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LPC Law Notes Property Law and Practice Notes

The Contents Of A Lease Notes

Updated The Contents Of A Lease Notes

Property Law and Practice Notes

Property Law and Practice

Approximately 490 pages

A collection of the best LPC PLP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of PLP notes available in the UK this year. This collection of notes is fully updated for recent exams, a...

The following is a more accessible plain text extract of the PDF sample above, taken from our Property Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

For ANY TYPE OF RESTRICTION IN A LEASE, distinguish between absolute, qualified and fully qualified covenants:

  • Absolute – “the Tenant shall not [X]”

  • Qualified – “the Tenant shall not [X] without Landlord’s consent

  • Fully Qualified – “the Tenant shall not [X] without Landlord’s consent, such consent not to be unreasonably withheld

The only way to permanently circumvent an absolute prohibition is for the parties to enter into a deed of variation altering the original covenant in the lease.

1) Alienation

Alienation means subletting or assigning the property. It refers to all forms of disposal.

Restrictions on alienation

In the absence of any restrictions in the lease, the tenant is free to do as it pleases. However, a LL of a commercial lease will normally want to control who is in occupation of the property, and will require the tenant to give covenants relating to assignments and subletting.

Statutory intervention (on all forms of alienation)

  • S19(1)(a) Landlord and Tenant Act 1927 – applies to all types of leases on all forms of alienation:

    • Has no effect on absolute covenants prohibiting alienation.

    • It converts a qualified covenants into a fully qualified covenant.

    • Note, that a LL may incur fees of a surveyor instructed to gather financial information about a proposed assignee or sub-tenant and could reasonably withhold consent if payment of such fees isn't made.

    • LL’s reasonableness in withholding consent:

      • International Drilling – a LL cannot refuse consent on grounds which have nothing to do with the LL/T relationship.

      • Moss Bros – LL’s of (e.g.) shopping centres will usually have a prescribed ‘tenant mix’ policy so it can control certain types of retail tenant – e.g. clothing shops/food outlets. A LL can refuse a proposed assignee’s business if it doesn't fit with the tenant-mix policy.

  • S.1 Landlord and Tenant Act 1988 – applies to all types of leases on all forms of alienation:

    • This provides a further layer of protection for tenants when a tenant applies to a LL in writing for consent to assign/sublet and the LL must not unreasonably withhold his consent.

    • The LL must respond within a reasonable time (either to give consent or a written notice of refusal).

    • If the LL doesn't comply, he may be liable for tortious damages for breach of statutory duty.

    • Dong Bang Minerva28 days from the receipt of the notice to alienate was considered reasonable time.

  • It is very IMPORTANT that LL’s ensure the terms of their consent are incorporated into a legal document (a licence) so that the conditions on which the consent is given can be outlined.

  • It is also IMPORTANT to obtain the assignee/sub-tenant’s direct covenant with the LL that it will comply with the tenant’s covenants in the lease to be sold/granted to it. This creates privity of contract between the LL and the assignee/sub-tenant should the covenant every be breached.

    • Aubergine – consent in principle not enough, it needs to be via a formal licence.

  • In addition to a T obtained the LL’s consent, it may need to ensure (where applicable) that the lender’s consent is obtained. Often, this is required under the lease terms.

  • Even if it isn't required, the dealing may require an application to the Land Registry to amend the freehold/existing leasehold titles or create a new leasehold title. These application DEFINITELY cannot be made without the lender’s consent.

    • In unregistered land the lender will also require consent as it will have custody of the title documents needed for any relevant applications.

1a) Assignment

Old and New Leases

  • Old Leasespre-1996 – maintained the concept of original tenant liability.

    • This meant that if T assigned/sub-leased the property and the assignee/sub-tenant breached a covenant, the original tenant would remain liable to the LL as only they have privity of contract.

  • New Leasespost-1996 – changes under the Landlord and Tenant (Covenants) Act 1995 (LT(C)A 1995):

    • S.5 LT(C)A 1995 abolished original tenant liability so for new leases, a tenant is automatically realised from covenants when it lawfully assigns the lease (i.e. only liable when the lease vested in it).

    • NOTE: original tenant liability still exists for leases created pre-1996.

Statutory intervention

  • S.19(1A) LTA 1927 – only applies to new leases (unlike 19(1)(a) which applies all leases) and to assignment only.

    • It allows the lease to specify circumstances where a LL may withhold consent to an assignment without being subject to the reasonableness test.

    • NOTE: this doesn't apply to sub-letting.

  • S.16 LT(C)A 1995authorised guarantee agreements (AGAs) – applies to assignment provisions in new leases.

    • One of the conditions attached to the LL’s consent for an assignment under s.19(1A) is often that the outgoing tenant enters into an AGA promising the perform the incoming assignee’s obligations under the lease, if the assignee defaults.

    • This only guarantees the IMMEDIATE ASSIGNEE – in the event of future assigning, another AGA is required.

  • Overriding leases: s.17 and s.19 LT(C)A 1995 (applies to all leases where tenants liable under original tenant liability or an AGA are facing attempts by the LL to recover payment following a breach by an assignee):

    • s.17 – a LL must serve 6 months notice on a former tenant of the payment becoming due.

    • **s.19 – a former tenant who has made a payment under s.17 may require the LL to grant it an ‘overriding lease’ by which the former tenant becomes the immediate LL of the defaulting tenant and the immediate tenant of the LL who is serving the notice.

      • This has the effect of providing the former T some control in that is regains possession of the premises from the assignee to prevent the default from continuing.

      • To obtain an overriding lease, a T must demand it in writing within 12 months of making a s.17 payment.

2) USE

An express restrictive covenant is needed from the T to restrict the use of the premises. Otherwise,...

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