These are notes on leasehold covenants created in 2019. They follow a structured format which condenses the relevant case law, statutory provisions and academic opinion that are relevant to the topic to aid with exam revision.
Leasehold covenants: 3. Covenant to behave in a tenant-like manner (to take
care)
Definition: Lord Denning- Warren v Keen- The tenant must take
Promises made between the landlord/lessor and proper care of the place. Must do the little jobs about
tenant/lessee as to the rights and obligations between the place which a reasonable tenant would do. Must not
them. (contained in the lease) Can be express or implied damage the house, wilfully or negligently
Covenants are only good if they can be enforced Transfer of leasehold covenants:
Issues: The landlord may pass their interest (the reversion- the
Implied covenants of landlord right to get back the land after the lease runs out) to a
Implied covenants of tenant third party usually via a sale of the freehold and the
Transfer of leasehold covenants: Main topic. tenant may pass their lease to a third party. These
Transfer- if the landlord were to sell the freehold to transfers are called assignments
somebody else would the new landlord be bound by the Assignment- means that an interest that has either been
previous covenants. (called assigning the reversion) sold or transferred to a third party- the assignee
When a tenant assigns their tenancy (when there is Landlord sells their reversion = the assignee becomes
existing lease and a tenant transfers or sells their lease it the new landlord
is referred to as an assignment) Tenant sells their lease, the assignee becomes the new
privity of contract and privity of estate tenant
leasehold covenants before 1 January 1996 Privity of contract and privity of estate:
leasehold covenants after 1 January 1996
Leases have a dual character, contractual (contractual
agreement) and proprietary (as a lease is an estate)
Implied covenants of the landlord: Need to look at the type of relationship exists between
the various parties to figure out if the original covenant
Three main implied covenants that a landlord is bound by, even if passes on the assignees
not written into the lease There exists between the original landlord and original
tenant a contract but there is also a proprietary interest
1. Covenant of quiet enjoyment in the form of the leasehold estate
Budd- Scott v Daniel- This is a covenant implied into the Contractual relationship = privity of contract
lease that the landlord would not disturb the possession Also enjoy a leasehold/proprietary relationship = privity
of the tenant of estate
Explained in Southark LBC v Mills- Landlord must not do Liability on covenants can be either contract based,
anything that substantially interferes with tenant’s title estate-based or both
to or possession of the premises, or his ordinary and Original landlord and original tenant- have both privity
lawful enjoyment of the premises of contract and estate
E.g.- disconnecting gas and electricity, blocking a Original landlord and landlord assignee- have privity of
window or erecting scaffolding outside a commercial contract but not estate. No proprietary relationship
property to block the premises exists
Overlaps with: Original tenant and tenant assignee- have privity of
2. Not to derogate from the grant/assignment contract, there is no privity of estate as there is no
Landlord must not prevent the tenant using the land in proprietary relationship
the way it is intended to be used Original landlord and tenant assignee – There is privity
3. Obligation to repair of estate but not contract, as the two have never
Smith v Marrable- Implied covenant to repair, to ensure entered into a contract
the premises will be fit for habitation Original tenant and landlord assignee- There is privity of
Not a high standard- premises do not have to be estate but not contract, as the two have never entered
pristine, just fit for habitation into a contract
Implied covenants of the tenant: Between original landlord and original tenant = privity of
contract
Three implied covenants that bind tenants Between the parties who hold the leasehold and
1. Covenant not to disclaim the landlord’s title- reversion = privity of estate
WG Clarke (Properties) v Dupre Properties LTD - Tenant If original tenant assigns the lease, the new tenant will
cannot deny that the landlord has title to the property. have privity of estate with whoever holds the freehold
Not something that happens often reversion (i.e., whoever is the current landlord)
If original landlord assigns the reversion, the new
More frequent: landlord will have privity of estate with the original
tenant
2. Covenant not to commit waste- Tenant must not cause
any physical change to the property that results in harm Covenants and leases created before 1st January 1996:
or loss to the estate
Position of the parties to leases created before the Landlord and
Most common: Tenant (Covenants) Act 1995 came into effect:
The position of the original parties to the lease:
, Original landlord and tenant are liable in contract (due or unpaid service charges), he must serve a problem
to privity of contract) for all leasehold covenants for the notice on the original tenant within 6 months of the sum
duration of the lease even if both have assigned their failing due- s.17 LTCA 1995 otherwise the landlord
interests- principle of continuing liability cannot claim
(e.g. Mr A owns a freehold and grants Mr B a 99-year
lease, contractual relationship exists. Mr A then sells his Position of assignee of landlord’s reversion:
freehold to Ms C, even though Mr A is not the liable he Can the new landlord enjoy the benefits of covenants
will be still be liable for those leasehold covenants and (sue tenants for breach of covenants) and be bound by
could still be sued if Ms C breaches the covenants) the burden of such covenants?
