Landlord's Consent For Alienation, Use And Alterations Notes

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Landlord's consent 1) What action is the tenant seeking permission / a licence for?

E.g. Change of use, assignment, subletting, alterations

2) Is this action covered in a clause of the lease?
(1st L - Lease)

If there is no (e.g. change of use clause) then the tenant is free to use the property has he sees fit

Yes 3) What type of covenant is it?

Absolute covenant - "Not to [underlet]"

Qualified covenant - "Not to [remove walls] without the landlord's consent"

Fully qualified covenant - "Not to
[change use] without the landlord's consent, not to be unreasonably withheld"

4) What is the effect of statute on this type of covenant?
(2nd L - Law)

Assignment

1) s.19(1)(a) Landlord and Tenant Act 1927

What types of lease and alienation does s.19(1)(a) LTA 1927 apply to?

This statutory provision applies to all types of lease and to assignment (all forms of alienation)

What affect does s.19(1) (a) LTA 1927 have on alienation covenants?

Absolute covenant - "The Tenant shall not [assign]"

s.19(1)(a) LTA 1927 has no statutory impact on this covenant

Qualified covenant - "The Tenant shall not [assign]" without the Landlord's consent

a) A qualified covenant is converted into a fully qualified covenant - s.19(1)(a) LTA 1927

b) The landlord is allowed to require, from the tenant, as a condition of giving his consent: - s.19(1)(a) LTA 1927 1) Payment of a reasonable sum of legal and other expenses incurred in connection with the granting of its consent (e.g. a surveyor) 2) The payment of a 'fine' or 'premium' for giving its consent to the alienation of the lease however only if the lease specifically allows the landlord to do so - s.144 LPA 1925

Fully qualified covenant - "The Tenant shall not [assign]" without the Landlord's consent, and such consent is not to be unreasonably withheld"

When is the landlord 'reasonably' withholding his consent under s19(1) (a) LTA 1927 ?

s.19(1)(a) LTA 1927 has no statutory impact on this covenant

International Drilling Fluids Ltd v Louisville Investments

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A landlord is only able to refuse his consent on grounds which are to do with the landlord and tenant relationship

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E.g. a landlord couldn't refuse consent because he did not like the proposed assignee or he supported a different football team

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E.g. A landlord could refuse if the proposed assignee's ability to pay the rent was in question or he had bad references

Moss Bros Group v CSC Properties Ltd

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A landlord was reasonable in refusing to consent as the proposed assignee's business did not fit with the landlord's tenant-mix policy (e.g. 50% ratio of clothes shops)

Ashworth Frazer Ltd v Gloucester City Council

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A landlord was reasonable in refusing to consent as he believed the proposed assignee would use the property for a purpose which would give rise to a breach of covenant

2) s.1 LTA 1988

What types of lease and alienation does s.1 LTA 1988 apply to?

This statutory provision applies to all types of lease and to assignment (all forms of alienation) which have converted fully qualified covenants or fully qualified covenants against alienation

What affect does s.1 LTA 1988 have on alienation covenants?

Absolute covenant - "The Tenant shall not [assign]"

s.1 LTA 1988 has no statutory impact on this covenant

Qualified covenant - "The Tenant shall not [assign]" without the Landlord's consent

a) Where a tenant applies to the landlord in writing for consent to assign / sublet, the landlord must provide a response within a reasonable time.- s.1 LTA 1988

b) The burden is on the landlord to prove reasonable refusal with written reasons provided s.1(6) LTA 1988 and if the landlord fails to comply with the LTA the landlord will be liable for tortuous damages for breach of statutory duty.

Fully qualified covenant - "The Tenant shall not [assign]" without the Landlord's consent, and such consent is not to be unreasonably withheld"

a) Where a tenant applies to the landlord in writing for consent to assign / sublet, the landlord must provide a response within a reasonable time.- s.1 LTA 1988

b) The burden is on the landlord to prove reasonable refusal with written reasons provided s.1(6) LTA 1988 and if the landlord fails to comply with the LTA the landlord will be liable for tortuous damages for breach of statutory duty.

3) s.19(1A) LTA 1927

What is a 'reasonable' amount of time to respond to the tenant under s.1 LTA 1988

Dong Bang Minerva v Davina

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A reasonable time will depend on the facts but 28 days from the receipt of the application and references is often reasonable

What types of lease and alienation does s.19(1A) LTA 1927 apply to?

This statutory provision applies to new commercial leases (leases granted before 1 January 1996) and to assignment

What affect does s.19(1A) LTA 1927 have on alienation covenants?

Where consent is subject to the landlord reasonably granting consent, it allows a lease to:

a) Specify 'circumstances' which, as a result of being listed, are automatically reasonable in withholding consent to assign.

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E.g. If assignee is unable to comply with future covenants

b) Specify 'conditions' which, as a result of being listed, are automatically reasonable for the landlord to impose as a condition for granting consent

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E.g. Requiring a third party guarantee to be given

4) s.16 LT (Covenants) Act 1995

What types of lease and alienation does s.16 LT (Covenants) Act 1995 apply to?

This statutory provision applies all types of lease and assignment (all forms of alienation) where there are circumstances / conditions attached which determine whether a landlord's consent is reasonably refused

What affect does s.16 LT (Covenants) Act 1995 have on alienation covenants?

a) It allows for one of the conditions under s.19(1A) LTA 1927 to be that the outgoing tenant enters into an AGA (Authorised Guarantee Agreement) promising to perform the incoming assignee's obligations under the lease if the incoming assignee defaults

b) This only applies to this particular assignment, so if the property is re-assigned a further AGA will be required from the new assignee.

5) s.17 and 19 LT (Covenants) Act 1995

What types of lease and alienation does s.16 LT (Covenants) Act 1995 apply to?

This statutory provision applies all types of lease and alienation (all forms of alienation) where the former tenant (assignor) is still liable due to it being and old lease or due liability under an AGA)

What affect does s.17 and 19 LT (Covenants) Act 1995 have on alienation covenants?

a) If a landlord wants to recover payment of rent or service charges from a former tenant he must serve a 'default notice' on a former tenant within 6 months of the payment becoming due in order to recover it

b) Once the former tenant has made this payment, he may require the landlord to grant him and 'overriding lease' within 12 months of the payment whereby the former tenant becomes the immediate landlord of the defaulting tenant and the immediate tenant of the landlord who serviced the 'default notice'.

c) The overriding lease gives the former tenant some control such as regaining possession of the premises to prevent the default from continuing.

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