Enforcing Leasehold Covenants (1)

January 1996

January 1995

Date of any assignment irrelevant when deciding whether 1995 Act applies What matters is date of lease

Leases granted after 1st January 1996

Leases granted prior to 1st January 1996

If T1 assigns lease: T1 remains subject to burden of covenants in lease

If further assignments of lease (i.e. T2 assigns): T1 remains subject to burden of covenants in lease

If further assignments of lease (i.e. T2 assigns): T1 does not remain subject to burden of covenants in lease

If T1 assigns lease: T1 does not remain subject to burden of covenants in lease

T1’s contractual liability lasts until end of contractual term

If contractual term ends but lease continues under statute T’s liability will end when contractual term ends (unless lease provides otherwise)

Privity of estate between L1 and T2

Privity of contract between L1 and T1

Privity of estate between L1 and T1

Privity of contract between L1 and T2

Covenants which touch and concern land pass to T2

If T2 defaults then L1 has choice – can take action against T2 (privity of estate) or against T1 (privity of contract)

Covenants which touch and concern land do not pass to T2

If T2 defaults then L1 can take action against T2 (privity of estate)

Yes

No

Depends on whether each assignee covenants directly with L

(a) Action against T in possession at time of breach (Unlikely to be successful because if current T worth suing then L likely to have sued him in the first place)

(b) Action against person to whom he assigned the lease (Action on the indemnity covenant) Indemnity covenant is covenant by assignee to indemnify assignor for any losses suffered by assignor as result of default by assignee

Section 30 (1) (a)

Section 3 LT(C)A 1995

Section 4 LT(C)A 1995

Section 3 LT(C)A 1996

All landlord and tenant covenants pass to assignee (unless expressed to be personal)

Privity of contract still exists between Tenant 1 and L1

Assigning T is automatically released from any liability under lease

He ceases to be subject to burden of lease covenants

If assignee breaches lease covenant L can only bring action against assignee

All landlord and tenant covenants pass to assignee (unless expressed to be personal)