Unit 7 - Landlord’s Remedies and Lease Termination Flashcards
A solicitor acts for the landlord of a freehold property let to a tenant for a term of 15 years with eight years left to run. The tenant has not carried out repairs in accordance with its repairing obligations in the lease. Following the procedure set out in the self-help clause in the lease, the landlord has entered the property and carried out the repairs.
Will the landlord be able to recoup all of its costs from the tenant?
A) No, the landlord will only be able to recoup the value by which the freehold interest in the property has reduced in value, rather than the full cost of the repair.
B) No, because the landlord did not serve a s 146 notice on the tenant.
C) No, because the landlord did not seek the leave of the court to pursue this claim.
D) Yes, the landlord should be able to recover the full costs of the repair in a debt action.
E) Yes, the landlord should be able to recover the full costs of the repair as damages
CORRECT ANSWER D - Although the breach of covenant here is a failure to repair, the case of Jervis v Harris confirmed that a liquidated sum sought to reimburse a landlord after exercising the self-help remedy in a lease is an action for debt rather than damages (so option E is wrong). Accordingly, the landlord is not bound by the restrictions on claims for damages in LTA 1927 (as in option A) and LP(R)A 1938 (as in options B and C).
A solicitor acts for the landlord of a freehold office building. In 2015, the landlord let the whole of the building to an insurance company for a term of 10 years. Rent is payable monthly. In 2017, the insurance company assigned the lease to an accountancy firm, with the landlord’s consent as required under the terms of the lease. In 2019, with the landlord’s consent, the accountancy firm assigned the lease to a recruitment agency. As a condition of obtaining consent, the accountancy firm entered into an authorised guarantee agreement (‘AGA’) with the landlord. It is now 2022 and the recruitment agency has failed to pay rent for the past three months.
Which of the following statements is the best advice to the landlord in this situation?
A) The landlord will only be able to sue the accountancy firm and the recruitment agency.
B) The landlord will only be able to sue the recruitment agency because the insurance company and the accountancy firm will have been released from liability under the tenant’s covenants in the lease by statute.
C) The landlord will be able to sue all three tenants but must first serve them each with a notice under s 17 Landlord and Tenant (Covenants) Act 1995 in respect of the recruitment agency’s failure to pay the rent.
D) The landlord will be able to sue all three tenants, but in the case of the insurance company and the accountancy firm the landlord must first serve them each with a notice under s 17 Landlord and Tenant (Covenants) Act 1995 in respect of the recruitment agency’s failure to pay the rent.
E) The landlord should be able to sue the accountancy firm and the recruitment agency, but only for rent arrears of not more than six months.
CORRECT ANSWER A - This a new lease under LT(C)A 1995. The current tenant, the recruitment agency, is clearly in breach of the covenant to pay rent and will
be liable for the breach. Former tenants are automatically released on assignment, so
the insurance company has been released. However, liability can continue if the outgoing tenant has given an AGA and as the accountancy firm has done this, it will remain liable for breaches of the tenant’s covenants. Option B is not the best advice as it ignores the AGA. Options C and D incorrectly refer to the possibility of suing all three tenants.
Former tenants can only be made liable for payment of fixed sums if notified of the breach within six months of the sum falling due (or the landlord commences an action against the former tenant within that time). As there are only three months of arrears, the accountancy firm can still be sued for the recruitment agency’s failure to pay rent. As long as the s 17 notice is given to the accountancy firm, there is no restriction on the amount of the arrears that can be recovered. The Limitation Act 1980 puts a limitation of six years on recovery of rent, but the lease only has another three years before it is due to expire. Option E is not the best answer as it is vague and imprecise.
It is 2022 and a tenant is having difficulty paying the rent reserved by its lease. The quarterly payment of annual rent was due 10 days ago. The lease contains a clause entitling the landlord to forfeit the lease whenever any rent reserved by the lease is outstanding for 15 days after becoming payable, whether formally demanded or not. The tenant’s problems are caused by an administrative error by its bank and the tenant has not been in breach of covenant before.
Which of the following statements is the best advice to the tenant about the landlord’s remedies for the failure to pay the rent on time?
A) The landlord can forfeit the lease immediately.
B) The landlord cannot forfeit the lease immediately because it needs to make a formal demand first.
C) The landlord is unlikely to succeed in any attempt to forfeit the lease.
D) The landlord cannot forfeit the lease immediately because it needs to wait longer from the rent due date.
