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W4 Leaseholds II Flashcards

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1
Q

What is assignment of the freehold reversion?

A

When the landlord sells the freehold interest to another

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2
Q

What are the formalities for an assignment of the freehold reversion?

A

Deed of Transfer (TR1, s52 LPA 1925) and registration (s27 LRA 2002)

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3
Q

What is the technical name for when the landlord sells the freehold interest to another?

A

Assignment of the freehold reversion

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4
Q

What is an assignment of the lease?

A

When the tenant sells the leasehold interest to another

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5
Q

What are the formalities for an assignment of the lease?

A

Deed of assignment (s52 LPA 1925)
Registration if lease is registered (s27 LRA 2002) or if lease is unregistered but more than 7 years remaining (s4 LRA 2002)

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6
Q

When does an assignment of a lease need to be registered?

A

If the lease is already registered (s27 LRA 2002) OR
Lease is unregistered but has more than 7 years remaining (s4 LRA 2002)

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7
Q

What is an old lease?

A

Lease created before 1st January 1996

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8
Q

What is a new lease?

A

Lease created on or after 1st Jan 1996

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9
Q

What is the default position for old leases and transfer of covenants post-assignment?

A

Original parties of the lease remain bound based on privity of contract

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10
Q

How can the original tenant of an old lease attempt to reclaim money from an assignee tenant?

A

1) Indemnity (express or implied) or
2) Common law rule in Moule v Garrett

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11
Q

Moule v Garrett 1872

A

Facts: Claimant assigned a lease to someone, who assigned it further to the defendants. Both assignment vehicles included express covenants from assignee to indemnify assignor. Current tenant breached covenant to repair, landlord recovered damages from original tenant, question was whether you could chain the indemnities. Court said yes.

Significance: Assignee of a lease (under old law) is under an obligation to indemnify the original lessee against breaches of covenant.

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12
Q

Old lease: When does the assignee tenant have the burden and benefit of leasehold covenants?

A

If there is:
1) Privity of estate
2) Legal lease that was legally assigned
3) Covenant touches and concerns the land
Authority: Spencer’s Case

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13
Q

Spencer’s Case 1583

A

Facts: Concerned a covenant to build a brick wall, and the relevant lease was assigned twice before the wall was built.

Significance: Covenants which touch and concern the land pass to assignees.

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14
Q

What is the benefit of a covenant?

A

The party with the benefit of a covenant can enforce the covenant (i.e. they can sue if it is not fulfilled)

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15
Q

What is the burden of a covenant?

A

The party with the burden of a covenant can have an action brought against them if unfulfilled (i.e. they can be sued)

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16
Q

What is privity of estate?

A

The enforcer and enforcee must have the relationship of landlord and tenant between the parties

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17
Q

What is the result of tenant covenants passing under Spencer’s Case?

A

A landlord has a choice of new tenant or old tenant to sue

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18
Q

What does it mean for a covenant to “touch and concern the land”?

A

Affects landlord in their capacity as a landlord and affects a tenant in their capacity as tenant.

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19
Q

Hua Chiao Commercial v Chiaphua 1987

A

Facts: Lease contained a covenant by the landlord to return a deposit to the tenant at end of the lease. Landlord assigned the reversion, and it was held the covenant was not binding on landlord’s assignee as it did not touch and concern the land.

Significance: Deposits collateral to the lease do not touch and concern the land

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20
Q

Old lease: when does a new landlord have the benefit and burden of covenants?

A

When the covenants refer to the subject matter of the lease

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21
Q

s141 LPA 1925

A

Makes the collection of rent and related forfeiture/re-entry enforceable
Makes the above enforceable by the owner of the reversion, even if the right arose prior to the transfer

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22
Q

S142 LPA 1925

A

Lessor’s covenants with reference to the subject-matter of the lease run with the reversion

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23
Q

Old lease: from when does the benefit of covenants pass to the new landlord?

