Termination of lease MCQs Flashcards
A landlord owns the freehold of a building which it has leased to several tenants under separate leases. One tenant has carried out alterations without the landlord’s consent. The lease states that landlord’s consent is required for all alterations.
What is the landlord entitled to do next?
The landlord will be entitled to forfeit the lease, irrespective of whether there is any specific provision in the lease, but must first serve a section 146 notice.
The landlord will be entitled to forfeit the lease, if there is a specific provision in the lease enabling it to do so, but must first serve a section 146 notice.
The landlord will be entitled to forfeit the lease, if there is a specific provision in the lease enabling it to do so. A section 146 notice is unnecessary for this type of breach.
The landlord will be entitled to forfeit the lease, irrespective of any specific provision in the lease, but must first serve a section 146 notice. The notice will need to include reference to the tenant’s entitlement to serve a counter-notice.
The landlord will be entitled to forfeit the lease, if there is a specific provision in the lease enabling it to do so, but must first serve a section 146 notice. The notice will need to include reference to the tenant’s entitlement to serve a counter notice.
The landlord will be entitled to forfeit the lease, if there is a specific provision in the lease enabling it to do so, but must first serve a section 146 notice.
Correct. A landlord’s ability to forfeit only arises if there is an express provision in the lease enabling it to do so. Before forfeiture can take place, however, the landlord must serve a section 146 notice.
A landlord owns the freehold of a building which it has leased to a number of tenants. One tenant has let its premises fall into a state of disrepair. Under the lease the tenant is required to keep its premises in good and substantial repair and condition.
Which one of the following statements describes the landlord’s best course of action?
The landlord will be entitled to enter the premises, if there is a specific provision in the lease enabling it to do so, to carry out the remedial works itself and claim the costs of doing so from the tenant as damages.
The landlord will be entitled to enter the premises, if there is a specific provision in the lease enabling it to do so, to carry out the remedial works itself but must first serve a notice pursuant to s.146 Law of Property Act 1925.
The landlord will be entitled to enter the premises, irrespective of a specific provision in the lease enabling it to do so, to carry out the remedial works itself and claim the costs of doing so from the tenant as a debt.
The landlord will be entitled to enter the premises, if there is a specific provision in the lease enabling it to do so, to carry out the remedial works itself and claim the costs of doing so from the tenant as a debt.
The landlord has no entitlement to enter the premises to carry out any remedial works due to the principle of quiet enjoyment.
The landlord will be entitled to enter the premises, if there is a specific provision in the lease enabling it to do so, to carry out the remedial works itself and claim the costs of doing so from the tenant as a debt.
Correct. The case of Jervis v Harris concluded that the landlord can reserve the right to enter the premises, make good the damage itself and recover the cost from a tenant. If the lease describes those costs as a debt, this money would be recoverable by the landlord as a debt. The advantage of this for the landlord is that any sum claimed as a ‘debt’ is not subject to the same limitations or requirements as a claim for damages under s.18 of the Landlord and Tenant Act 1927 or under the Leasehold Property (Repairs) Act 1938.
A tenant of commercial premises is more than a month in arrears with its service charge payments. Principal rent, service charge and insurance premium are all reserved as rent under the lease. A right of forfeiture arises under the lease when rents are unpaid for more than 21 days. Apart from the service charge arrears, the landlord is happy with the tenant. It is currently a difficult market for landlords wanting commercial tenants.
Which one of the following is the best remedy for the landlord to recover the service charge arrears?
Specific performance.
Commercial Rent Arrears Recovery.
A debt action.
Injunction.
Forfeiture.
A debt action.
Correct. While the other options might sound plausible they are each incorrect. The landlord is happy for the tenant to remain and so it would not be in the landlord’s interests to forfeit the lease. CRAR can only be used to recover principal rent, VAT and outstanding interest– not service charge or insurance. Specific performance and injunctions may be appropriate in limited circumstances for other breaches of covenant, but not for non payment of rent. Therefore the landlord should sue for non payment of rent.
A commercial tenant with a 15 year protected lease with 10 years still to run wants to bring the lease to an end. The tenant has ruled out the possibilities of assignment or underletting and there is no break clause. The landlord has no interest in recovering the premises from the tenant.
How would you advise the tenant?
The tenant should leave the premises and return the keys to the landlord.
The tenant should try to negotiate with the landlord for a surrender. It is likely a premium (not reverse) will be payable.
The tenant should try to negotiate with the landlord for a surrender. It is likely a reverse premium will be payable.