E) The landlord can forfeit the lease if the rent is not paid in the next five days.
CORRECT ANSWER C - The lease dispenses with the need to make a formal demand (so option B is wrong), but the rent has only been due for 10 days and the lease stipulates the need to wait 15 days (so option A is wrong).
Options D and E recognise that the landlord will have to wait longer before the right of forfeiture arises, but are not the best advice as they suggest that this is the only obstacle facing the landlord in a forfeiture action. The tenant can apply for relief from forfeiture and this is likely to be granted because the tenant has not been in breach before and the problem is unlikely to be repeated. The facts do not suggest that the tenant is in long-term or severe financial difficulty.
A solicitor acts for the landlord of a retail unit. The lease was granted for a term of 10 years commencing on 5 January 2015. It is now 1 May 2024. The lease was not contracted out
of the Landlord and Tenant Act 1954 (the 1954 Act) and the landlord has instructed the solicitor to serve a s 25 notice on the tenant to terminate the lease on 5 January 2025.
Can the solicitor comply with the landlord’s instructions?
A) No, because the tenant enjoys security of tenure so the landlord cannot terminate the lease unless the tenant is in breach of at least one of the tenant’s covenants.
B) No, because is too early to serve the s 25 notice.
C) No, because it is too late to serve the s 25 notice.
D) Yes, because the landlord will be able to comply with the requirements of the 1954 Act for service of the s 25 notice if it is served today.
E) Yes, because the 1954 Act allows a landlord to terminate a tenancy in the last six months of the contractual term.
CORRECT ANSWER D -
Option D is correct. The contractual expiry date of the lease is 4 January 2025 so on 1 May 2024, the landlord is within the 12–6 month window to terminate on that date. It is neither too early nor too late to serve the s 25 notice, so options B and C are wrong.
Option A is misconceived as the 1954 Act allows the landlord to terminate the lease whether or not the tenant is in breach of the lease; breaches of the lease may be relevant to whether the landlord can successfully oppose a renewal of the lease using s 30 grounds (a), (b) and (c) but this is a different point about which there is no information in the facts.
Option E is wrong as the proposed date for termination of the lease in a s 25 notice cannot be earlier than the date the tenancy could have been terminated under the common law, which for a fixed term lease is the contractual expiry date.
A landlord owns a property which is let to a business tenant on a 10 year fixed term lease. The contractual term expires in just over six months’ time and the landlord wishes to serve a s 25 notice on the tenant opposing the grant of a new tenancy today. The landlord acquired the property four and a half years ago and wishes to move into the property itself when the tenant leaves. Last year the tenant failed to pay the June instalment of the rent but has otherwise been a good tenant.
Which of the following statements is the best advice to the landlord as to which ground(s) to specify in its s 25 notice?
A) The landlord cannot rely on ground (g) because it has only owned the property for four and half years.
B) The landlord will be able to rely on grounds (b) and (g), but it would be better to rely on ground (b) as it is a discretionary ground.
C) The landlord is unlikely to be able to rely on ground (b) but could rely on ground (g).
D) The landlord will be able to rely on grounds (b) and (g), but it would be better to rely on ground (b) as the tenant will not be entitled to compensation.
E) The landlord will be able to rely on grounds (b) and (g), but it would be better to rely on ground (g) as it is a mandatory ground.
CORRECT ANSWER C - On the facts, the two grounds that are potentially available to the landlord are (b) and (g). Ground (b) is discretionary and ground (g) is mandatory.
Ground (b) is available where there has been a persistent failure by the tenant to pay rent. The tenant has only missed one rent payment and so it is unlikely that the landlord could rely upon it. Options B, D and E are, therefore, not the best advice. Option B is also misconceived as it would not be better to rely on a discretionary ground where a mandatory ground is available. Option D is correct that ground (b) is a non-compensatory ground and this might have been a reason for choosing it had it been available.
Ground (g) is available where, at the termination of the lease, the landlord intends to occupy the premises as its business or residence. This is not available if the landlord acquired its interest in the property within five years of the ending of the current tenancy. This will be the termination date specified in the s 25 notice. Although the landlord has not yet owned its interest in the property for five years on the date of service of the s 25 notice, it will have done so by the termination date specified in the s 25 notice and so will not be barred from relying on ground (g). Option A is therefore wrong.
