to the tenant, sell them, and use the proceeds to settle rent areas.
What is the difference between Commercial Rent Arrears Recovery v Forfeiture for non payment of rent?
When can they both be used?
DIFFERENCE
1. CRAR allows the landlord to enter and take tenants’ goods to sell to settle rent arrears.
- Forfeiture is used to enter, repossess, and end a lease.
USAGE:
2. Forefiture may apply to service charges and insurance rent depending on its terms, but CRAR only applies to annual rent (rent for premises)
- CRAR also has specific procedural requirements whilst forfeiture does not.
What are the 4 procedual rules for using Commerical Rent Arrears Recovery?
1, Must be atleast 7 days of rent outstanding to service notice and take goods.
- Authorised Enforcement agent must be used
- Goods £1350 and under cannot be taken if NECESSARY for tenants business
- Agent can only remove property belonging to a tenant
(Unless sublet, landlord can take from subtenant with 14 days clear notice.)
When can a Guarantor be claimed against for a breach of a lease covenant of paying rent?
Gaurantors to the current tenant will always be liable under the terms of the guarantee, and to indemnify the landlord for any breach by the tenant.
After a lease assignment, the liability will depend on the type of lease.
Old Leases - Subsequent Gaurantor will only be liable if they gauranted for the whole remainder of the leases term (Rather than just while there tenant was there)
New Leases - Subsequent Gaurantors are automatically released on lawful assignment of lease.
However, can be indirectly liable if guaranteed the outgoings tenants performance under an Authorised Gaurantee Agreement
A landlord can claim against a gaurantor for a breach of covenant for not paying rent.
What is the procedure for the landlord to do this?
The landlord must serve a section 17 notice for a recovery of a fixed charged upon the Gaurantor.
Notice must be served within 6 months of the sum being owed.
What is an overriding lease?
If under after a lease assignment, a former tenant or Gaurantor has been served section 17 notice (And so are being claimed against for the current tenants covenant breach of not paying rent) they can apply for an overriding lease.
An overriding lease ‘slots in between’ the landlord and the existing tenant, making the former tenant or Gaurantor the immediate landlord of the current tenant. This allows the former parties to take back control (for example by forfeiting the lease and reletting the premises )
What is Specific peformance?
A Discretionary equitable remedy requiring an action to remedy a breach.
As it is equitable, it will only usually be granted where the other remedies wouldn’t be appropriate.
The Landlord must also come to equity with clean hands.
What lease covenant breaches does the Self Help - Jarvis v Harris Clause apply to?
What does it do?
The Landlord can ENTER and check tenants compliance of REPAIR COVENANTS
If breached, landlord can SERVE NOTICE REQUIRING THE TENANT TO DO THE WORK DILIGENTLY AND EXPEDITIOUSLY.
Landlord can ENTER and CARRY OUT the work if the tenant does not, and RECOVER THE COSTS AS A DEBT.
