Alienation clauses (Structure and content of a lease)- FS Flashcards
(12 cards)
What is an alienation clause in a lease?
An alienation clause restricts or regulates a tenant’s ability to assign, sublet, or otherwise dispose of their leasehold interest.
Define assignment of lease.
Assignment occurs when the tenant transfers the entire unexpired term of the lease to another party (the assignee), with no interest retained in the lease.
Define subletting (underletting).
Subletting is when the tenant grants a new leasehold interest to another (the subtenant), thereby becoming that subtenant’s landlord.
What is the legal status of the original lease when a lease is assigned or sublet?
The original lease remains in effect. When assigned, the head lease continues with the assignee as tenant. When sublet, the sublease exists alongside the head lease
Who is the head landlord in an alienation structure?
The head landlord is the original freeholder or superior landlord, typically the party who granted the initial lease (e.g. Tom in the example).
What does section 19(1) of the Landlord and Tenant Act 1927 provide?
It implies into qualified alienation clauses that a landlord’s consent to assign or sublet cannot be unreasonably withheld.
What is meant by “consent not to be unreasonably withheld”?
A landlord must give consent to assign or sublet unless withholding it is justified on reasonable grounds (e.g. tenant insolvency, unsuitable use, or breach history).
What are examples of unreasonable grounds for refusing consent to alienation?
Arbitrary refusal, discriminatory reasons, or reasons unrelated to legitimate landlord interests (e.g. race, gender, or unrelated prejudice).
What’s the difference between an assignment and a sublease?
Assignment = transfers entire lease, no interest retained.
Sublease = creates new lease, tenant becomes landlord of subtenant, and retains interest.
In a standard lease, when is alienation permitted?
Usually only with the landlord’s written consent, as per the lease’s express alienation clause (e.g. clause 8 of the Hardman House lease).
Can a landlord charge a premium for giving consent to tenant improvements?
No, under Section 19(2) of the Landlord and Tenant Act 1927, where alterations constitute improvements, the landlord cannot charge a premium for consent. However, the landlord may claim reasonable legal and administrative costs incurred in considering the request.
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In a lease granted in 2010, can a licence to assign include a direct covenant from the assignee to the landlord?
Yes. Even though the lease is a ‘new lease’ under the Landlord and Tenant (Covenants) Act 1995, and the burden of the tenant covenants automatically passes to the assignee, a licence to assign usually includes a direct covenant from the assignee to the landlord to reinforce liability. This offers the landlord additional contractual protection.
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