RE15 Outgoing (Original) Tenant Incoming Tenant ( assignee) Outgoing Landlords Incoming Landlords Outgoing Tenant TF Landlord's Remedies and Lease Termination Liability on Leasehold covenants If lease is granted ON or AFTER 1st January 1996 ( LTCA 1995) > Tenant is bound before assignment. > After T lawfully assigns lease, tenant will automatically be released from future liability (Landlord and Tenant (Covenants) Act 1995 (LTCA 1995). UNLESS He has agreed to enter an AGA which would make him liable. ( agreement entered into by outgoing tenant with LL in which outgoing tenant guarantees the performance of the lease by BY AN IMMEDIATE SUCCESSOR IN TITLE ONLY. doesn't extend to subsequent tenants) T will be obliged to provide an AGA only where : a) Commercial leases - where parties have agreed in their lease that an AGA is to be provided on assignment b) If LL lawfully requires the provision of an AGA as a condition of giving consent to the assignment => he will remain liable for any breaches committed before the date of assignment. =>The original tenant will not automatically be released from the covenants if he assigns in breach of covenant (e.g. fails to get landlord's consent). => If the tenant enters into an AGA and remains liable under it,, he should seek protection in the form of an indemnity covenant from his successor in title. Must be given expressly - Gets the benefit of the landlord's covenants when he takes assignment (s3(2)(b)). -> Bound by all the tenant's covenants in the lease, EXCEPT THOSE EXPRESSLY STATED TO BE 'PERSONAL' to the original tenant (s3(2)(a)). -> Will NOT automatically be released from his covenants unless he applies to the tenant to be released from future liability before or within four weeks of the date of assignment. - Automatically inherit the benefit of tenants covenants (s3(3)(b). If lease is granted BEFORE 1st January 1996 - LCTA doesn't not apply here -> Remains bound by the covenants for the whole of the contractual term due to privity. =>i.e. He is liable not only for breaches which he commits himself, but also for those committed by 1
RE15 TF his successors in title. => This liability continues after assignment UNLESS Landlord expressly agrees to release him. Incoming Tenant - Any assignee will be liable for breaches committed whilst ownership of the lease is vested in that assignee in respect of covenants which 'touch and concern' the land. ' covenants which touch and concern the land ' are those which would be entered into between parties as landowners rather than in their capacity as individuals Thus the landlord can potentially seek redress against either the original tenant or the assignee who committed the breach i.e. he gets the CHOICE of who to sue. BUT cannot claim double compensation Indemnity Covenant - In the light of the above, an assignee (Incoming Tenant) will usually be required to indemnify the Outgoing Tenant in respect of any breach of covenant committed after the date of the