7. Landlord's Remedies and Lease Termination Flashcards
(156 cards)
1
Q
Who can the landlord look to when there has been a breach of the tenant’s covenants for a remedy?
A
- current tenant
- guarantor (if available)
- former tenants (and their guarantors)
2
Q
What is the liability of the original tenant in old leases?
A
The original tenant remains liable for the covenants under the lease for the full term, even after assigning it to another tenant.
3
Q
In addition to the current tenant, who else can the landlord sue in privity of contract?
A
- the original tenant; AND
*intervening tenants if they provided a direct covenant on the assignment.
4
Q
What is the liability of the original tenant in new leases?
A
the original tenant is released from liability
5
Q
What is an old lease?
A
Leases granted before 1 January 1996
6
Q
What is a new lease?
A
Leases granted on or after 1 January 1996
7
Q
How can a landlord compensate for the lack of control over original tenants in new leases?
A
Landlord is allowed to ask for certain circumstances and conditions that must be met to give their consent to an assignment - e.g. AGA
8
Q
What is an authorised guarantee agreement (AGA)?
A
a promise by the outgoing tenant that it will be liable for any breaches of the covenants in the lease by the incoming assignee.
9
Q
How long does an AGA last for?
A
only lasts for the duration of that assignee’s ownership of the lease
10
Q
For non-payment of rent, what is the first thing the landlord has to check?
A
- A covenant to pay rent in the lease
- That the tenant has failed to pay by the due date
11
Q
What are the four remedies for non-payment of rent?
A
- Action in debt
- Commercial Rent Arrears Recovery (CRAR)
- Pursue guarantors and/or rent deposit
- Forfeiture
12
Q
What is an action in debt?
A
- Non-payment of rent is a debt
- Landlord can recover debt through court
13
Q
What is the limitation period for an action in debt for rent recovery?
A
6 years
14
Q
What is the effect of a CRAR?
A
Permits the landlord to enter the property and seize and sell goods belonging to the current tenant
15
Q
What does the remedy of CRAR apply to ?
A
commercial premises only
16
Q
What are the procedural rules for CRAR that the landlord must follow?
A
- 7 days’ notice
- Use an enforcement agency
- Not allowed to remove certain goods - up to £1350 + necessary for tenant’s business.
- Can only take items owned by tenant
17
Q
If the tenant does not pay the arrears after being notified of the landlord’s intention to use a CRAR, what can the landlord do?
A
Can sell the goods, provided:
* this is done at a public auction
*tenant is given at least 7 clear days’ notice of the sale
18
Q
What is CRAR available for and when does it become available?
A
- In relation to rent paid for possession and use of premises (not arrears of other payments)
- At least 7 days’ rent must be outstanding
19
Q
Is arrears of insurance rent recoverable using CRAR?
A
No - even if reserved as rent in the lease
20
Q
When will a landlord require a guarantor?
A
If they have reservations about the tenant’s ability to pay maintain rental payments without financial difficulty
21
Q
What is the effect of requiring a guarantor?
A
A guarantor of a current tenant may be sued in the same way as the current tenant
22
Q
How can a guarantor be obliged to pay outstanding rent if the tenant does not pay?
A
Guarantee in writing obliges guarantor to:
* pay outstanding rent and payments
* to remedy and indemnify the landlord against loss caused by breach
23
Q
How does the liability of a guarantor differ between old and new leases?
A
Old Lease:
* extends through the duration of the lease
* regardless of assignment
New Lease:
* guarantor automatically released on assignment by guaranteed tenant
* may be liable if AGA entered into
24
Q
How can a landlord pursue a former tenant or the guarantor of a former tenant, whether under a new or old lease, for non-payment of rent under s17 of the Landlord and
Tenant (Covenants) Act 1995?
A
- Landlord serves a ‘default notice’ for a ‘fixed charge’ recovery from former tenants or guarantors.
- The notice must be issued within six months of the current tenant’s breach.
