Leases Leasehold Covenents - GDL Land Law

Terminology

• covenant: promise contained in a deed.

• covenantor: person making the promise (bears the burden).

• covenantee: person to whom promise made (takes benefit).

• assignment: transfer of whole of residue of existing lease to 3^rd party.

• sub-letting: grant of new lease to 3^rd party by someone already tenant of same property.

• reversion: landlord’s interest in property – usually freehold (but sub-letting: may be leasehold).

Express Obligations of a Landlord and Tenant under a Lease

- Minimum requirements for valid demise (lease):

• 1. formalities complied with.

• 2. no uncertainty over main terms: identity of landlord + tenant; property to be demised; term; commencement + expiry dates; consideration.

- No other express provisions necessary, but usually included for certainty.

• implied obligations: will be imposed if parties fail to make provisions (+ some implied obligations: override express provisions).

Landlord’s Express Covenants

- Quiet enjoyment: not to interfere with tenant’s possession or enjoyment of property during lease.

• covers: acts of landlord + anyone claiming under him.

• does not cover: acts of someone claiming by title paramount (e.g. through superior landlord).

• breach dep. on facts:

  • Owen v Gadd [1956]: erection of scaffolding hindering access breach.

  • Kenny v Preen [1963]: persistent intimidation of tenant to induce him to leave breach.

  • Southwark LBC v Mills [2001]: failure to soundproof flat NOT breach: t. must take property as he finds it.

• unlawful eviction: statutory protection.

  • Protection from Eviction Act 1977: harassment/unlawful eviction of residential tenants criminal.

  • s27 + s28 Housing Act 1988: statutory damages for tenant.

- Insure: reciprocal covenant where lease allows landlord to recover insurance premiums.

- Repair: usual where only part of building let + tenant covenants to pay proportion of costs (usually in service charge).

- Enforce covenants in other leases of same building: common where building let in multiple units.

• rationale: no privity of contract between individual tenants landlord’s covenant = guarantee that no tenant will be allowed to remain in breach of covenant which might affect other tenants (e.g. being in arrears of service charge).

• usually required by mortgagees: refuse to accept residential leases without this protection as security.

Tenant’s Express Covenants

- To pay rent.

• scope: modern leases – inc. other regular monetary payments (e.g. insurance premiums, service charge) landlord can use rent recovery remedies.

• advance vs. arrears:

  • no contrary agreement: payment required in arrears.

  • commercial leases: in advance in practice – on ‘usual quarter days’ (25 Mar, 24 Jun, 29 Sep, 25 Dec).

• rent payable even If premises cannot be used (e.g. destroyed by fire).

  • but exceptional cases: doctrine of frustration might apply.

    • National Carriers Ltd v Panalpina (Northern) Ltd [1981]: 10 year warehouse lease; only means of access closed for 20 months HoL: not frustrated, but maybe if longer frustration.

    • if land physically destroyed: e.g. falls into sea.

• subject to rent review clause (no implied right, must be express provision): rent can be increased (e.g. pre-determined amounts, or periodically to market rate).

• tenancy deposit schemes: Housing Act 2004 – landlord must use 1 of 3 approved schemes.

- Repair: usually express clause stipulating who has obligation – longer leases: more likely tenant.

• subject to s11 Landlord and Tenant Act 1985: short residential leases – repairing obligations on landlord (s11(4): overrides any express covenant).

• ambit: keep premises in condition in which they would be kept by reasonably minded owner.

  • factors to take into account:

    • 1. character + type of premises at beginning of lease: not neighbourhood.

    • 2. age of premises.

    • 3. express words of covenant.

  • limited: renewal NOT required by repairing covenant – Lurcott v Wakely [1911]:

    • repair: restoration by renewal or replacement of subsidiary parts;

    • renewal: reconstruction from entirety (whole/substantially whole property).

  • repair or renewal: question of degree.

    • Lurcott v Wakely: front external wall of 200-y.o. house needed to be rebuilt tenant liable under repairing covenant.

    • Lister v Lane [1883]: old house on timber platform over boggy soil sank + demolished CoA: tenant not liable under repairing obligation (would be giving back different thing to what t. took).

    • Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1980]: repair entailed insertion of expansion joints omitted from original design tenant liable: did not change character of building + cost trivial vs. value of building.

    • Brew Brothers Ltd v Snax (Ross) Ltd [1970]: necessary underpinning works cost 8k; whole building valued at 7.5-9k tenant not liable under full repairing covenant.

  • repair: interpreted restrictively by courts.

    • Quick v Taff Ely BC [1986]: condensation to property but no damage to fabric of building no disrepair, no liability under repairing covenant.

• fair wear + tear: tenant may be expressly exempted from liability.

  • but: still liable for further consequential damage – must make repairs to prevent.

    • Regis Property Co Ltd v Dudley [1959]: damages skylight (fair wear + tear) let in rainwater t. liable for consequential water damage.

- Alienation: covenants restricting assignment + sub-letting.

• assignment vs. sub-letting:

  • assignment: t. parts with whole term of years assignee takes over lease + assignor drops out of picture (but poss. residual liability on personal covenants).

  • sub-letting: creation of sub-lease of all or part of demised property new estate with original tenant as intermediate landlord.

    • tenant who sub-lets must retain reversion (even if only nominal: 1 day): purported sub-let of whole of residue operates as assignment.

• no implied restriction: t. can assign/sub-let unless expressly restricted.

  • absolute covenant: t. completely prohibited from assigning or sub-letting.

  • express covenant construed in tenant’s favour:

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