A

From the date the lease began (not date of assignment)
Auth: Re King

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24
Q

Re King 1963

A

Facts: Lease included a covenant for the tenant to keep a fire insurance policy in the joint names of landlord and tenant. Question arose regarding who was entitled to the money paid out under the policy, since the tenant had died and landlord had assigned the reversion. Court decided that since (old law) the new landlord has the benefit of covenants from the beginning of the lease, the old landlord was not entitled to the policy money.

Significance: Assignment of a reversion passes the entire benefit (from start of lease) to new landlord, not just from date of assignment.

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25
Q

What does LTCA stand for?

A

Landlord & Tenant (Covenants) Act 1995

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26
Q

What happens to the burden of tenant covenants upon transfer of a new lease?

A

Original tenant is released from burden (s5 LTCA 1995), unless the assignment was without consent or there were pre-existing breaches
Passes to new tenant under s3 LTCA 1995

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27
Q

s5 LTCA 1995

A

Releases a tenant from both benefit and burden of covenants upon assignment of the lease

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28
Q

s11 LTCA 1995

A

If assignments are made in breach of covenant or by operation of law, then the original tenant is not relieved of benefit/burden

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29
Q

s24 LTCA 1995

A

Parties are still liable for breach of covenant occurring prior to assignment/release

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30
Q

What is an AGA?

A

Authorised Guarantee Agreement - where an old tenant is liable for their immediate successor (can’t chain AGAs)

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31
Q

s16 LTCA 1995

A

Allows AGAs

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32
Q

s19(1)(A) LTA 1927

A

Landlords cannot unreasonably withhold consent to assign/underlet, but may request payment of a reasonable sum

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33
Q

s3 LTCA 1995

A

Benefit and burden of both landlord and tenant covenants pass on assignment

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34
Q

BHP Petroleum v Chesterfield 2000

A

Facts: Landlord assigned the reversion and served a notice releasing themselves from landlord obligations. Tenant discovered physical damage to the building, putting landlord in breach of covenant. Court held that the covenant was personal and not a landlord covenant, even though it touched and concerned the land. As such, original landlord was not released from the burden of the covenant.

Significance: Something can touch and concern land but still be a personal covenant. Under new law, any covenants which are not landlord/tenant covenants do not pass and are still enforceable to original parties.

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35
Q

Can the LTCA provisions regarding landlord covenants be excluded?

A

No
Auth: s25 LTCA 1995

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36
Q

s25 LTCA 1995

A

Cannot contract out of LTCA 1995

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37
Q

New leases: Is the original landlord released from landlord covenants upon assignment?

A

Yes (s6/8 LTCA 1995) if tenant consents
BUT only from date of assignment - old landlord still on the hook for pre-existing breaches (s24 LTCA 1995)

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38
Q

London Diocesan v Phithwa 2005

A

Facts: X was sublandlord, subletting six shops. Each sublease had an exclusion of sublandlord’s liability, to limit it to only when they held the reversion. X assigned the reversion, and the new party disappeared, so the rent under the headlease was not being paid. The sublettors were granted relief from forfeiture but were expected to pay the rent arrears under the headlease and take new leases of shops. Sublettors tried to claim damages from X for breach of landlord covenant. Court upheld the exclusion clause as valid.

Significance: Under new law, landlords and tenants can limit their liability under covenants in their agreements.

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39
Q

Does the burden of landlord covenants and benefit of tenant covenants pass to the new landlord for new leases?

A

Yes (s3 LTCA 1995)

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40
Q

Re King is ______________ for new leases

A

Reversed - under new law, benefit and burden pass from date of assignment, whereas Re King backdates to beginning of lease
(see s24 LTCA 1995)

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41
Q

Why (where allowed) would a landlord try to recover rent from an old tenant?

A

If new tenant is not paying

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42
Q

What is a s17 notice?

A

A notice of intention to recover unpaid rent, under s17 LTCA 1995

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43
Q

When must a s17 notice be issued?

A

Within 6 months of charge becoming due

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44
Q

If issuing a s17 notice to an old tenant, then will the rent be the same or greater than they paid?