- The landlord doesn’t need to start legal proceedings; the default notice serves as notice of the claim.
25
What is an overriding lease?
a headlease between the landlord and the former tenant/guarantor slotted in between the landlord and the defaulting tenant, making the former tenant/guarantor the immediate landlord of the defaulting tenant.
26
Where the landlord serves a default notice on a former tenant or its guarantor, what action can that person take to regain control over the property?
The person can regain control by paying the sum claimed under the default notice and then calling for an 'overriding lease,' essentially becoming the immediate landlord of the defaulting tenant in a headlease arrangement with the landlord.
27
How can a landlord pursue a rent deposit as a remedy?
Require the tenant to deposit a cash sum as security for payment of the rent and performance of the tenant's covenants contained in the lease.
28
What is the usual amount of a rent deposit?
6-12 months' rent due under the lease
29
What is a rent deposit deed?
Sets out the circumstances which entitle the landlord to withdraw money from the rent deposit and the point at which it is repayable to the tenant (eg on an approved assignment).
30
When can a landlord withdraw money from the rent deposit?
As soon as the tenant is in breach of a relevant covenant in the lease
31
What can limit the landlord from withdrawing money from the rent deposit?
If they have breached the rent deposit deed themselves.
32
What are general requirements to be included in the rent deposit deed?
* require the tenant to top the deposit up
* the rent deposit balance is returned to the tenant at the end of the term or on an earlier lawful assignment.
33
What is the remedy of forfeiture?
* Bring the lease to an end
* Enables the landlord to gain vacant possession of the property
34
What must the lease contain to be able to use forfeiture?
a forfeiture clause
35
Does a forfeiture clause have to be labelled as 'forfeiture clause'?
No can be labelled as 'provisos' or 're-entry'
36
When will forfeiture become applicable?
The lease will specify how many days must have been outstanding before forfeiture can take place.
37
What are the two ways a landlord could forfeit a lease?
1. By taking possession through 'peaceable re-entry'; OR
2. By obtaining a court order
38
Can the tenant respond to forfeiture?
Yes, the tenant can:
* apply for relief, but it's the
* court's discretion to allow the lease to continue
39
What is the condition that the tenant must meet to apply for relief from forfeiture?
Paid all arrears and costs
40
How may a landlord waive their right to forfeit?
by carrying out any act that demonstrates an intention to continue the landlord-tenant relationship - e.g. accepting/demanding rent after breach has arisen
41
What are the four remedies available to a landlord for breach of repair covenant?
1. Specific performance
2. Damages
3. Self-help (Jervis v Harris) clause
4. Forfeiture
42
What is the effect of the equitable remedy of specific performance?
It forces the tenant to comply with the positive covenants that they are in breach of.
43
When will the court grant specific performance as a relief?
Only when other remedies are not appropriate - no forfeiture or self-help clause and damages are not adequate
44
When are damages available for breach of covenant?
always
45
What are the two statutory provision that may mean that the landlord cannot recover full damages as a remedy for breach of repair covenant?
1. Section 18 LTA 1927
2. Leasehold Property (Repairs) Act 1938
46
What is the effect of Section 18 LTA 1927 on damages in a disrepair context?
limits the amount of damages to the amount by which the landlord's reversion has diminished in value as a result of the disrepair
47
Why might relying on s18 LTA to recover disrepair be unattractive to the landlord?
because the diminution in capital value of the building attributable to the disrepair may be less than the cost of the repairs.
48
What does the Leasehold Property (Repairs) Act 1938 apply to?
Applies to leases granted for more than seven years with more than three years left to run
49
If the Leasehold Property (Repairs) Act 1938 applies and the landlord want to sue for damages, what is the special procedure that must be followed and the possible situations that may arise?
1. Notice must be served on the tenant
2. Tenant has a right to serve counter notice within 28 days
3. If counter notice served, landlord cannot proceed without leave of the court.
50
What is a self-help (Jervis v Harris) clause?