The tenant should try to negotiate with the landlord for a surrender. It is likely no premium will be payable as the tenant will be released from the rent and the landlord will obtain the benefit of the vacant premises.
The only way in which a protected lease can be brought to an end before the expiry of the contractual term is forfeiture. However, you would not advise the tenant to breach the lease.
The tenant should try to negotiate with the landlord for a surrender. It is likely a reverse premium will be payable.
Correct. The tenant’s only option apart from alienation is to try to agree a surrender. As the landlord will be giving up 10 years of rent, the landlord is likely to want a lump sum from the tenant to compensate it for this. As the money goes in the same direction as the property interest, it would be a reverse premium.
You act for a landlord of a commercial property. Last year, your client let the property to a retail tenant for a term of 10 years. The tenant has failed to pay the last 2 quarter’s rent payments and your client wants to forfeit the lease.
The lease contains a forfeiture clause permitting the landlord to forfeit the lease if the tenant is more than 21 days in arrears of rent. The tenant has written to the landlord to confirm it will be able to pay the upcoming quarter’s rent payment in 2 weeks’ time but will need a further 6 months to settle the arrears.
Which statement describes the best advice to give to your client?
The landlord can forfeit the lease using either the peaceable re-entry method or the court action method, without having to serve a section 146 notice first.
The landlord can pursue forfeiture but it would be advisable to pursue Commercial Rent Arrears Recovery at the same time.
The landlord can forfeit the lease without having to serve a section 146 notice when using the court action method but would need to serve a s 146 notice if using the peaceable re-entry method.
The landlord should wait until the tenant has paid the next quarter’s rent before forfeiting the lease.
The landlord is unlikely to be successful in pursuing forfeiture as the tenant has already confirmed that it will repay the arrears in six months.
The landlord can forfeit the lease using either the peaceable re-entry method or the court action method, without having to serve a section 146 notice first.
This is correct. A section 146 notice is not required where forfeiture is pursued for non-payment of rent (s146(11) Law of Property Act 1925).
Question 1
A solicitor acts for the landlord of a freehold property let to a tenant for a term of 15 years
with eight years left to run. The tenant has not carried out repairs in accordance with its
repairing obligations in the lease. Following the procedure set out in the self- help clause in
the lease, the landlord has entered the property and carried out the repairs.
Will the landlord be able to recoup all of its costs from the tenant?
A No, the landlord will only be able to recoup the value by which the freehold interest in
the property has reduced in value, rather than the full cost of the repair.
B No, because the landlord did not serve a s 146 notice on the tenant.
C No, because the landlord did not seek the leave of the court to pursue this claim.
D Yes, the landlord should be able to recover the full costs of the repair in a debt action.
E Yes, the landlord should be able to recover the full costs of the repair as damages.
Answer
Option D is correct. Although the breach of covenant here is a failure to repair, the case
of Jervis v Harris confirmed that a liquidated sum sought to reimburse a landlord after
exercising the self- help remedy in a lease is an action for debt rather than damages (so
option E is wrong). Accordingly, the landlord is not bound by the restrictions on claims for
damages in LTA 1927 (as in option A) and LP(R)A 1938 (as in options B and C).
Question 2
A solicitor acts for the landlord of a freehold office building. In 2015, the landlord let the
whole of the building to an insurance company for a term of 10 years. Rent is payable
monthly. In 2017, the insurance company assigned the lease to an accountancy firm, with
the landlord’s consent as required under the terms of the lease. In 2019, with the landlord’s
consent, the accountancy firm assigned the lease to a recruitment agency. As a condition of
obtaining consent, the accountancy firm entered into an authorised guarantee agreement
(‘AGA’) with the landlord. It is now 2022 and the recruitment agency has failed to pay rent
for the past three months.
Which of the following statements is the best advice to the landlord in this situation?
A The landlord will only be able to sue the accountancy firm and the recruitment agency.
B The landlord will only be able to sue the recruitment agency because the insurance
company and the accountancy firm will have been released from liability under the
tenant’s covenants in the lease by statute.
C The landlord will be able to sue all three tenants but must first serve them each with
a notice under s 17 Landlord and Tenant (Covenants) Act 1995 in respect of the
recruitment agency’s failure to pay the rent.
D The landlord will be able to sue all three tenants, but in the case of the insurance
company and the accountancy firm the landlord must first serve them each with
a notice under s 17 Landlord and Tenant (Covenants) Act 1995 in respect of the
recruitment agency’s failure to pay the rent.
E The landlord should be able to sue the accountancy firm and the recruitment agency,
but only for rent arrears of not more than six months.
