Alienation covenants Flashcards
(13 cards)
what is alienation? what does it include?
disposal of an interest in leasehold property. Includes:
o Assign
o Underlet
o Charge
o Sharing occupation
o Parting with possession
what is assigning?
transfer existing lease to someone else
what is underletting?
carve sub-lease out of headlease.
what is charging?
mortgaging (usually prohibited)
what is sharing occupation?
allowing a 3rd party to occupy (i.e. under a licence)
what is parting with possession?
catch-all term of agreements difficult to classify
what is the position regarding qualified alienation covenants?
automatically converted to a fully qualified covenant
what is the Court of Appeals guidance when considering ‘reasonableness’?
o Would premises be used in undesirable way?
o LL cannot refuse on grounds which have nothing to do with LL/T or subject of lease
o LL does not need to prove if reasonable person would reach same conclusion
o Only bound to consider relevant interests but unreasonable not to consider detriment to T
give some examples of when it has been reasonable to refuse the disposal of an interest (6)
o bad reference
o T in longstanding breach
o compete with business
o reduce reversionary interest + LL plans to sell
o use inconsistent with LL’s policy
o would acquire LTA protection
give some examples of when it has been unreasonable to refuse the disposal of an interest
o T’s breach is minor
o It is advantageous for LL
what are some conditions the LL and T may agree when negotiating the lease?
Assignment - AGA
Underlet - terms mirror underlease, annual rent + review same as headlease
what is the process for T to obtain LL’s consent?
Consent obtained by written application to LL.
LL must within a reasonable time:
Give consent (unless reasonable not to) +
Service notice of decision (inc. conditions / reasons for refusal)
what is the effect if there is no alienation covenant?
T can dispose of the lease in anyway if the lease is silent.