Contractual remedy allowing the landlord to recover the costs of repairs as a debt and not a damages claim.
51
What is the benefit of a self-help clause?
landlord is able to avoid statutory limitation on pursuing damages claims imposed by the 1927 and 1938 Acts.
52
What does a self-help clause allow the landlord to do?
Can enter the property to check compliance with the tenant's repair covenant.
53
What can a landlord do if a breach is found after exercise their right to inspect the property under a self-help clause?
Landlord can serve notice specifying the works required to remedy the breach
54
What can a landlord do if a tenant fails to start repairs within a specified period after landlord has served noticed under self-help clause?
* may enter and carry out repairs
* recover costs from the tenant as a debt
55
What is the benefit of a self-help clause converting a claim for damages into a claim for debt?
Avoids statutory restrictions on recoverability.
56
What is the procedure for forfeiture for breaches other than non-payment of rent as laid down in s146 of the Law of Property Act 1925?
Landlord must serve a s 146 notice on the tenant
57
What does a s146 notice served on the tenant do?
* specify the breach
* require the breach to be remedied within a reasonable time if it is capable of remedy
* require the tenant to pay compensation for the breach.
58
If a tenant does not comply with a s146 notice what can the landlord do?
Forfeit the lease by:
* peaceable re-entry; OR
* a court order
59
What special 146 notice is needed in cases of disrepair when the lease was originally for seven years or more and has at least three years left unexpired or forfeiture?
Leasehold Property (Repairs) Act 1938 applies:
* requiring the Section 146 notice to include notification of the tenant's right to serve a counter notice within 28 days.
* If the tenant serves a counter notice, the landlord can only proceed to forfeit with the court's permission.
60
How is forfeiture used as a remedy for breach of other covenants (not rent or repair)?
Purpose: Terminating the lease.
Condition: No need for the Section 146 notice to include the tenant's right to serve a counter notice.
61
How is an injunction used as a remedy for breach of other covenants (not rent or repair)?
1. Sought for breach of a negative covenant (e.g., changing property use) OR
2. To prevent an anticipated breach (e.g., unauthorized assignment).
62
How is specific performance used as a remedy for breach of other covenants (not rent or repair)?
Conditions for Applicability:
* Positive obligation is precise.
* Ongoing supervision is not required.
* Damages are inadequate as a remedy
63
How are damages used as a remedy for breach of other covenants (not rent or repair)?
recoverable under standard contractual rules
64
How is pursuing as former tenant/guarantor used as a remedy for breach of other covenants (not rent or repair)?
Seeking compensation from a former tenant or their guarantor.
65
How is deduction from rent deposit deed used as a remedy for breach of other covenants (not rent or repair)?
Condition: Permissible if the rent deposit deed allows.
Use: Deducting costs, losses, and expenses from the deposit due to a breach.
66
What is the definition of surrendering of the lease?
Surrendering a lease is not a technical remedy but a practical way for the landlord and tenant to address issues.
67
What is the process of surrendering of the lease?
* Requires a mutual act by the tenant and landlord, treating the lease as no longer in existence.
* Can be done informally (e.g., handing back keys) or formally through a deed of surrender, especially with commercial leases.
68
What is a deed of surrender?
Formal document addressing issues like arrears.
69
What makes a deed of surrender attractive and to whom?
Attractive to the tenant as it terminates obligations
70
What is the advantage of surrendering of the lease?
Potentially quicker and cheaper than forfeiture for both parties.
71
What does successful surrender of a lease depend on?
on the willingness of both parties to pursue it.
72
What is effluxion of time?
automatic termination of a fixed-term lease - no notice is required
73
What is effluxion of time applicable to?
Commercial property leases that have a fixed term
74
How are period tenancies' notice to quit determined?
by the appropriate period's notice to quit given by the landlord or tenant
75
How are yearly tenancies' notice to quit determined?
by at least half a year's notice expiring at the end of a completed year of the tenancy.