A

If there was a contractual price variation in place when they were a tenant, then that will apply
If the rent has changed unforeseeably, then the change does not apply (s18 LTCA 1995)

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45
Q

If a former tenant is served a valid s17 notice then they are entitled to ask for an _________ ___________

A

Overriding lease
Auth: s19 LTCA 1995

46
Q

s17 LTCA 1995

A

Governs notices to former tenants for rent recovery/recovery of any fixed charge unpaid by current tenant

47
Q

s18 LTCA 1995

A

Where former tenants can be served with a s17 notice, they are not liable to pay for any unforeseeable variation in the charge

48
Q

s19 LTCA 1995

A

Gives a former tenant the right, after having been served a s17 notice, to an overriding lease

49
Q

What is an overriding lease?

A

Makes the former tenant a sub-landlord of the headlease, and current tenant is a sub-tenant.
Allows former tenant to collect rent directly and/or enact forfeiture

50
Q

Structure for leasehold covenant questions

A

1) Old law or new law
2) Breach of landlord covenant: has burden passed to new landlord? Has benefit passed to new tenant? Remedy?
3) Breach of tenant covenants: has burden passed to new tenant? Has benefit passed to new landlord? Remedy?

51
Q

Which remedies are available to a tenant for a breach of landlord covenant?

A

1) Injunction
2) Damages
3) Specific performance - automatic if breach is statutory repair covenant - s17 LTA 1985)
4) Self-help: withholding rent to pay for repairs

52
Q

Which remedies are available to a landlord for breach of tenant covenants?

A

1) Damages (statutory limitations under s18 LTA 1927 and the Leasehold Property (Repairs) Act 1938)
2) Specific performance (unusual)
3) Injunction
4) Debt action for unpaid rent
5) Commercial Rent Arrears Recovery
6) Forfeiture

53
Q

s17 LTA 1985

A

In case of a landlord’s breach of a repairing covenant, court may order specific performance as a remedy

54
Q

s18 LTA 1927

A

Limits damages to breach of covenant for repair to the amount it affects the value of the reversion; negates the damages if the building would need to be demolished anyways

55
Q

What is forfeiture?

A

A legal right in land of the landlord’s arising expressly from the legal lease

56
Q

s1(2)(e ) LPA 1925

A

Right of entry is a legal right

57
Q

Forfeiture is _________ _________ _____ an equitable lease

A

Automatically implied into
Auth: Shiloh Spinners v Harding 1973

58
Q

Shiloh Spinners v Harding 1973

A

Facts: Leasehold of a mill was assigned, including several covenants around protection of the premises. Tenant demolished part of the premises, breaching covenant. Landlord sought possession, tenant disputed the right of re-entry/forfeiture. Court held that forfeiture was exercisable in equitable leases/assignments.

Significance: Forfeiture rights are automatically implied into equitable leases.

59
Q

What is the process for forfeiture?

A

1) Check for forfeiture clause
2) Check that a breach has taken place
3) Ensure right to forfeit has not been waived
4) Follow formal requirements
5) Forfeit using appropriate method
6) Consider position re: relief

60
Q

What can happen if proper forfeiture process is not followed?

A

The landlord can be liable for trespass

61
Q

How does a landlord waive the right to forfeit?

A

Landlord is aware of breach AND
Landlord (or agent) performs some unequivocal act recognising continued existence of lease (e.g. accepting rent)

62
Q

Central Estates (Belgravia) v Woolgar 1972

A

Facts: Tenant was running a brothel, breached an immorality clause. Landlord knew but the agent didn’t, agent requested next round of rent, thus affirming the lease and waiving the forfeiture right.

Significance: Example of waiver of forfeiture right.

63
Q

London & County v Wilfred Sportsman 1971

A

Facts: Overdue rent on adjoining flats, re-entry rights aros while the reversion was changing hands.

Significance: Assignee landlord can forfeit even if right of re-entry arose prior to assignment.

64
Q

What are the formality requirements for forfeiture due to rent breach?

