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Land Law: Leases 2, Covenants in Leases Terminology---landlord & tenant
?????Covenant: a promise generally contained in a deed and enforceable without the need for consideration.
?????Covenantor: the person making the promise, i.e. the person bearing the burden of the covenant.
?????Covenantee: the person to whom the promise is made, i.e. the person taking the benefit of the covenant.
?????Assignment: the transfer or passing on of the whole of the residue of the existing lease to a third party.
?????Sub-letting: the grant of a new lease to a 3rd party by someone who is already a tenant of the same property.
?????Reversion; the landlord's interest in the property. Usually the freehold, but the cause of a sub-letting, the reversion may be leasehold. Whose covenant? What type?
?????Tenant's express covenants
?????Landlord's express covenants
?????Tenant's implied covenants
?????Landlord's implied covenants Express Obligations of a landlord and tenant under a lease
? ?? ? A demise (lease) will be valid provided: o (a): it complies with the necessary formalities. o (b): this is no uncertainty as to the identity of the landlord, tenant, the property to be demised, the term of the demise, the commencement and expiration dates and any consideration.
? ?? ? The inclusion of any other provision is not strictly necessary, however in most circumstances the will parties want as much certainty as possible from the outset re their obligations---so most drafted lease will include some/all of the following express covenants.
? ?? ? If not express, courts can imply certain obligations into a lease to gill the gaps. Some implied obligations will take precedence over express obligations, making the latter ineffective.
Tenant's express covenants
? ?? ? Basic rule: a tenant may do all things that an owner of an estate can do unless the lease prohibits such actions. For this reason, leases are drafted in a prohibitory or negative manner setting out what the tenant cannot do. Thus, if there is no mention of an action in a lease, a tenant is free to do it. To pay rent
1 ? ?? ? Scope of obligation---can include service charge & insurance premiums: in modern leases it is customary to stipulate that, in addition to the agreed rent, certain other regular monetary payments (eg insurance premiums and service charges) are also treated as rent. -hence the landlord can use the particular remedies for rent recovery available to recover those payments too.
? ?? ? In advance or in arrears? In the absence of a contrary agreement, a written covenant to pay rent is construed as requiring payment in arrears.
??? ?In practice, most commercial leases require the rent to be payable quarterly in advance on the 'usual quarter days' (25 March, 24 June, 29 Sep, 25 Dec).
? ?? ? Frustration: rent continues to be payable even though the premises cannot be used, eg if destroyed by fire.
??? ?In exceptional circumstances, the doctrine of frustration might apply to leases, at lease in principle (National Carriers v Panalpina (Northern) (1981)), where HL held that a 10-yr warehouse lease would not be frustrated by the closure of the only means of access for some 20 months. The result might have been different if access was closed off for a number of yrs.
??? ?Frustration could also possibly occur if the land is physically destroyed, eg if it falls into the sea.
? ?? ? Rent review
??? ?There is no implied right of the landlord to call for a review of rent during the term of the lease---thus there must be express provision providing for the rent to be increased (for eg by pre-determined amounts on specified dates; or, more usual in commercial leases, by providing for the rent to be increased periodically to an open market rent). Repair clauses:
?????Normally an express clause in lease stipulating who has obligation to repair certain parts of the premises. The longer the lease ? the more repairing obligations likely to be on the tenant.
?????A number of statutory provisions re repair: o Eg, for short residential leases, Landlord & Tenant Act 1985, s11: which imposes certain repairing obligations on a landlord. S11(4): a covenant by the lessee for repair of the premises is of no effect, in so far as it relates to the matters mention in s11. So s11(4)-the statute overrides express provisions with regard to these provisions. o Except for 'fair wear & Tear'.
?????Ambit of repairing covenant o Under a general repairing covenant, the tenant must keep the premises in a condition in which they would be kept by a 'reasonably minded owner', having regard to (Proudfoot v Hart, 1890, CA):
2 (a) the character and type of premises at the beginning of the lease---the obligation is neither diminished nor increased by a change in the character of the neighbour;
? (b) the age of the premises;
? (c) the express words of the covenant.