Where landlord has assigned the reversion, the benefits Key provision regarding the running of the benefit
of the covenants (the right to sue the tenant) passes to S.141 LPA 1925- Rent reversed by a lease and the
the new landlord- s.141 LPA 1925. benefit of every covenant or provision contained in the
E.g.: lease having reference to the subject matter of the lease
Mr A sells the freehold (there is already a 99-year lease shall be annexed and go with the revisionary estate in
created) to Mr B who becomes the new landlord (he the land
purchases the land when there is 95 years left on the This means that on assignment of the landlord’s
lease) which means that for the next 95 years Mr A can reversion (when the landlord sells the freehold to a new
still be held liable (sued for) for any breaches done by landlord), the benefits of all covenants (the right to sue)
Mr B. that have reference to the subject matter of the lease
If Mr C breaches a covenant of the lease (like not paying will run with the reversion (it will be attached to the
rent), the new landlord Mr B can sue him. However, if reversion for the new landlord). The new landlord would
Mr B breaches a covenant of the lease, Mr C can sue Mr have the right to sue the original tenant on the
A. covenants
Note: There is no implied covenant to pay rent must be
expressly written
Consequences of continuing liability for original tenant
can be severe What does a covenant that is a reference to the subject matter
Mr C (tenant) assigns the lease to Ms D, Ms D breaches of the lease mean?
the covenant of the lease (not to pay rent). Under the Spencer’s case- Reference to the subject matter of the
principle of continuing liability and the nature of privity lease are covenants that touch and concern the land-
of contract, even though Mr C has sold the lease P&A Swift Investements v Combined English Stores
(assigned the lease) he can be sued for Ms D breaching Group Plc - Test for whether a covenant touches and
the covenant concerns the land-
The 1995 act is not retrospective, the rules above apply The covenant must benefit whoever is the current
to covenants and leases created before 1st January 1996, landlord
many leases are long term and could still fall under this The covenant must affect the nature, quality, most of
provision use, or the value of the land (important)
Consequences of continuing liability: The covenant must not be expressed to be personal.
In other words, the covenant must be proprietary
If the original tenant assigns the lease, the original (benefit the land), not personal (benefit particular
landlord can still sue the original tenant for breaches individual).
committed by the new tenant. In summary: under S 141 LPA 1925, all proprietary
This happened frequently during recessions in 1990’s covenants will run automatically to the new landlord
when the new tenant failed to pay rent and was who can sue the original tenant on them.
bankrupt/insolvent
Running of the burden to the new landlord:
Harshness of the continuing liability principle can be s.142 LPA 1925- obligation to perform the covenants
mitigated: On assignment of the landlord’s reversion, the burden of
If express limitation of liability is in the lease (but these all covenants that touch and concern the land (are
are rare) proprietary) will run automatically to the new landlord.
Indemnity covenants: This means that the tenant has the choice on whether
Can be expressed or implied under s.77 LPA 1925 they want to enforce a landlord covenant, like a
Express- The new tenant who gets the lease agrees to covenant to keep the property in good repair. Can
indemnify (protect) the old tenant for any breaches that choose to sue the old landlord or the new landlord
the old tenant might get sued for. This can be done Old landlord remains liable under privity of contract.
again and again, each time the tenancy is assigned. There is privity of estate between the new landlord and
However, in order for it to be work, there must be a new the current tenant and that is why when the old
indemnity covenant each time and it must remain landlord assigns the reversion why the burden of all
unbroken. covenants that touch and concern the land run with the
Original tenant will not be liable for any increased rent reversion
prices resulting from a difference of terms of the original
lease after assignment Position of assignees of the tenant’s lease:
Where the original landlord wants to recover a fixed
sum from original tenant (e.g. x amount of rent arrears
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller BigH. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.08. You're not tied to anything after your purchase.