A solicitor acts for the freehold owner of an office building. The client needs to occupy the whole of the building in 18 months’ time, but wants to raise some rental income from the building in the meantime. The client has identified a suitable short-term occupier.
Which one of the following options will best achieve the client’s objective?
A) Granting the occupier a lease for 18 months, contracted out of the Landlord and Tenant Act 1954.
B) Granting the occupier a tenancy at will.
C) Granting the occupier a contractual licence.
D) Granting the occupier a lease for six months, followed by another lease of six months when the first one expires.
E) Granting the occupier a lease for six months with an option to extend the term by a year once the first six months has passed.
CORRECT ANSWER A - A fixed term lease of 18 months gives the client certainty of income for the whole of the period, but the occupier will not have the right to stay on in the property or renew the lease as a contracted out tenancy is excluded from security of tenure under the 1954 Act.
In relation to option B, the 1954 Act excludes tenancies at will from security of tenure, but a tenancy at will can be terminated without notice by the occupier so gives no certainty of income. In relation to option C, a contractual licence is not a tenancy within the meaning of s 23 of the 1954 Act but may be construed as a (secure) lease if, in practice, exclusive possession is enjoyed.
In relation to option D, two tenancies of exactly six months each (so not resulting in occupation for more than 12 months) will not attract security of tenure but will not guarantee income for the full 18 months. Also, the client cannot be sure that the occupier will take the second lease once the first lease expires.
In option E, the tenancy will be treated as a tenancy for more than six months so enjoy security of tenure under the 1954 Act.
In 2015, Langley Estates PLC (”Langley”) granted a lease of an office building for a term of 20 years to Tyler Finance Ltd (”Tyler”).
In 2020, with Langley’s consent, Tyler assigned the lease to Asset Management Ltd (”Asset”). Tyler was required to enter into an authorised guarantee agreement (”AGA”).
Asset has failed to make its last quarterly rent payment.
Which ONE of the following statements best describes who Langley can take action against and why?
A) Langley can take action against Tyler because as the original tenant Tyler remains liable for the covenants for the duration of the lease.
B) Langley can take action against Tyler because Tyler retains liability for the covenants under the AGA.
C) Langley can take action against Tyler because it is the original tenant and against Asset because it is the current tenant.
D) Langley can take action against Tyler because of the AGA and against Asset because it is the current tenant.
E) Langley can only take action against Asset as Asset is the current tenant and Tyler was automatically released on the assignment to Asset.
CORRECT ANSWER D - Langley can take action against Tyler because it gave an AGA, but it can also take action against Asset as the current tenant.
Option A is wrong. It suggests only Tyler is liable and it refers to the original tenant retaining liability for the covenants for the duration of the lease: this is only true for leases granted prior to 1 January 1996.
Option B is wrong as it does not include taking action against Asset.
Option C is not the best answer because it does not contain an accurate statement of why Tyler is liable: original tenant liability does not apply to a lease granted after 1 January 1996.
Option E is wrong because Tyler entered into an AGA and was not therefore released on the assignment.
A solicitor is advising a client who is a business tenant of a small retail premises under a fixed term ten year lease which is due to expire in three years’ time. The client is having financial problems and does not want to run the business from these premises anymore. The client hopes to get out of the lease, but the lease does not contain a break clause.
Which ONE of the following statements is correct?
A) The client can serve a notice to quit to end the tenancy.
B) The client can serve a Section 26 request to end the tenancy.
C) The client can insist the landlord bring about merger of the lease and the freehold.
D) The client can ask the landlord to agree to surrender of the tenancy.
E) The client can vacate the property and this will bring the lease to an end.
CORRECT ANSWER D - the lease is part way through a fixed term and if the tenant wants the lease to end it will have to attempt to negotiate a surrender of the lease with the landlord.
Option A is wrong as a notice to quit only brings a periodic tenancy to an end, but this is a fixed term tenancy.
Option B is wrong: a Section 26 request is relevant where the tenancy has security of tenure (which may be the case here), but it can only be served within 12 months of the contractual termination date, which is over three years away.
Option C is wrong because the tenant cannot force the landlord to take back the lease which would bring about the merger of the lease and the freehold.
Option E is wrong as, if the tenant vacates the property, it does not affect the validity of the lease and the tenant will still be liable under the covenants of the lease.