? However, a covenantor to repair does not require renewal of the whole or substantially the whole of the property---is a question of degree whether the work involves repair or renewal
?????Distinction between repair and renewal?
o It's a question of degree whether repair or renewal. o Under a repair covenant, you may have to do some renewal if that's the only practical means of repair. o Stent v Monmouth Council: a defective door, due to a design defect; was leaking, causing damage; HELD: the only sensible way to repair it (there was a repairing covenant), was to replace it---so had to replace, even though was under a repair clause (so this was held to be repair, not renewal o But will be 'renewal' if asked to replace the whole or substantially the whole of the property o Lurcott v Wakeley (1911): o The front external wall of a 200-yr-old house had to be taken down to ground floor level and rebuilt. The defects were attributable to old age. o The tenant as held liable under a repairing covenant-o under a repairing covenant, he had to replace the whole front external wall of the property (held to be repair, not renewal). o 'Repair is restoration by renewal or replacement of subsidiary parts. Renewal, as distinguished from repair, is reconstruction of the entirety'. o Lister v Lane (1883): o A house was built on a timber platform resting on boggy soil; was at least 100 yrs old; timber rotted and the platform sank causing one of the walls to bulge so badly that the house was condemned and had to be demolished. The tenant had covenanted that he would 'well, sufficiently and substantially repair, uphold, sustain, maintain, amend and keep' the premises. o CA held: the tenant was not liable: 'a covenant to repair . . . is not a covenant to give back a different thing from that which the tenant took when he entered into the covenant'. o Ravenseft Properties v Davstone (Holdings) (1980): o Concrete cladding of a new building fell off; was necessary to insert expansion joints omitted from the original design.3
o HELD: this did not change the character of the building so as to take the obligation out of the covenant to repair; the cost of the joints formed a trivial part only of the value of the whole building. o CF Brew Brothers v Snax (1970): o A 14-yr lease of a fish and chop shop contained a full repairing covenant by the tenant. The flank wall cracked and tilted over next door's garage forecourt. The wall's condition was attributed to seepage of water through defective drains covered by the repairing covenant. Underpinning works were necessary costing PS8k. The building as a whole as valued between PS7.5k-PS9.5k. HELD: the necessary work not did not fall within the scope of the repairing covenant---
question of degree in each case. o Courts have interpreted 'repair' restrictively---Quick v Taff Ely (1986): if there is condensation in the property but no actual damage to the fabric of the building, there is no disrepair, so no liability under a repairing covenant. Also HELD; this restrictive interpretation of landlord's repairing obligation did not breach Art 8 ECHR. o Also depends on cost/value of property whether repair or renewal o Sneaky clauses---Proudfoot v Hart (1980): o Under a covenant to 'keep the property' in repair, that includes the obligation to put the property into repair in the first place. o So even if you take the property in disrepair already ( =
deterioration from an earlier better condition), an obligation to 'keep the property' in repair will includes an obligation to put the property back into repair in the first place, have to restore to earlier better condition. o Standard of repair = standard of a 'reasonably minded' tenant, having regard to the age and locality of the property. o In Proudfoot---the smarter the area, the higher the standard of repair. o 'Fair wear and Tear'/Consequential damage o There may be an express clause exempting the tenant from liability for fair wear and tear. However, even if there is, the tenant must nevertheless do such repairs as may be required to prevent further consequential damage flowing originally from fair wear and tear. o Regis Property v Dudley, 1959: even if the clause exempts you from 'fair, wear and tear', that doesn't prevent you from having to stop further consequential damage arising from 'fair, wear and tear', caused by rain come through a damaged skylight in this case. Covenant not to make alterations 4
?????It is ordinary to impose a restriction on all external or 'structural' alterations.
?????Internal non-structural alterations are usually permitted, but are qualified by a requirement for the landlord's consent.
?????A proviso that such consent is not to be unreasonably withheld in the case of improvements will be automatically implied into a qualified covenant (LTA 1927, s19(2)).
?????s19(2) LTA 1927: where there is a covenant against making improvements without landlord's consent (slightly different point), the landlord's consent cannot be unreasonably refused. Use
?????Customary restrictions o In the absence of any restriction in the lease, the tenant can use the demised property for any lawful purpose. However, it is customary for the landlord to restrict the use to, eg, residential or office or light industrial use or whatever is appropriate to the nature of the premises. o Egs: o 'Not to use the premises otherwise than as a single private dwelling house'. o 'Not to use the premises for any illegal or immoral purposes' o 'Not to use the premises except for the purposes of a retail florists and greengrocers and not for any other purposes except with the lessor's written consent'. o Joint London Holdings v Mount Cook Land (2006): a covenant not to use the property as a victualler; the tenant wanted to open a food takeaway place; but court HELD: you can't serve food, 'victualler' includes selling drink and food.
?????Qualified covenant: o If there is a qualified covenant against change of use (requirement for landlord's consent), there is no provision that the landlord has to act 'reasonably' in refusing consent. o However, cannot charge a fine for consent-- S19(3): landlord cannot take a lump sum of money as a condition for consenting to a change of use of the property. Alienation covenant: not to assign or sublet
?????Distinction between assignment and sub-letting: o Assignment = tenant sells the whole of the tenant's terms of years to someone else. The assignor drops out of the picture (subject to a possible residual liability for personal covenants) and the assignee takes over the lease. 5
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