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LEASE TERMINATION - Coggle Diagram
LEASE TERMINATION
Methods of termination
- Effluxion of time
Fixed term tenancy w/out security of tenure will expire at end of contractual term
- landlord can require the tenant to vacate the premises, if tenant refuses = trespasser
If landlord consents to unprotected tenant remaining in occupation = tenant is not holding over, but would be treated as a ‘tenant at will’.
- If landlord accepts rent = tenancy at will may be converted to a periodic tenancy
- Break clause
Fixed term tenancy may contain a break clause, which allows the lease to be ended before the end of the contractual term
- If tenant exercises it = effective with a protected tenancy
- If landlord exercises it = only brings contractual term to an end but tenant may still hold over unless protected lease is contracted out
- Notice to quit
Periodic tenancy can be brought to end by notice which gives other party a specific date on which to vacate, which must expire on first day / last day of tenancy period unless tenancy agreement says otherwisenotice period required depends on the period of tenancy:
- Weekly = four weeks (residential) or one week (other tenancies)
- Monthly = one month
- Quarterly = one quarter
- Yearly = six months
If periodic tenancy is protected = landlord may serve notice to quit, but only end periodic tenancy so tenant can to hold over
- To recover possession from a protected tenant under periodic tenancy > serve a hostile section 25 notice supported by one or more of the statutory grounds w/in 6 to 12 months’ notice of the termination date
Tenant may also serve notice to quit if it wishes to leave the premises
- cannot serve a section 26 notice
- Surrender
Fixed term tenancy may be brought to an end earlier than end of contractual term provided both landlord and tenant agree
- Tenant gives up its leasehold interest to the landlord > express surrender must be made by deed
- Premium may be payable for surrender depending on who has most to gain > if paid by tenant = reverse premium
A surrender by operation of law arises when landlord and tenant act in way that is inconsistent with the continuation of the tenancyexpress surrender by deed or a surrender by operation of law are effective even if the tenancy is protectedIF there is agreement to surrender a protected tenancy in advance of the deed = parties must follow notice + declaration procedure
- Merger
When either tenant acquires landlord’s freehold superior interest (opposite to a surrender), or a third party acquires bothFreehold (or superior interest) + leasehold are merged and come to an end = only 1 is held so they both end > would happen whether the tenancy is protected or not
LANDLORD’S REMEDIES
- Damages
Available to landlord if tenant breaches covenants which are enforceable as a matter of contract between the parties > put the landlord back into the position they would have been were it not for the breach of covenantBUT costly and protracted, and the landlord may not be able to recover its costs.
- Action in debt
Landlord can issue court proceedings to recover a debt, such as unpaid rent, service charge or insurance rent.
- Limited to rent due in the 6 years before issue of proceedings > relevant to long leases, where low ground rents often go unpaid
Court claims may be costly and time consuming BUT time taken to pursue debt gives tenant breathing space + help preserve the landlord/tenant relationship
- Guarantor and rent deposit
The landlord can rely on contractual terms of a guarantee to claim its losses from the guarantor
- Landlord can pursue unpaid rent + any breach of the tenant’s covenants
Tenant will be required to top up the deposit after a withdrawal
- Commercial rent arrears recovery (CRAR)
Self-help remedies = cheaper and quicker than court proceedings.CRAR may be used where:
- premises are purely commercial
- minimum of 7 days’ principal rent is owed
- lease has not been forfeited
CRAR requirements
- landlord appoint an enforcement agent w required certificate from court or exempt from it
- 7 clear days’ notice must be given of intention to enter the tenant’s premises
- If notice expires without repayment of debt > enforcement agent can enter premises + seize goods up to the value of debt
- Landlord must serve a further 7 clear days’ notice if it intends to sell any of the seized goods.
- Equitable remedies
Specific performance
- An order to the tenant to do something that it has not done = rare
Injunction
- An order to the tenant not to do something > unlikely to be granted against an assignment that has already taken place
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BREACH OF REPAIR COVENANT
Neither forfeiture nor proceedings for damages are as simple as for other breaches.
Forfeiture procedureLandlord must serve a section 146 notice of its intention to forfeit, detailing remedy + giving tenant reasonable time to remedy the breach if:
- lease is for a term of 7 years or more + there are at least 3 years of the term left to run
If so = tenant has 28 days to serve a counter-notice. + landlord must get leave from court before proceeding
Damages procedure
Landlord must serve a section 146 notice of its intention to forfeit, detailing remedy + giving tenant 28 days to serve a counter-notice
Measure of damages is loss of value to landlord’s reversion NOT cost of putting premises into full repair
Other remediesSpecific performance = rarely granted for wants of repair
- SP / forfeiture / damages are not good remedies so the one below is most used
Jervis v Harris clause - self-help remedy
- commercial lease + FRI will almost always contain a self-help clause
- Give the landlord the right to: enter the property / carry out any repairs / recover the cost of doing so from the tenant.
- NO need for the landlord to serve a section 146 notice
- Cost of carrying out the repairs is treated as a debt to the landlord, not damages so can be recovered in full
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