A solicitor is advising the landlord of a small office block. The office block is let under a periodic tenancy which has been running for the last five years and has security of tenure under the Landlord and Tenant Act 1954 (“LTA 54”). The landlord would like to bring the lease to an end.
Which ONE of the following statements is correct?
A) The landlord can make the tenant surrender the lease.
B) The landlord can serve a notice to quit.
C) The landlord can serve a Section 26 request to bring the tenancy to an end.
D) The landlord must wait for the lease to expire.
E) The landlord can serve a Section 25 notice to bring the tenancy to an end.
CORRECT ANSWER E - Option A is wrong as the landlord cannot make the tenant surrender the lease, it can only be done with the tenant’s agreement.
Option B is wrong: if a tenancy has the protection of the LTA 54 it can only be brought to an end in one of the ways specified by the LTA 54 and these do not include service of a notice to quit by the landlord (although the tenant can terminate a periodic tenancy protected by the LTA 54 by serving a notice to quit).
Option C is wrong as under the LTA 54 a Section 26 request can only be served by the tenant.
Option D is wrong as a periodic tenancy does not expire.
In 2018, your client, a landlord granted a lease of an office building for a term of 15 years to Granby Limited (“Granby”).
In 2022, with the landlord’s consent, Granby assigned the lease to Nyla Investments (“Nyla”). Granby was required to enter into an authorised guarantee agreement (“AGA”).
Nyla has failed to make its last three quarterly rent payments and the landlord wants to know what remedies it has against Nyla.
Which ONE of the following best describes the most appropriate remedy for the landlord?
Make a damages claim.
A) Pursue Commercial Rent B) Arrears Recovery (“CRAR”).
C) Seek an injunction.
D) Pursue the typical self-help remedy likely to be found in the lease.
E) Seek an order for specific performance.
CORRECT ANSWER B - Options A, C, D and E are all remedies which are more typically used for breach of covenants other than non-payment of rent.
In 2018, your client, a landlord granted a lease of an office building for a term of 15 years to Granby Limited (“Granby”).
In 2022, with the landlord’s consent, Granby assigned the lease to Nyla Investments (“Nyla”). Granby was required to enter into an authorised guarantee agreement (“AGA”).
Nyla has failed to make its last three quarterly rent payments and the landlord wants to know what remedies it has against Nyla.
Nyla has failed to make its last three quarterly rent payments. Nyla provides financial services. It leases all its office equipment and furniture. The client is aware that Nyla has this week received payment of a large bill from a client, which is substantially more than the amount of the rent owed. The client does not want to lose Nyla as a tenant because the market is very slow and it fears it would take months to obtain a new tenant. The client is aware that Granby is having severe financial problems and is on the brink of being wound up.
Which ONE of the following statements best describes what action the landlord should take?
A) Commercial Rent Arrears Recovery (“CRAR”).
B) A claim for debt.
C) Forfeiture.
D) Seek to persuade Nyla to surrender the lease.
E) Pursue Granby under the authorised guarantee agreement (‘AGA’).
CORRECT ANSWER B - We are aware that the tenant is about to receive a large sum in payment of a bill from which the rent could be paid if a claim for debt were made. Although all the remedies are potential remedies for breach of the payment of rent covenant, the others are less suitable on the facts of the question.
Option A is not the best answer as CRAR would not be appropriate because the nature of its business means it does not have any assets which could be seized and its furniture and office equipment are leased which means they cannot be seized.
Options C and D are not appropriate as the client wants to keep its tenant as the rental market is slow and both options would mean the lease comes to an end.
Option E is not the best answer as it would not be suitable to pursue the former tenant under the AGA as we know it is in financial difficulty and we could be throwing good money after bad.
In 2018, your client, a landlord granted a lease of an office building for a term of 15 years to Granby Limited (“Granby”).
In 2022, with the landlord’s consent, Granby assigned the lease to Nyla Investments (“Nyla”). Granby was required to enter into an authorised guarantee agreement (“AGA”).
Nyla has failed to make its last three quarterly rent payments and the landlord wants to know what remedies it has against Nyla.
Nyla has failed to make its last three quarterly rent payments. Nyla provides financial services. It leases all its office equipment and furniture. The client is aware that Nyla has this week received payment of a large bill from a client, which is substantially more than the amount of the rent owed. The client does not want to lose Nyla as a tenant because the market is very slow and it fears it would take months to obtain a new tenant. The client is aware that Granby is having severe financial problems and is on the brink of being wound up
TRUE OR FALSE:
Unless the landlord has served a default notice on Granby, it has lost its ability to recover the first of the three outstanding quarter’s rent from Granby.