76
How can period tenancies' notice to quit be determined by one dull period's notice?
They expire at the end of a completed period of the tenancy
77
When does surrender occur?
when the tenant yields up the lease to the landlord who accepts the surrender.
78
How can surrender be achieved?
Only if both the landlord and the tenant agree to it.
79
What happens to a lease on surrender?
the lease is said to merge in the landlord's reversion and is extinguished
80
For surrender to be legal how must it be done?
must be by deed
81
When does a merger occur?
* When the tenant acquires the immediate reversion to the lease; OR
* when a third party acquires both the lease and the reversion
82
What is a merger?
the opposite of surrender
83
What happens to the lease when it and the reversion are both in possession of the tenant or a third party? (in the context of a merger)
* The lease automatically merges with the reversion.
* The lease is extinguished, unless expressly preserved in the documentation by the tenant or third party.
84
What is the effect of a tenancy protected by the 1954 Act?
* common law methods of termination may not apply
* may continue until it is terminated in accordance with the provisions of the Act
85
What does the 1954 Act apply to?
tenant (not a licence) + occupied by tenant + for business purposes
86
What types of business tenancies are NOT protected by the 1954 Act?
1. Tenancies at will
2. Fixed-term tenancy less than 6 months
3. Specific business leases (agricultural, farms, and mining leases)
4. Fixed-term tenancies that are contracted out
87
What is the effect of the 1954 Act?
Protects tenancies that the act applies to as they will not come to an end unless terminated in accordance with the provisions of the Act.
88
What right does the the 1954 Act give a tenant after termination?
to apply to court for a new tenancy which can only be opposed by the landlord on of the seven statutory grounds contained in s 30 of the 1954 Act.
89
What are the seven methods of termination as per the s30 grounds under the 1954 Act?
1) s 25 notice by landlord
2) s 26 notice for new tenancy by tenant
3) forfeiture
4) surrender
5) periodic tenancy - notice to quit by tenant
6) fixed-term lease - s 27 notice by tenant
7) fixed-term lease - by the tenant ceasing to be in occupation for business purposes at the end of the lease under s 27(1A).
90
What does a s 27 notice allow the tenant to do in a fixed term lease?
terminate the tenancy by serving three months’ written notice on the landlord under s 27, so long as the notice does not expire before the contractual expiry date.
91
What are the common law methods of termination allowed by the 1954 Act?
1. Forfeiture (applicable when the tenant is in default).
2. Surrender (applicable when the landlord and tenant mutually agree).
92
What is the effect of section 27(1A)?
enables the tenancy to end by effluxion of time where the tenant ceases to be in occupation for business purposes at the end of the lease.
93
In cases of a period tenancy hows can a tenant serve a notice to quit under the 1954 Act?
tenant to serve a notice to quit on the landlord, but the landlord cannot serve notice to quit on the tenant.
94
What is the effect of s 27 notice?
allows the tenant to serve a notice
on the landlord to end a fixed-term tenancy, but does not give the landlord the same right.
95
What is the purpose of the 1954 Act?
to afford security of tenure to business tenants
96
If there are no grounds for forfeiture or an agreement to surrender, what is the only way a landlord can terminate a business tenancy protected by the 1954 Act?
Section 25 notice
97
When can section 25 notice be used?
for a fixed-term or periodic tenancy
98
What is the first step in the process of lease termination involving a s 25 notice?
The landlord must serve a s 25 notice on the tenant.
99
Why does the landlord serve a s 25 notice, and what information must it include?
* Served regardless of whether the landlord wants the property back or intends to grant a new lease.
* The landlord must outline its proposals for the terms of the new lease in the s 25 notice.
100
In cases where the landlord opposes the renewal of the tenancy, what additional information must be included in the s 25 notice?
If the landlord opposes renewal, the s 25 notice must state the s 30 grounds.
101
What is the significance of the termination date specified in the s 25 notice, and what are the constraints on this date?