A

Lease typically excludes the need for a formal demand
No formality requirements if 6 or more months of arrears
Otherwise: s146 LPA 1925 notice

65
Q

s146 LPA 1925

A

Governs right of re-entry/forfeiture and notice requirements

66
Q

What are the requirements of a s146 LPA 1925 notice?

A

Must specify the breach
Must allow a reasonable time after issue of notice to remedy the breach
If seeking compensation, must request it in the notice

67
Q

What is a reasonable time to remedy?

A

For an irremediable breach: 14 days’ notice
For a remediable breach, depends on nature, generally 3-6 months

68
Q

Rugby School v Tannahill 1935

A

Facts: Tenant breached covenant not to use the premises for illegal/immoral purposes (was operating a brothel). Subsequent notice to quit did not require her to remedy the breach or compensate in money, since it was a breach incapable of remedy.

Significance: Negative covenants may not be capable of remedy (judges dissented on whether this was an always or a sometimes). If incapable of remedy, then the notice to quit does not need to request remedy to be valid.

69
Q

Patel v K&J Restaurants 2010

A

Facts: Lease included covenants against use of premises for illegal/immoral purposes, and prohibiting the tenant from sharing occupation. Police informed tenant that one of the flats was being used as a brothel, but tenant took no action. Landlord then tried to forfeit for breach of covenant, but tenant then evicted the relevant sub-tenant. Court ruled that while there had been a breach of covenant, relief from forfeiture could be granted based on proportionality.

Significance: Relief from forfeiture, morality clauses

70
Q

What happens if correct s146 procedure is not followed?

A

Proceedings are invalidated

71
Q

What are the methods of forfeiture?

A

1) Court action for possession (preferred)
2) Peaceable re-entry

72
Q

Billson v Residential Apartments 1992

A

Facts: Tenants breached covenant by altering the property without consent.

Significance: Tenants can still apply for relief from forfeiture after a landlord peaceably re-enters, provided landlord did not have a court order.

73
Q

When is peaceable re-entry not an option?

A

Occupied residential properties
s7 - Protection from Eviction Act 1977

74
Q

s6 Criminal Law Act 1977

A

Using or threatening violence to secure entry to a premises (without lawful authority) is a criminal offence

75
Q

When might a tenant be granted relief from forfeiture due to rent breaches?

A

If it is clear that the tenant can pay, they will be granted relief:
Up until date of a court order (automatic)
Up to 6 months after court order/peaceable re-entry (discretionary)

76
Q

s138/139 County Courts Act 1984

A

Governs court order for peaceable re-entry and relief from peaceable re-entry

77
Q

When might a tenant be granted relief from forfeiture due to non-rent breaches?

A

Can apply up to date of execution of s146 notice (by peaceable re-entry or court order)
No rights after court order
After peaceable re-entry, can apply within a reasonable time

78
Q

What happens to a sub-tenant if their lease ends as a result of forfeiture of a superior lease?

A

They can apply for relief under s146(4) LPA 1925

79
Q

Ropemaker v Newhaven

A

Facts: Lease included covenant against using premises for illegal/immoral purposes, or any purpose apart from a high class restaurant/night-club. Found there was overwhelming evidence of prostitution and the managers of the subleases were aware of it. Head landlord tried to forfeit head lease, but headtenant was granted relief from forfeiture due to the value of the lease, the disproportionate loss forfeiture would cause, the fact that the immoral use had ended and the subtenant would not be renewed, and nothing they did would change the stigma attached to the club. Also head tenant’s sole director was in poor health.

Significance: Court granted relief for breach of immoral use covenant

80
Q

Marylebone v Tesco

A

Facts: Covenant restricted the use of premises to grocers, wine, spirit, and beer merchants. Breach of covenant claimed when Tesco started selling newspapers, magazines, etc. Tried to argue relief from forfeiture, was not granted since it was a clear breach, and had wilfully traded in breach of covenant for over a year. Court also considered that it would be difficult to police the covenant against them in future.

Significance: Relief from forfeiture is a discretionary remedy - court considers many factors.

