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3 Cards in this Set
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What are the rules relating to the running of the benefit and burden of leasehold covenants pre-1996 |
An assignee of the Landlord can enforce the benefit of the tenants covenants if they have reference to the subject matter of the lease (i.e. they "touch and concern") - s141 LPA 1925. An assignee of the landlord can be bound by the landlords covenants under s142 LPA 1925 on the same principle.
Under Spencer's Case (1583) an assignee of the Tenant can be bound by the covenants if:
1) the lease was made by deed
2) the assignment was by deed
3) there is privity of estate between the landlord and assignee (meaning there is a landlord/tenant relationship)
4) the covenant "touches and concerns" the estate.
Touch and concern was discussed in P & A Swift Investments Ltd v Combined English Stores Group (1989) and means that the covenant affects the use and value of the estate and is not expressed to be personal. |
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What are the rules relating to the running of the benefit and burden of leasehold covenants post-1996 |
Following Landlord and Tenant (Covenants) Act 1995 the running of the benefit and burden of leasehold covenants has been simplified.
Under s3 LT(C)A 1995 the benefit and burden of the tenant covenants are automatically transmitted on lawful assignment.
This is with the exception of any covenants expressed to be personal (s3(6) LT(C)A 1995)
Under s5 there is an automatic release of the original tenant from liability on non-personal covenants on lawful assignment.
By s16 the landlord can make it a condition of assignment that the tenant enters into an Authorised Guarantee Agreement guaranteeing the performance of the covenants by their assignee. Following s19(1A) Landlord and Tenant Act 1927 a commercial landlord may reasonably withhold consent to assignment until this is complied with.
There is no automatic release from liability for original landlord on assignment of the freehold reversion but they may apply to the tenant in writing for release (s6) or apply to the court if this is refused (ss7 and 8).
Under s17 the original tenant can be held liable on covenants to pay fixed sums, such as rent, provided landlord serves written notice within six months of default. If tenant receives such notice he can call for an overriding lease to put him in the position of landlord to his assignee and, more importantly, take back possession of the premises (s19).
Unlike the common law, LT(C)A 1995 applies to equitable leases too (s28(1)).
s23 LT(C)A 1995 reverses the decision in Re King (1963). |
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How can leasehold covenants be enforced against a sub-tenant by a freeholder? |
There is neither privity of contract nor privity of estate between a freeholder and sub-tenant. Even following LT(C)A 1995 the only remedy a head landlord will have against a sub-tenant is under principle in Tulk v Moxhay (1848) to enforce restrictive covenants in equity or forfeit for a breach with a right of re-entry which is a legal interest under s1(2)(e) LPA 1925. This must be protected in registered land. |