Answer
The best advice is contained in option A. This a new lease under LT(C)A 1995. The current
tenant, the recruitment agency, is clearly in breach of the covenant to pay rent and will
be liable for the breach. Former tenants are automatically released on assignment, so
the insurance company has been released. However, liability can continue if the outgoing
tenant has given an AGA and as the accountancy firm has done this, it will remain liable for
breaches of the tenant’s covenants. Option B is not the best advice as it ignores the AGA.
Options C and D incorrectly refer to the possibility of suing all three tenants.
Former tenants can only be made liable for payment of fixed sums if notified of the breach
within six months of the sum falling due (or the landlord commences an action against the
former tenant within that time). As there are only three months of arrears, the accountancy firm
can still be sued for the recruitment agency’s failure to pay rent. As long as the s 17 notice is
given to the accountancy firm, there is no restriction on the amount of the arrears that can be
recovered. The Limitation Act 1980 puts a limitation of six years on recovery of rent, but the
lease only has another three years before it is due to expire. Option E is not the best answer
as it is vague and imprecise.
Question 3
It is 2022 and a tenant is having difficulty paying the rent reserved by its lease. The
quarterly payment of annual rent was due 10 days ago. The lease contains a clause
entitling the landlord to forfeit the lease whenever any rent reserved by the lease is
outstanding for 15 days after becoming payable, whether formally demanded or not. The
tenant’s problems are caused by an administrative error by its bank and the tenant has not
been in breach of covenant before.
Which of the following statements is the best advice to the tenant about the landlord’s
remedies for the failure to pay the rent on time?
A The landlord can forfeit the lease immediately.
B The landlord cannot forfeit the lease immediately because it needs to make a formal
demand first.
C The landlord is unlikely to succeed in any attempt to forfeit the lease.
D The landlord cannot forfeit the lease immediately because it needs to wait longer from
the rent due date.
E The landlord can forfeit the lease if the rent is not paid in the next five days.
Answer
Option C is correct. The lease dispenses with the need to make a formal demand (so option
B is wrong), but the rent has only been due for 10 days and the lease stipulates the need to
wait 15 days (so option A is wrong).
Options D and E recognise that the landlord will have to wait longer before the right of
forfeiture arises, but are not the best advice as they suggest that this is the only obstacle
facing the landlord in a forfeiture action. The tenant can apply for relief from forfeiture and
this is likely to be granted because the tenant has not been in breach before and the problem
is unlikely to be repeated. The facts do not suggest that the tenant is in long- term or severe
financial difficulty.
Question 1
A solicitor acts for the landlord of a retail unit. The lease was granted for a term of 10 years
commencing on 5 January 2015. It is now 1 May 2024. The lease was not contracted out
of the Landlord and Tenant Act 1954 (the 1954 Act) and the landlord has instructed the
solicitor to serve a s 25 notice on the tenant to terminate the lease on 5 January 2025.
Can the solicitor comply with the landlord’s instructions?
A No, because the tenant enjoys security of tenure so the landlord cannot terminate the
lease unless the tenant is in breach of at least one of the tenant’s covenants.
B No, because is too early to serve the s 25 notice.
C No, because it is too late to serve the s 25 notice.
D Yes, because the landlord will be able to comply with the requirements of the 1954 Act
for service of the s 25 notice if it is served today.
E Yes, because the 1954 Act allows a landlord to terminate a tenancy in the last six
months of the contractual term
Answer
Option D is correct. The contractual expiry date of the lease is 4 January 2025 so on 1 May
2024, the landlord is within the 12– 6 month window to terminate on that date. It is neither
too early nor too late to serve the s 25 notice, so options B and C are wrong.
Option A is misconceived as the 1954 Act allows the landlord to terminate the lease
whether or not the tenant is in breach of the lease; breaches of the lease may be relevant
to whether the landlord can successfully oppose a renewal of the lease using s 30 grounds
(a), (b) and (c) but this is a different point about which there is no information in the facts.
Option E is wrong as the proposed date for termination of the lease in a s 25 notice cannot
be earlier than the date the tenancy could have been terminated under the common law,
which for a fixed term lease is the contractual expiry date.
Question 2
A landlord owns a property which is let to a business tenant on a 10 year fixed term lease.
The contractual term expires in just over six months’ time and the landlord wishes to serve
a s 25 notice on the tenant opposing the grant of a new tenancy today. The landlord
acquired the property four and a half years ago and wishes to move into the property itself
when the tenant leaves. Last year the tenant failed to pay the June instalment of the rent
but has otherwise been a good tenant.