TRUE - Section 17 of the Landlord and Tenant (Covenants) Act 1995 requires a landlord to serve a default notice on the former tenant within six months of the breach, otherwise the landlord will not be able to claim from them. If the landlord serves the default notice now, it will only be able to claim rent that fell due within the last six months.
A solicitor is acting for a landlord of a small industrial use building which is let on a 15 year lease which was granted five years ago. The rent is due on the usual quarter days in March, June, September and December but the tenant has not paid its rent for the last instalment which was due one week ago. There is a forfeiture clause in the lease which provides for forfeiture where rent is outstanding for 14 days after becoming payable (whether formally demanded or not).
Can the landlord forfeit the lease now?
A) No because the landlord needs to make a formal demand first.
B) No because the landlord needs to make a formal demand and wait a further seven days.
C) No because the landlord needs to wait a further seven days.
D) Yes because there is no need to make a formal demand.
E) Yes because there is no need to make a formal demand nor wait for any more time to pass.
CORRECT ANSWER C - Options A and B are wrong as there is no need to make a formal demand as the lease dispenses with this requirement.
Options D and E are wrong as the landlord must wait 14 days from the date the rent was due, which was only one week ago.
Your client is the landlord of a restaurant which was let in 2015 on a 15 year lease to Yum Cha Limited (“Yum Cha”). Yum Cha had a guarantor, when it took the lease (“the Guarantor”). Yum Cha has assigned the lease and gave an authorised guarantee agreement (“AGA”) to your client on the assignment. The Guarantor guaranteed Yum Cha’s obligations under the AGA. The assignee has defaulted on the payment of rent and your client thinks its best chance of recovering the rent is by pursuing the Guarantor. It has served a default notice under section 17 of the Landlord and Tenant (Covenants) Act 1995 on the Guarantor.
Is the landlord entitled to pursue the Guarantor for the non-payment of rent?
A) Yes, as the Guarantor’s liability lasts for the duration of the lease.
B) No, as the Guarantor is released from its liability on assignment of the lease.
C) Yes, as the landlord will have required the Guarantor to guarantee the new tenant.
D) Yes, as the Guarantor guaranteed Yum Cha’s obligations under the AGA.
E) No, because Yum Cha was released from liability for the covenants in the lease on assignment.
CORRECT ANSWER D - Option A is wrong: as this is a new lease the guarantor’s liability only lasts until the tenant assigns the lease.
Option C is wrong as any attempt by the landlord to make the guarantor to guarantee the new tenant will likely be void.
Option E is wrong, as although Yum Cha was released from liability under the lease on assignment, Yum Cha entered into an AGA with the landlord and so can be pursued for breach of the lease covenants.
Although Option B correctly states that the guarantor is released from liability on assignment, it fails to take into account that the landlord required the Guarantor to guarantee Yum Cha’s obligations under the AGA.
Your client owns a small office block which it wants to let. Your client is concerned not to allow the new tenant to have security of tenure under the Landlord and Tenant Act 1954 (“LTA 54”).
Which ONE of the following statements best describes the consequences of the LTA 54 applying to a tenancy?
A) The tenancy will not automatically end on the contractual end date.
B) The tenancy will not automatically end on the contractual end date and can only be terminated in one of the ways permitted by the LTA 54.
C) The tenancy will not automatically end on the contractual end date and can only be terminated in one of the ways permitted by the LTA 54 and the tenant has the right to request a new tenancy.
D) The tenancy will not automatically end on the contractual end date and the tenant has the right to request a new tenancy.
E) The tenancy will not automatically end on the contractual end date and can only be terminated in one of the ways permitted by the LTA 54 and the tenant cannot be required to pay an increased rent if a new tenancy is granted.
CORRECT ANSWER C - The LTA 54 provides that a protected tenancy will not come to an end unless terminated in accordance with the LTA 54. In other words, the tenancy will not simply expire on its contractual end date - one of the seven methods of termination under the LTA 54 will be required to end the tenancy. Even if the current tenancy is bought to an end, the tenant has the right to apply to the court for a new tenancy. Although Options A, B, C and D are partially correct, only Option C sets out all three of the consequences and that is why it is the best option.
Option E is wrong: rent can be increased if a new tenancy is granted.