81
Q

Facts: Claimant assigned a lease to someone, who assigned it further to the defendants. Both assignment vehicles included express covenants from assignee to indemnify assignor. Current tenant breached covenant to repair, landlord recovered damages from original tenant, question was whether you could chain the indemnities. Court said yes.

Significance: Assignee of a lease (under old law) is under an obligation to indemnify the original lessee against breaches of covenant.

A

Moule v Garrett 1872

82
Q

Facts: Concerned a covenant to build a brick wall, and the relevant lease was assigned twice before the wall was built.

Significance: Covenants which touch and concern the land pass to assignees.

A

Spencer’s Case 1583

83
Q

Facts: Lease contained a covenant by the landlord to return a deposit to the tenant at end of the lease. Landlord assigned the reversion, and it was held the covenant was not binding on landlord’s assignee as it did not touch and concern the land.

Significance: Deposits collateral to the lease do not touch and concern the land

A

Hua Chiao Commercial v Chiaphua 1987

84
Q

Makes the collection of rent and related forfeiture/re-entry enforceable
Makes the above enforceable by the owner of the reversion, even if the right arose prior to the transfer

A

s141 LPA 1925

85
Q

Lessor’s covenants with reference to the subject-matter of the lease run with the reversion

A

S142 LPA 1925

86
Q

Facts: Lease included a covenant for the tenant to keep a fire insurance policy in the joint names of landlord and tenant. Question arose regarding who was entitled to the money paid out under the policy, since the tenant had died and landlord had assigned the reversion. Court decided that since (old law) the new landlord has the benefit of covenants from the beginning of the lease, the old landlord was not entitled to the policy money.

Significance: Assignment of a reversion passes the entire benefit (from start of lease) to new landlord, not just from date of assignment.

A

Re King 1963

87
Q

Releases a tenant from both benefit and burden of covenants upon assignment of the lease

A

s5 LTCA 1995

88
Q

If assignments are made in breach of covenant or by operation of law, then the original tenant is not relieved of benefit/burden

A

s11 LTCA 1995

89
Q

Parties are still liable for breach of covenant occurring prior to assignment/release

A

s24 LTCA 1995

90
Q

Allows AGAs

A

s16 LTCA 1995

91
Q

Landlords cannot unreasonably withhold consent to assign/underlet, but may request payment of a reasonable sum

A

s19(1)(A) LTA 1927

92
Q

Benefit and burden of both landlord and tenant covenants pass on assignment

A

s3 LTCA 1995

93
Q

Facts: Landlord assigned the reversion and served a notice releasing themselves from landlord obligations. Tenant discovered physical damage to the building, putting landlord in breach of covenant. Court held that the covenant was personal and not a landlord covenant, even though it touched and concerned the land. As such, original landlord was not released from the burden of the covenant.

Significance: Something can touch and concern land but still be a personal covenant. Under new law, any covenants which are not landlord/tenant covenants do not pass and are still enforceable to original parties.

A

BHP Petroleum v Chesterfield 2000

94
Q

Cannot contract out of LTCA 1995

A

s25 LTCA 1995

95
Q

Facts: X was sublandlord, subletting six shops. Each sublease had an exclusion of sublandlord’s liability, to limit it to only when they held the reversion. X assigned the reversion, and the new party disappeared, so the rent under the headlease was not being paid. The sublettors were granted relief from forfeiture but were expected to pay the rent arrears under the headlease and take new leases of shops. Sublettors tried to claim damages from X for breach of landlord covenant. Court upheld the exclusion clause as valid.

Significance: Under new law, landlords and tenants can limit their liability under covenants in their agreements.