Which of the following statements is the best advice to the landlord as to which
ground(s) to specify in its s 25 notice?
A The landlord cannot rely on ground (g) because it has only owned the property for four
and half years.
B The landlord will be able to rely on grounds (b) and (g), but it would be better to rely
on ground (b) as it is a discretionary ground.
C The landlord is unlikely to be able to rely on ground (b) but could rely on ground (g).
D The landlord will be able to rely on grounds (b) and (g), but it would be better to rely
on ground (b) as the tenant will not be entitled to compensation.
E The landlord will be able to rely on grounds (b) and (g), but it would be better to rely
on ground (g) as it is a mandatory ground.
Answer
Option C is correct. On the facts, the two grounds that are potentially available to the landlord
are (b) and (g). Ground (b) is discretionary and ground (g) is mandatory.
Ground (b) is available where there has been a persistent failure by the tenant to pay rent.
The tenant has only missed one rent payment and so it is unlikely that the landlord could rely
upon it. Options B, D and E are, therefore, not the best advice. Option B is also misconceived
as it would not be better to rely on a discretionary ground where a mandatory ground is
available. Option D is correct that ground (b) is a non- compensatory ground and this might
have been a reason for choosing it had it been available.
Ground (g) is available where, at the termination of the lease, the landlord intends to occupy
the premises as its business or residence. This is not available if the landlord acquired its
interest in the property within five years of the ending of the current tenancy. This will be the
termination date specified in the s 25 notice. Although the landlord has not yet owned its
interest in the property for five years on the date of service of the s 25 notice, it will have done
so by the termination date specified in the s 25 notice and so will not be barred from relying
on ground (g). Option A is therefore wrong.
Question 3
A solicitor acts for the freehold owner of an office building. The client needs to occupy the
whole of the building in 18 months’ time, but wants to raise some rental income from the
building in the meantime. The client has identified a suitable short- term occupier.
Which one of the following options will best achieve the client’s objective?
A Granting the occupier a lease for 18 months, contracted out of the Landlord and Tenant
Act 1954.
B Granting the occupier a tenancy at will.
C Granting the occupier a contractual licence.
D Granting the occupier a lease for six months, followed by another lease of six months
when the first one expires.
E Granting the occupier a lease for six months with an option to extend the term by a
year once the first six months has passed.
Answer
Option A is correct. A fixed term lease of 18 months gives the client certainty of income for
the whole of the period, but the occupier will not have the right to stay on in the property or
renew the lease as a contracted out tenancy is excluded from security of tenure under the
1954 Act.
In relation to option B, the 1954 Act excludes tenancies at will from security of tenure, but
a tenancy at will can be terminated without notice by the occupier so gives no certainty of
income. In relation to option C, a contractual licence is not a tenancy within the meaning
of s 23 of the 1954 Act but may be construed as a (secure) lease if, in practice, exclusive
possession is enjoyed.
In relation to option D, two tenancies of exactly six months each (so not resulting in occupation
for more than 12 months) will not attract security of tenure but will not guarantee income for
the full 18 months. Also, the client cannot be sure that the occupier will take the second lease
once the first lease expires.
In option E, the tenancy will be treated as a tenancy for more than six months so enjoy
security of tenure under the 1954 Act.
A solicitor is acting for a tenant of business premises in connection with an application for the grant of a new tenancy, following service by the tenant of a request under s.26 of the Landlord and Tenant Act 1954 (1954 Act).
Although the landlord is not opposing the grant of a new tenancy, the tenant is concerned that they will not reach agreement on the terms of the new tenancy.
The solicitor advises the tenant that in default of agreement the court has the power to order the grant of a new tenancy for a new duration.
The tenant has asked for clarification on the extent of the court’s powers.
If the landlord and tenant do not agree the terms of the new tenancy, what order can the court make?
A. The court can only order the grant of a new tenancy on the same terms as the existing tenancy.
B. The court can only order the grant of a new tenancy on the same terms as the existing tenancy except with regard to rent.
C. The court can only order the grant of a new tenancy on the same terms as the existing tenancy for a term not exceeding 15 years.
D. The court can only order the grant of a new tenancy on such terms as it determines under the 1954 Act for a term not exceeding 15 years.
E. The court can only order the grant of a new tenancy on the same terms as the existing tenancy and contracted out of the 1954 Act.
D - The court can only order the grant of a new tenancy on such terms as it determines under the 1954 Act for a term not exceeding 15 years.
