Lease Termination

Question 1

What are the different methods whereby a lease can be terminated?

Answer 1

• effluxion of time
• a break clause
• surrender
• notice to quit
• merger

Question 2

What is termination by effluxion of time?

Answer 2

Where tenancy without security of tenure comes to end on expiry of contractual term.

Landlord can require tenant to vacate the premises and can treat the tenant as a trespasser

Question 3

What happens if the landlord consents to a tenant remaining in the property after the expiry of the term in an unprotected lease?

Answer 3

Tenancy at will created and if rent accepted then potential periodic tenancy

Question 4

What is termination by break clause?

Answer 4

Clause which if exercised will lead to termination of lease before contractual term expiry.

Question 5

Is a break clause effective with a protected tenancy?

Answer 5

Yes - if exercised by tenants

Only effective if landlord exercises it if not security of tenure so no.

Question 6

What is notice to quit?

Answer 6

For periodic tenancies where either landlord or tenant gives notice that they intend for tenancy to end.

Question 7

What happens with notice to quit and protected tenancies?

Answer 7

If tenant serves notice, then still effective

If landlord serves notice, then tenant can still hold over

Question 8

What notice period is required for notice to quit?

Answer 8

Depends on length or periodic tenancy:

• weekly period - 1 week’s notice (4 weeks for residential)
• monthly period - 1 month’s notice
• quarterly period - 1 quarter’s notice
• yearly period - 6 month’s notice

Question 9

When must notice to quit expire?

Answer 9

On first or last day of tenancy period

Question 10

If a landlord serves notice on a tenant who has secured tenancy who then holds over, how can they get them to quit?

Answer 10

They must serve hostile section 25 notice supported by one or more of the statutory grounds

Question 11

What is termination by surrender?

Answer 11

Tenant can give up leasehold interest to landlord.

Question 12

What is the process for surrender?

Answer 12

• express surrender requires a deed
• premium may be payable
• surrender by operation of law also effective and occurs where landlord and tenant act in a way that is inconsistent with continuation of tenancy

Question 13

What happens if in advance of deed for surrender, there is an agreement to surrender?

Answer 13

Similar procedure as to contracting out of protected tenancies must be followed ie must be notice and declaration.

Question 14

What is termination by merger?

Answer 14

Either tenant acquires the landlord’s superior interest or a third party acquires it

Question 15

When can the landlord claim damages for breach and what can they recover?

Answer 15

For all breaches damages will be available.

Landlord can recover damages that put them back in a position they would have been in had it not been for the breach of covenant

Question 16

When will a landlord issue an action in debt?

Answer 16

Can do so to recover any debt, such as unpaid rent, service charge or insurance rent

Can only recover rent due in the six years before issue of proceedings

Question 17

Who can an action in debt be brought against?

Answer 17

• tenant
• former tenant if old lease or tenant gave authorised guarantee agreement
• guarantor

Question 18

Is a landlord limited to recovering unpaid rent from a guarantor?

Answer 18

No - can go after them for any breach of tenant’s covenants

Question 19

How can the landlord use the rent deposit as a remedy?

Answer 19

Can draw on rent deposit if tenant is in arrears.

Tenant then has to top up deposit

Question 20

What is commercial rent arrears recovery and when can it be used?

Answer 20

Self-help remedy and can be used where:

• the premises are purely commercial
• a minimum of seven days’ principal rent is owed (cannot be used to recover service charge or other sums)
• the lease has not been forfeited

Question 21

What are the requirements for using commercial rent arrears recovery?

Answer 21

• landlord must appoint enforcement agent who has required certificate from court or is exempt (eg police officer)
• seven clear days’ notice must be given of the intention to enter the tenant’s premises (clear days exclude Sundays and bank holidays)
• notice must include certain details, such as amount of the debt and how to repay it, details of power to enforce the debt and contact details of enforcement officer
• if notice expires without repayment of the debt, enforcement agent can enter premises and take control of goods belonging to the tenant up to value of debt owed
• landlord must give further seven clear days’ notice if it intends to sell the goods

Question 22

Are equitable remedies eg specific performance and injunctions ever available for breach?

Answer 22

Theoretically possible but very unlikely

Question 23

What is forfeiture?

Answer 23

It is the right of the landlord to re-enter the premises and take them back from the tenant

Question 24

Is forfeiture an automatic right?

Answer 24

No - only permitted insofar as the lease permits it

Typically when tenant fails to pay rent, breaches other obligations of lease, or there is an insolvency event

Question 25

When can a landlord exercise forfeiture?

Answer 25

- for non-payment of rent, as soon as lease allows - for other breach of obligation, landlord must serve a section 146 notice

Question 26

How can forfeiture be achieved?

Answer 26

- peaceable re-entry by landlord - by court order for forfeiture

Question 27

What is a s 146 notice? What will it detail?

Answer 27

Notice of potential forfeiture Will detail alleged breach and gives the tenant a reasonable opportunity to remedy it, failing which the landlord will be entitled to forfeiture

Question 28

When will the landlord waive their right to forfeiture?

Answer 28

When they act in a way that acknowledges the continuing existence of the lease. Intention of the landlord is irrelevant

Question 29

What are examples of once and for all breaches?

Answer 29

- non-payment of rent - an unlawful assignment or underletting - an insolvency event

Question 30

What are examples of continuing breaches?

Answer 30

- failure to keep the premises in repair - breach of the user covenant - failure to comply with an insurance obligation

Question 31

If a landlord waives their right of forfeiture in respect of a once and for all breach, can they ever regain it?

Answer 31

No - once waived lost forever

Question 32

If a landlord waives their right of forfeiture in respect of a continuing breach, can they ever regain it?

Answer 32

Yes - for each the day the breach continues the landlord will regain it. So if waived one day will regain the next

Question 33

What is relief from forfeiture?

Answer 33

- Tenant may apply for relief from court (or any other party who derives interest in lease such as under tenant or mortgagee) - discretionary remedy - if awarded will be as if forfeiture never happened and court will aim to put parties in position they would have been in had forfeiture not happened

Question 34

When will relief often be granted from forfeiture?

Answer 34

Will likely be granted for non-payment of rent if tenant settles all arrears and landlord's costs

Question 35

What additional steps may have to happen for forfeiture for breach of a repairing covenant?

Answer 35

If lease is for term of seven years or more and has at least three years left to run then tenant has 28 days to serve counter-notice meaning landlord must get leave from court to proceed. Landlord has to advise tenant of this right in s 146 notice.

Question 36

When can a landlord issue proceedings for damages for breach of a repairing obligation?

Answer 36

Only after landlord has served a section 146 notice and given the tenant 28 days to serve a counter-notice

Question 37

How are damages to be measured in respect of breach of repairing obligation?

Answer 37

Loss of value to landlord's reversion not the cost of putting the premises in full repair

Question 38

What is a Jervis v Harris clause?

Answer 38

Self help remedy for breach of repairing covenant that allows landlord to: - enter the property - carry out any repairs - recover the cost of doing so from the tenant which are to be treated as a debt so recoverable in full - no s 146 notice is needed