Leasehold covenants

Question 1

Positive covenant

Answer 1

One that requires a person to carry out work or spend money

Question 2

Negative covenant

Answer 2

One which places restrictions on what a person may do.

Question 3

Enforceability of covenants in ‘old’ leases - Which this applies to

Answer 3

Leases made before 1st Jan 1996

Question 4

Enforceability of covenants in ‘old’ leases - Liability of the original parties to the lease

Answer 4

Privity of contract which lasts for the duration of the lease. Means original tenant and landlord will remain liable throughout.

Question 5

Enforceability of covenants in ‘old’ leases - Liability of successors to the original parties - Spencer’s case

Answer 5

Only applies to tenants. Only applies to covenants which touch and concern the land. Privity of estate. All tenants will have the benefit of covenants and the burden. Although the original parties to the lease will, in the case of an old tenancy, remain liable throughout the term, their successors in title are only liable for breaches committed whilst the lease or reversion is vested in them. They can sue the landlord.

Question 6

Enforceability of covenants in ‘old’ leases - Liability of successors to the original parties - Spencer’s case - Touches and concerns

Answer 6

The covenant affects the nature, quality, mode of user or value of the land.
- T’s covenant to pay rent
- T’s covenant to only use the demised premises as a public house
- T’s covenant to repair

Question 7

Enforceability of covenants in ‘old’ leases - Liability of successors to the original parties - S. 142 and S. 142

Answer 7

Applies only to landlords. Transfer the benefit of the right to sue old tenant or new tenant. They can also be sued by old and new tenant.

Question 8

Enforceability of covenant’s in ‘new’ leases - Liability of the original parties

Answer 8

Privity of contract.

Question 9

Enforceability of covenant’s in ‘new’ leases - Liability of the original parties following assignment and liability of their successors - Tenants

Answer 9

Where the lease is assigned the old tenant is released from obligations. Unless the landlord makes them sign an AGA. This will make then guarantee the liability of their immediate successor.

Question 10

Enforceability of covenant’s in ‘new’ leases - Liability of the original parties following assignment and liability of their successors - Landlords

Answer 10

No automatic release for the old landlord, they remain liable. They will have to apply for one.

Question 11

Remedies for tenant’s breach of covenant to pay rent - Action for debt

Answer 11

The landlord may sue the tenant for debt. Has to be within 6 years from the date on which the arrears became due.

Question 12

Remedies for tenant’s breach of covenant to pay rent - Commercial rent arrears recovery

Answer 12

Only for commercial leases. It can be used to recover rent payable in advance or arrears and is subject to a minimum amount of arrears (7 days rent). To exercise CRAR, rent has to become due and payable, and at least seven days’ notice of enforcement has to be served on the tenant. An enforcement agent is instructed to serve an enforcement notice on the tenant and the notice binds the property in the tenant’s goods from the time it is served. The goods remain bound until the arrears are paid or the goods are sold

Question 13

Remedies for tenant’s breach of covenant to pay rent - Forfeiture

Answer 13

Means the lease will be brought to a premature end. At common law, a landlord wishing to forfeit a lease because the tenant had not paid the rent had to show that the tenant had been given an opportunity to pay it. The landlord did this by making what is known as a formal demand. The landlord would attend at the premises on the last day for payment at a convenient hour before sunset and demand payment of the exact amount, such demand continuing until sunset. Assuming the landlord does not have to make a formal demand, he next must decide whether to forfeit by means of peaceable re-entry or whether to commence forfeiture proceedings. If the lease is a lease of a dwelling-house, the landlord will not be able to use peaceable re-entry as a means of forfeiting the lease. As a result, most landlords will obtain a court order to take possession of premises, unless it is clear that peaceable re-entry can be obtained.

Question 14

Remedies for any other breaches by the tenant - Damages

Answer 14

Damages are limited to:
- such as may fairly and reasonably be considered either arising naturally, ie according to the usual course of things, from such breach of contract itself; or
- such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.

Question 15

Remedies for any other breaches by the tenant - Specific performance

Answer 15

Where the court orders the other party to perform their obligations. Will only be granted where damages are not considered to be adequate.

Question 16

Remedies for any other breaches by the tenant - Injunction

Answer 16

In the case of a negative covenant, for example not to use premises for the purposes of a business, an appropriate remedy might be an injunction ordering the defendant not to contravene the covenant

Question 17

Remedies for any other breaches by the tenant - Forfeiture

Answer 17

Enables the landlord to terminate a fixed-term lease before that term expires. The landlord will have a right to forfeit where:
(a) the lease contains a provision for the landlord to re-enter the property for a breach of covenant by the tenant (a forfeiture clause); or
(b) the lease is granted subject to a condition that the landlord may forfeit it on the happening of some event
A landlord signifies an intention to forfeit either by means of peaceable re-entry, that is, physically re-taking possession, or by the service of proceedings.

Question 18

Remedies for any other breaches by the tenant - Forfeiture - Procedure

Answer 18

Before proceeding to forfeit, must check that the lease contains a right to do so, usually in the form of a forfeiture clause. Having done this, the landlord must then serve on the tenant a notice under s 146 of the Law of Property Act 1925. Assuming that the landlord has served a valid s 146 notice then, unless the tenant complies with the notice and remedies the breach, as in the case of forfeiture for non-payment of rent, the landlord may choose to forfeit either by serving proceedings on the tenant or by means of peaceable re-entry. Again the tenant may be entitled to relief from forfeiture.

Question 19

Remedies for landlord breaches - Damages

Answer 19

Damages are limited to:
a) such as may fairly and reasonably be considered either arising naturally, ie according to the usual course of things, from such breach of contract itself; or
b) such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it

Question 20

Remedies for landlord breaches - Specific performance

Answer 20

Court order to make the other party to perform the obligation.

Question 21

Remedies for landlord breaches - Self-help by means of set-off

Answer 21

There is the possibility of a set-off against rent. To succeed in claiming the right to set-off at common law, the tenant must notify the landlord that repairs are needed and that, unless he carries out the repair work in accordance with his covenant, she will arrange to have the repairs done herself. Having carried out the repairs, she may then deduct the cost of them from future payments of rent until she has been reimbursed in full. It is essential that the amount she is seeking to recover is a liquidated, or fixed, sum.

Question 22

Self-help and if the person doesn’t have the means to pay

Answer 22

If the person doesn’t have the resources to pay for the repairs then it is not sensible to sue them or go for self-help

Question 23

How much sums can you recover under an AGA

Answer 23

Under an AGA the landlord can only recover up to 6 months of sums

Question 24

Planning permission and enforceability of a covenant

Answer 24

Planning permission is not relevant to the enforceability of a covenant

Question 25

using a building in a specific way

Answer 25

restrictive covenant