* The notice must specify the date on which the landlord wants the tenancy to end.
* This date cannot be earlier than the common law termination date and does not necessarily coincide with the exact date of a fixed-term lease expiration.
102
What are the timing requirements for serving a s 25 notice, and what is the impact of not serving it in time?
* must be served no less than six months and no more than twelve months before the specified termination date.
* If not served in time for the contractual expiry date, the tenancy continues for the extra month if the six months extend beyond the lease expiration.
103
What is the situation of a landlord indicated in s 25 notice that they will oppose the grant of a new tenancy?
the tenant must apply to the court before the expiry date of the s25 notice
104
How can a landlord pre-empt the tenant's right to apply to court to prevent lease renewal?
by applying for an order to terminate the lease on the grounds stated in its s 25 notice (only if the tenant has not already made a lease renewal application)
105
What is the situation of a landlord indicated in s 25 notice that they will NOT oppose the grant of a new tenancy?
parties negotiate for the grant of a new lease + tenant should still apply to court within time limit to safeguard their position.
106
For a s25 notice where the landlord has indicated that they will not oppose the grant of a new tenancy, how can the time limit for the tenant to apply to court for a new lease be extended?
by agreement between the parties
107
Which court is an application following service of a s25 notice made to?
the county court
108
What happens to fixed term leases at the contractual expiry date?
They come to an end by effluxion of time.
109
How can periodic leases come to an end?
By service of a notice to quit.
110
How can leases be surrendered or extinguished?
By the tenant surrendering or merging with the reversion.
111
What is security of tenure under the 1954 Act?
The right for the tenant to stay in the property after the expiry of the contractual term and apply for a new tenancy.
112
What are the limited grounds for denying a new tenancy under the 1954 Act?
Set out in s 30 of the 1954 Act.
113
What are the requirements for a tenant to qualify for security of tenure under the 1954 Act?
Having a tenancy, occupying the property for business purposes, and not being excluded from protection.
114
How can the parties agree that a tenancy should not enjoy security of tenure?
By granting a tenancy at will, a contractual licence, a lease for six months or less, or a contracted-out lease.
115
How can a protected tenancy be terminated?
By one of the seven ways laid down by the 1954 Act.
116
How can a protected tenant terminate the lease on the contractual expiry date?
By ceasing to occupy for business purposes or serving a s 27 notice with three months' prior written notice.
117
How can a protected tenant terminate the lease after the expiry of the contractual expiry date?
By serving a s 27 notice with three months' notice or agreeing to a voluntary surrender with the landlord.
118
How can a protected tenant stay in the property and renew the tenancy after the contractual expiry date?
By serving a s 26 request for a new tenancy on the landlord or by doing nothing and waiting for the landlord to take action.
119
What can a landlord choose to do if they are happy for the tenant to stay on?
Do nothing and allow the tenant to continue occupying the property on the existing terms.
120
What is a tenancy at will?
A type of agreement that allows a tenant to occupy a property for an unspecified period of time.
121
What is a contractual licence?
A type of agreement that grants permission to occupy a property for a specific purpose.
122
What is a contracted-out lease?
A lease that has been excluded from the protection of security of tenure under the 1954 Act.
123
What is a protected tenancy?
A tenancy that is protected by the provisions of the 1954 Act.
124
What is a s 27 notice?
A notice served by a tenant to terminate a protected tenancy.
125
What is a s 26 request?
A request served by a tenant to apply for a new tenancy under the 1954 Act.
126
What is a reversion?
The right of the landlord to regain possession of the property after the lease expires.
127
What is a protected tenancy?
A tenancy that can continue indefinitely.
128
How can a landlord terminate a protected tenancy?
By serving a s 25 notice on the tenant.
129
What is the notice period for a s 25 notice?
Not less than 6 or more than 12 months.
130
Can the termination date be before the common law expiry date?
No, it cannot be before the common law expiry date.
