SGS 8: Contents of a lease 1 Flashcards
(41 cards)
What should you breakdown your advice to clients into?
The four Ls:
- Lease
- Law
- Landlord’s title
- Local authority consents
When is it common for a commercial lease to start?
On the quarter day preceding the date of lease
How do you calculate the contractual expiry date?
- from and including [x]/commencing on [x] = the lease will expire on the day before that date in the relevant year/month
- from [25th march] -> will commence on 26th and expire on 25th
How do you ascertain the full picture re the service charge?
cross check the exact definition of the premises, the tenant’s repairing obligation and the landlord’s repairing obligation in the lease
Insurance rent = ?
the premium paid by the landlord for ensuring the premises against damage caused by insured risks and also for insuring against 3 years loss of rent. The tenant pays the IR to the landlord on the usual quarter days
rent suspension clause = ?
if the tenant’s premises are damaged by an Insured Risk so that they cannot be used or occupied, then the tenant does not have to pay the annual rent, insurance rent or service charge until the earlier of:
- the date the premises are again fit for occupation; or
- three years from the date of the damage
What if the premises are destroyed by an insured risk and cannot be occupied or used within three years?
Either party can serve a notice on the other to terminate the lease
What should an action for damages for breach of a repair covenant not exceed?
The amount of any reduction in the value of the landlord’s freehold interest. Damages are not recoverable where the premises are going to be pulled down or structurally altered after the end of the lease (s.18(1) LTA 1927)
What is the landlord’s remedy for breach of a tenant’s covenant?
Forfeiture:
- bring the lease to an end before its expiry date
- remove the tenant from the premises
Is the right of a landlord to forfeit a lease automatic?
No - it is only available as a remedy if the lease expressly reserves such a right in an express clause, giving the landlord right of re-entry following a defined triggering event
What must a landlord do before exercising the right to forfeiture for breach of covenant or bankruptcy?
Serve a s.146 notice on the tenant which must:
- Set out the breach
- Require it to be remedied within a reasonable time (if capable of remedy)
- Claim any compensation (damages) required
What can the tenant apply for when a s146 notice is served on them?
s.146(2): tenant can apply to the court for relief against forfeiture
What does the Leasehold Property (Repairs) Act 1938 apply to>
- breach of repair covenants
- leases that were originally granted for a term of 7 years or more, with at least 3 yers left to run at the date of notice
What must happen if the Leasehold Property (Repairs) Act 1938 applies?
Special s.146 notice must be served on these leases even if the landlord chooses just to claim damages for breach of a repair covenant rather than to forfeit the lease:
What must the s.146 special notice contain?
- statement that T has the right to serve a counter-notice (s.1(4))
What can the tenant do after having a s.146 special notice served on them?
The tenant has 28 days to serve a counter notice. If the tenant serves a counter-notice on the landlord, then the landlord has to get leave of the court before he can forfeit the lease, re-enter or sue for damages (s.1(3))
What did the Landlord and Tenant Act 1954 s.51(1) do?
Extended the LP(R)A to apply to all leases of at least 7 years with at least three years left to run at the date of the notice
Self help for breach of repair covenant - case 1
Jervis v Harris:
- If landlord reserves the right to enter the premises, makes good the damages and recovers the cost from a tenant and describes the sum due from the tenant as debt, this money would be recoverable by the landlord as debt
- Adv: any sum claimed is not subject to the same limitations r requirements as a claim for damages under s.18 LTA or under the LP(R)A
- Note: the landlord can only do this if the lease expressly reserves the right to do so using a J v H clause = allows the landlord to enter the premises to repair if the teantn has defaulted + sue the tenant as a debt to recover the cost of repairs
Self help for breach of repair covenant: case 2
Rainbow Estates ltd v Tokenhold ltd:
- An order for specific performance to force the tenant to comply with its repairing obligation is available in principle. However, this is a discretionary remedy and is more likely to be obtained in exceptional circumstances
Why will commercial landlords seek to reserve as many payments under the lease as possible as ‘rent’?
Broadened definition means a default on any such payment of rent without serving a s.146 notice
- s.146(1) no requirement for the landlord to serve notice if it is a breach of covenant to pay rent
What is the general rule on alterations?
The tenant is free to carry out any alterations to the premises, subject to the legal doctrine of waste = prevents alterations which would devalue the premises
What are some potential controls the landlord can have on alterations?
- limiting the type of alterations permitted
- requiring the landlord’s approval or consent in order to do the alteration works
- requiring reinstatement/removal of alterations at the end of the lease term
What is consent of the landlord to the tenant’s works documented by?
Licence for alterations
Who prepares the licence for alterations?
- landlord’s solicitor
