Alienation Flashcards
(50 cards)
What is assignment in leasehold law?
Assignment is when the tenant (assignor) transfers the lease to a new tenant (assignee). The assignee takes over the lease obligations and gains exclusive possession.
What does alienation mean in the lease context?
Alienation is any disposal of all or part of the tenant’s interest in the lease. Assignment is one form.
Why might a tenant assign a lease?
If they no longer need the premises, cannot afford the rent, or find a willing assignee to take over.
What is the effect of assignment on the landlord-tenant relationship?
The landlord becomes landlord of the assignee, who is liable for the rent and obligations; the assignor generally ceases to be liable unless subject to ongoing obligations.
What is the difference between absolute, qualified and fully qualified covenants on assignment?
- Absolute: No assignment permitted
- Qualified: Only with landlord’s consent
- Fully qualified: Landlord’s consent required and must not be unreasonably withheld
How does s19(1)(a) LTA 1927 affect qualified assignment covenants?
Converts them into fully qualified covenants—landlord must act reasonably in withholding consent.
What does s1 LTA 1988 require regarding landlord’s response to assignment requests?
Landlord must give their decision within a reasonable time.
When is it reasonable to withhold consent to assignment?
- Assignee’s proposed use is inconsistent with property use
- Assignee cannot provide references or accounts
- Assignee is newly incorporated
- Landlord dislikes the tenant or their business (unreasonable)
What are “conditions” and “circumstances” under s19(1A) LTA 1927?
Lease terms that outline when a landlord may reasonably withhold consent, e.g., unpaid rent or refusal to provide guarantor.
What is privity of contract in leases?
It is the continuing contractual relationship between the original parties (e.g., tenant and landlord), enforceable even after assignment.
What is privity of estate in leases?
It is the relationship between current landlord and tenant under the lease, which allows enforcement of lease obligations.
How does the Landlord and Tenant (Covenants) Act 1995 affect liability?
- New leases (from 1 Jan 1996): assignor is released; assignee assumes all obligations.
- Old leases: assignor remains liable.
What is an Authorised Guarantee Agreement (AGA)?
A guarantee given by the outgoing tenant (assignor) for the assignee’s obligations under a new lease.
When is an AGA used?
Where the lease requires it or it is reasonable to request (e.g., concerns over assignee’s financial position).
How long does liability under an AGA last?
Only until the next lawful assignment of the lease.
What are the typical steps in assigning a commercial lease?
- Pre-exchange
- (Optional) Exchange
- Pre-completion
- Completion
- Post-completion
What are the landlord’s solicitor’s pre-exchange tasks?
Take instructions
Confirm consent application received
Draft licence to assign
What are the tenant’s solicitor’s pre-exchange tasks?
- Apply for consent
- Draft contract (if needed)
- Deduce title
- Circulate licence to assign
What are the assignee’s solicitor’s pre-exchange tasks?
- Investigate title
- Review lease
- Raise CPSE1 and CPSE4 enquiries
- Carry out searches
What is an undertaking for costs?
A binding promise by a solicitor to pay another’s legal/surveyor fees; enforceable by the court.
When is the lease negotiable during assignment?
Rarely. Lease terms are generally fixed. Only in rare cases (e.g., landlord prefers assignee) may the lease be varied via deed of variation.
What pre-completion steps are required for assignment?
- Completion statement
- Pre-completion searches (OS1)
- Execution of licence to assign and deed of assignment
What happens at completion of an assignment?
- Completion monies transferred
- Licence to assign and deed of assignment are dated and completed
What are the post-completion steps for an assignee?
- Submit SDLT/LTT return
- Register lease (if required)
- Notify landlord of the assignment