A

London Diocesan v Phithwa 2005

96
Q

Governs notices to former tenants for rent recovery/recovery of any fixed charge unpaid by current tenant

A

s17 LTCA 1995

97
Q

Where former tenants can be served with a s17 notice, they are not liable to pay for any unforeseeable variation in the charge

A

s18 LTCA 1995

98
Q

Gives a former tenant the right, after having been served a s17 notice, to an overriding lease

A

s19 LTCA 1995

99
Q

In case of a landlord’s breach of a repairing covenant, court may order specific performance as a remedy

A

s17 LTA 1985

100
Q

Limits damages to breach of covenant for repair to the amount it affects the value of the reversion; negates the damages if the building would need to be demolished anyways

A

s18 LTA 1927

101
Q

Right of entry is a legal right

A

s1(2)(e ) LPA 1925

102
Q

Facts: Leasehold of a mill was assigned, including several covenants around protection of the premises. Tenant demolished part of the premises, breaching covenant. Landlord sought possession, tenant disputed the right of re-entry/forfeiture. Court held that forfeiture was exercisable in equitable leases/assignments.

Significance: Forfeiture rights are automatically implied into equitable leases.

A

Shiloh Spinners v Harding 1973

103
Q

Facts: Tenant was running a brothel, breached an immorality clause. Landlord knew but the agent didn’t, agent requested next round of rent, thus affirming the lease and waiving the forfeiture right.

Significance: Example of waiver of forfeiture right.

A

Central Estates (Belgravia) v Woolgar 1972

104
Q

Facts: Overdue rent on adjoining flats, re-entry rights aros while the reversion was changing hands.

Significance: Assignee landlord can forfeit even if right of re-entry arose prior to assignment.

A

London & County v Wilfred Sportsman 1971

105
Q

Governs right of re-entry/forfeiture and notice requirements

A

s146 LPA 1925

106
Q

Facts: Tenant breached covenant not to use the premises for illegal/immoral purposes (was operating a brothel). Subsequent notice to quit did not require her to remedy the breach or compensate in money, since it was a breach incapable of remedy.

Significance: Negative covenants may not be capable of remedy (judges dissented on whether this was an always or a sometimes). If incapable of remedy, then the notice to quit does not need to request remedy to be valid.

A

Rugby School v Tannahill 1935

107
Q

Facts: Lease included covenants against use of premises for illegal/immoral purposes, and prohibiting the tenant from sharing occupation. Police informed tenant that one of the flats was being used as a brothel, but tenant took no action. Landlord then tried to forfeit for breach of covenant, but tenant then evicted the relevant sub-tenant. Court ruled that while there had been a breach of covenant, relief from forfeiture could be granted based on proportionality.

Significance: Relief from forfeiture, morality clauses

A

Patel v K&J Restaurants 2010

108
Q

Facts: Tenants breached covenant by altering the property without consent.

Significance: Tenants can still apply for relief from forfeiture after a landlord peaceably re-enters, provided landlord did not have a court order.

A

Billson v Residential Apartments 1992

109
Q

Using or threatening violence to secure entry to a premises (without lawful authority) is a criminal offence

A

s6 Criminal Law Act 1977

110
Q

Governs court order for peaceable re-entry and relief from peaceable re-entry

A

s138/139 County Courts Act 1984

111
Q

Facts: Lease included covenant against using premises for illegal/immoral purposes, or any purpose apart from a high class restaurant/night-club. Found there was overwhelming evidence of prostitution and the managers of the subleases were aware of it. Head landlord tried to forfeit head lease, but headtenant was granted relief from forfeiture due to the value of the lease, the disproportionate loss forfeiture would cause, the fact that the immoral use had ended and the subtenant would not be renewed, and nothing they did would change the stigma attached to the club. Also head tenant’s sole director was in poor health.

Significance: Court granted relief for breach of immoral use covenant

A

Ropemaker v Newhaven

112
Q

Facts: Covenant restricted the use of premises to grocers, wine, spirit, and beer merchants. Breach of covenant claimed when Tesco started selling newspapers, magazines, etc. Tried to argue relief from forfeiture, was not granted since it was a clear breach, and had wilfully traded in breach of covenant for over a year. Court also considered that it would be difficult to police the covenant against them in future.

Significance: Relief from forfeiture is a discretionary remedy - court considers many factors.

A

Marylebone v Tesco

Land Law (9 decks)

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