Week 10 - Leasehold Covenants

Question 1

Leasehold covenants must always be included in the lease document. True or False?

Answer 1

False. Some forms of covenant are implied, where they are not expressly stated, for example, landlords are required to allow quiet enjoyment of the property, and not to change their promise (derogate from the grant). Tenant implied covenants include the requirement to pay rent and any taxes due, and to use the premises as a tenant (in a tenant-like manner).

Question 2

Identify, and briefly explain, one common landlord covenant.

Answer 2

Landlord: Not to derogate from the grant – not to go back on the ‘promise’ made in granting the lease (use of a common area for example).
To allow the tenant ‘quiet enjoyment’ – not to unreasonably interfere with the tenant in their rights to exclusive possession and use.

Question 3

Identify, and briefly explain, one common tenant covenant.

Answer 3

To pay the rent, and any other sums due (taxes for
example).
Covenants in relation to alterations – not to carry out
alterations or make changes to the property.

Question 4

Covenants can take two forms,

absolute or qualified. True or false.

Answer 4

True.

Question 5

Give a brief explanation of absolute covenants.

Answer 5

Absolute covenants forbid the action completely.

Question 6

Give a brief explanation of qualified covenants.

Answer 6

Qualified covenants may allow the action under certain conditions – such as with permission from the landlord.

Question 7

‘Alienation’ (in relation to leasehold covenants) means one tenant turning other tenants against the building’s legal owner. True or false?

Answer 7

False. Alienation is the name for acquisition of third party rights to a lease and includes assigning or underletting a lease.

Question 8

Briefly explain why a landlord considering an alienation request might seek information about the proposed new tenants financial standing?

Answer 8

To ensure that the new tenant can fulfil the lease if the

assignment goes ahead. To satisfy themselves that the new tenant is a legitimate business.

Question 9

Permitted use must always be stated as a Use Class drawn from the Town and Country Planning (Use Classes)
Order 1987. True or false?

Answer 9

False. Some user restrictions are specific – for example

shopping centre lets.

Question 10

Name the statutory provision that governs consent/withholding of consent.

Answer 10

s.19 of the Landlord and Tenant Act 1927. S.19(1) & 1(a)
governs alienation, s.19(2) governs alteration, s.19(3)
governs qualified users. The latter does not impose the duty not to withhold.

Question 11

International Drilling Fluids v. Louisville Investments (Uxbridge) Ltd (1986) is a leading authority for derogation of a grant. True or false?

Answer 11

False. It is a leading authority for unreasonable withholding of consent. Where an ‘on paper’ detriment would not actually arise, refusal of consent is not reasonable. The case gave rise to seven ‘guidelines’ that can be used to test what ‘reasonable’ means.

Question 12

Name one ‘valid’ reason that a landlord may withhold consent to assign a lease.

Answer 12

Principally, for ‘good estate management’. Note that where an assignment would also result in a change of use, the change can also create a ‘valid’ reason to withhold consent. The new use needs only to be ‘unacceptable’ to the landlord, it does not need to be expressly prohibited.

Question 13

What was held in the case of Dennis and others v. Davies (2008)?

Answer 13

The use of the word ‘may’ in the ‘consent’ indicated that actual consent was being considered, but had not yet been granted.

Question 14

What was held in the case of Alchemy Estates Ltd. v. Astor (2009)?

Answer 14

Consent expressed with reasonable conditions is valid consent.

Question 15

Identify all three covenants governing alterations.

Answer 15

Absolute covenant
Full qualified covenant
Partial qualified covenant

Question 16

Explain what is meant by absolute covenant in relation to alterations.

Answer 16

Prohibits all alterations. Does not allow the tenant to make any physical changes to the building including, for example, painting and decorating unless required under a covenant to repair – but then only to restore the property, not to change it.

Question 17

Explain what is meant by full qualified covenant in relation to alterations.

Answer 17

Permitting all changes, with consent. The consent cannot be unreasonably withheld. This form will allow the tenant to ask for permission to make any changes they wish, internal or external.

Question 18

Explain what is meant by partial qualified covenant in relation to alterations.

Answer 18

Permitting some changes (with consent) but prohibiting others. This is common where the tenant leases only part of a building and is allowed to make alterations to the demised premises, but not to the retained premises.

Question 19

The tenant holds the ‘burden of proof’ when demonstrating unreasonable withholding of consent. True or false?

Answer 19

False. The provisions of the Landlord and Tenant Act 1988 puts the onus on the landlord to prove they have not been unreasonable.