131
What should a protected tenant do to renew their tenancy?
Make an application to the court before the termination date.
132
When should a landlord serve a counter-notice?
Within two months of receiving the s 26 request.
133
What happens if the terms of the new lease are determined by the court?
The renewal lease is likely to be on similar terms and conditions to the old lease.
134
What is the likely rent for a renewal lease?
The open market rent as at the date of renewal.
135
When does a landlord have to pay compensation to the tenant?
If the new tenancy is refused, unless certain grounds are established.
136
What could the rent deposit cover?
Any covenant that is specified in the rent deposit deed enabling the landlord to use for any breaches.
137
What are the advantages of forfeiture?
* Threatening to forfeiture is enough to make the tenant comply
* Going through with the forfeiture gets rids of the tenant
138
What are the disadvantages of forfeiture?
* may not find another tenant
* may end up in court and tenant can apply for relief.
139
What is the disadvantage of making a damages claim?
s18 LTA - the landlord cannot cover more in damages than the drop of value in the freehold reversion.
140
What are the advantages of the self-help clause?
Get repairs fixed quickly without letting the property deteriorate.
141
What are the disadvantaged of the self-help clause?
Landlord may be unable to recover debt from existing tenant
142
What is the amount of compensation at a lower rate?
rateable value of property
143
What is the amount of compensation at a higher rate?
double rateable value of property
144
When does a higher rate of compensation apply?
if the tenant and any predecessors in the same business have occupied for 14 years or more.
145
What type of grounds are repair, rent, and other obligations?
discretionary grounds - for the court's to determine
146
What are compensation grounds?
* L wants to let whole
* Demolition/reconstruction
* L to occupy
147
What is the 5 year rule for the landlord to occupy on the the ground to occupy a property?
The landlord must have been the landlord for 5 years before they can rely upon this ground.
148
What are the s30 grounds?
(a) Tenant’s failure to repair
(b) Tenant’s persistent delay in paying rent
(c) Tenant’s substantial breach of other obligations
(d) Landlord has offered alternative accommodation (which must be suitable to the tenant’s
needs and on reasonable terms)
(e) Tenancy is an underletting of part (rarely used)
(f) Landlord intends to demolish or reconstruct and could not reasonably do so without
obtaining possession
(g) Landlord intends to occupy the holding for its own business or as a residence
149
Which from the s30 grounds are discretionary?
(a) Tenant’s failure to repair
(b) Tenant’s persistent delay in paying rent
(c) Tenant’s substantial breach of other obligations
(e) Tenancy is an underletting of part (rarely used)
150
Which from the s30 grounds are mandatory?
(d) Landlord has offered alternative accommodation (which must be suitable to the tenant’s
needs and on reasonable terms)
(f) Landlord intends to demolish or reconstruct and could not reasonably do so without
obtaining possession
(g) Landlord intends to occupy the holding for its own business or as a residence
151
Which from the s30 grounds is the most frequently used ground?
(f) Landlord intends to demolish or reconstruct and could not reasonably do so without
obtaining possession
152
What are the conditions that a landlord must meet to rely on ground (g) of the s30 grounds to occupy the property for their own use?
Have owned their interest for at least five years before the ending of the current tenancy.
153
What is the purpose of the landlord having to be the landlord of a property for 5 years to rely on ground (g) to occupy the property?
to prevent a landlord buying the reversion cheaply within five years of the end of the lease and then acquiring vacant possession using this ground.
154
What is the exception to a landlord having to be the landlord for 5 years before relying on ground (g) to occupy the property?
the ground will be available to a landlord who buys property with vacant possession, lets it and then seeks possession within five years of buying it.
155
What does a tenant need to do in response of a section 25 notice, to challenge it?
apply to the court before the expiry date of the s25 notice
156
To serve a s25 notice before the contractual expiry does the day of the contractual expiry date count?
Yes - the last day to day to serve the s25 notice is on the contractual expiry date.
