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Covenants Notes

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Covenants Notes Revision

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Type of clause?

What does it do?

User Covenant

Restricts the tenant's use of the premises Planning Legislation - tenant may not be able to carry out any building or other operations. Cannot make a material change in use of premises without obtaining planning permission Covenants affecting a superior title - restrictive covenants affecting the landlord's reversionary title which bind tenant Common law restraints - law of nuisance may prevent tenant from using premises in such a way as to cause disturbance to a neighbour

Absolute

Gives landlord absolute

Landlord's Concerns

Maintain value of interest in premises


Maintain rental value of premises


Avoid damaging reputation of premises by immoral or undesirable uses


Maintain value of adjoining premises owned by landlord


Avoid tenant competing with other premises of landlord in vicinity


Maintain a good mix of different retail uses in a shopping precinct owned by landlord


Perform balancing act between control of the tenant and good estate management, and maximisation of rental values Ensure lease clearly states that any reference to the UCO is intended to refer to the Order as enacted at the time the lease was granted

Tenant's Concerns

SC/SCPC/Statute?

Rental values and rent review reflecting restrictive use


Narrower covenant avoided as limits ability to dispose of premises at some stage in future


Have regard to own future use of premises


Not too wide that will allow landlord to increase rental value of tenant's interest at review


Ought to resist a positive covenant

Code cl.8 - landlords' control over alterations and changes of use should not be more restrictive than necessary…

If narrowly

Can define use by reference to the Town and Country Planning (Use Classes) Order 1987 (UCO)

Remedy for Breach Landlord can claim damages for tenant breach of positive covenant Claim injunction for breach of negative covenant

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