Enforceability of Leasehold Covenants Flashcards
(12 cards)
Under a lease granted after 1 January 1996, when does a tenant’s liability for leasehold covenants generally end?
A. Automatically upon valid assignment
B. When an indemnity is provided to the landlord
C. Upon the expiry of the lease
D. When the landlord consents to the assignment
A. Automatically upon valid assignment
Explanation: Under the LTCA 1995, section 5, a tenant in a new lease is automatically released from future liability when they validly assign the lease. They remain liable only for breaches occurring before the assignment.
What is the effect of privity of estate?
A. It creates a continuing contractual obligation for original parties
B. It binds any owner of land to the terms of a covenant
C. It creates enforceability of covenants between current landlord and tenant
D. It applies only to freehold covenants
C. It creates enforceability of covenants between current landlord and tenant
Explanation: Privity of estate allows covenants that touch and concern the land to be enforced between the current landlord and current tenant for as long as both hold legal estates in the land.
Which of the following best defines an Authorised Guarantee Agreement (AGA)?
A. A deed allowing subletting
B. A clause that releases the tenant on assignment
C. A guarantee by the landlord of the tenant’s obligations
D. A guarantee by the outgoing tenant of the incoming assignee’s obligations
D. A guarantee by the outgoing tenant of the incoming assignee’s obligations
Explanation: An AGA is a statutory mechanism under LTCA 1995, section 16, that allows a landlord to require the outgoing tenant to guarantee the lease obligations of the new tenant (assignee) upon assignment.
Which section of the LTCA 1995 provides for automatic passing of leasehold covenants on assignment?
A. Section 2
B. Section 3
C. Section 5
D. Section 8
B. Section 3
Explanation: Section 3 of the LTCA 1995 provides for the automatic transmission of the benefit and burden of all leasehold covenants to the assignee and incoming landlord, except where covenants are expressed to be personal.
Ali, the tenant under a commercial lease granted in 2018, validly assigns the lease to Ben. The lease includes a clause requiring landlord consent for assignment. The landlord gives consent, and as part of the arrangement, Ali provides an AGA. A year later, Ben fails to pay rent. Who is the landlord most likely to pursue?
A. Ali, under the original lease
B. Ben, as the current tenant
C. Ali, under the terms of the AGA
D. The landlord cannot pursue either party
C. Ali, under the terms of the AGA
Explanation: Although Ali was released from liability under LTCA 1995, section 5, the AGA (under section 16) means he remains liable for Ben’s breaches until Ben assigns the lease or the lease ends. The landlord may prefer to sue Ali if Ben is insolvent.
Cora is the tenant under a lease granted in 1993. She assigns the lease to Daniel in 2001. In 2024, Daniel fails to repair the premises, breaching a lease covenant. Who is liable?
A. Only Daniel
B. Only Cora
C. Neither Cora nor Daniel
D. Cora and Daniel
D. Cora and Daniel
Explanation: The lease is an old lease (pre-1996), so privity of contract means the original tenant (Cora) remains liable throughout the term. Privity of estate allows the current landlord to also pursue Daniel, the current tenant.
A lease granted in 2020 includes a restrictive covenant against operating a café. The lease is assigned to Eva, who then sublets to Faisal. Faisal starts operating a café. Can the landlord enforce the covenant?
A. No, because Faisal is a subtenant
B. Yes, because restrictive covenants bind any occupier
C. No, because it is a positive covenant
D. Yes, but only if Faisal signed an AGA
B. Yes, because restrictive covenants bind any occupier
Explanation: Under LTCA 1995, section 3(5), restrictive covenants in new leases can be enforced against any occupier, including subtenants, even without privity of contract.
In which of the following situations would a covenant in a lease not bind a successor?
A. The lease is from 2022 and the covenant is expressed to be personal
B. The lease is from 1990 and the covenant touches and concerns the land
C. The lease is from 2010 and the covenant restricts use of the land
D. The lease is from 2023 and the covenant is not expressed to be personal
A. The lease is from 2022 and the covenant is expressed to be personal
Explanation: Under LTCA 1995, section 3(6), covenants that are expressly personal do not run with the lease and cannot bind successors.
Holly, a tenant under a lease granted in 2010, assigns the lease to Ingrid in breach of an alienation covenant. Holly does not obtain landlord consent. Which of the following is true?
A. Holly is automatically released from future liability
B. Ingrid has no obligations under the lease
C. The lease is automatically terminated
D. Holly remains liable because the assignment was an ‘excluded assignment’
D. Holly remains liable because the assignment was an ‘excluded assignment’
Explanation: Under LTCA 1995, section 11, if the assignment breaches an alienation covenant, it is an ‘excluded assignment’, and the outgoing tenant (Holly) does not benefit from an automatic release.
James, the tenant, provides an AGA when assigning the lease to Karen. Karen later breaches a covenant. James pays damages to the landlord and seeks to recover from Karen. There is no express indemnity clause. Can James succeed?
A. No, because there is no direct contract
B. Yes, under the rule in Moule v Garrett
C. No, unless the lease includes a forfeiture clause
D. Yes, but only if he had the landlord’s consent
B. Yes, under the rule in Moule v Garrett
Explanation: Moule v Garrett allows the outgoing tenant to claim a common law indemnity from the assignee if they have had to pay damages caused by the assignee’s default.
Which of the following best describes the liability of the landlord under a new lease after selling the reversion?
A. The landlord is automatically released from liability
B. The landlord remains liable for future breaches
C. The landlord is released only if the tenant consents or the court orders
D. The landlord is always liable if an AGA was signed
C. The landlord is released only if the tenant consents or the court orders
Explanation: Under LTCA 1995, sections 6–8, a landlord is not automatically released. They must apply to the tenant (or court) for a release when assigning the reversion.
A landlord brings proceedings against a former tenant under an AGA. Which remedy is most likely available?
A. Specific performance
B. Forfeiture
C. Damages
D. Injunction
C. Damages
Explanation: Since the former tenant is no longer in control of the property, equitable remedies like specific performance are unavailable. The landlord’s remedy against them under an AGA is damages only.
