Jennifer Slade COMMERCIAL LEASES LECTURE 6 Commercial Leases

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Jennifer Slade COMMERCIAL LEASES LECTURE 6

Jennifer Slade COMMERCIAL LEASES LECTURE 6

Commercial Leases: Lecture 6 Today’s topics �Alienation provisions T’s disposal of the lease

Commercial Leases: Lecture 6 Today’s topics �Alienation provisions T’s disposal of the lease

Commercial Leases: Lecture 6 Alienation �What is alienation? (p. 1) �Why would a landlord

Commercial Leases: Lecture 6 Alienation �What is alienation? (p. 1) �Why would a landlord wish to restrict it? �Part vs whole L may place greater restrictions on dealings of part

Commercial Leases: Lecture 6 Alienation � Forms of covenant/restriction – prohibitions come in different

Commercial Leases: Lecture 6 Alienation � Forms of covenant/restriction – prohibitions come in different “strengths” Absolute Qualified Fully qualified � Absolute “you must not…” – i. e. T needs waiver/variation of lease to dispose Effect at rent review? – will depress rent at review

Commercial Leases: Lecture 6 Alienation �Qualified (p. 2) “you must not…. without my consent/approval/licence”

Commercial Leases: Lecture 6 Alienation �Qualified (p. 2) “you must not…. without my consent/approval/licence” In writing ▪ Note Aubergine �Licences to assign/sublet All parties execute Direct covenants? ▪ Since no privity between L and sub-T, L will want direct covenant between them

Commercial Leases: Lecture 6 Alienation �Fully qualified – weakest form of prohibition “you must

Commercial Leases: Lecture 6 Alienation �Fully qualified – weakest form of prohibition “you must not…. without my consent/approval/licence, which is not to be unreasonably withheld” �Alienation clauses can provide different restrictions for part/whole e. g. fully qualified for dealings with whole, absolute for dealings with part

L’s consent (not to be unreasonably withheld) needed for assigning/subletting whole A “Permitted Part”

L’s consent (not to be unreasonably withheld) needed for assigning/subletting whole A “Permitted Part” may be disposed of under certain stricter conditions

Commercial Leases: Lecture 6 Alienation � Effect of s 19(1)(a) LTA 1927 (pp. 2

Commercial Leases: Lecture 6 Alienation � Effect of s 19(1)(a) LTA 1927 (pp. 2 -3) Converts qualified covenants to fully qualified covenants ▪ Implies “such consent not to be unreasonably withheld” into alienation covenants where landlord’s consent required All leases and all forms of alienation subject to this provision � Note also s 144 LPA – no premium can be charged for consent, but L’s reasonable costs can be required

Commercial Leases: Lecture 6 Alienation �Meaning of “reasonable” (p. 3) When is it reasonable

Commercial Leases: Lecture 6 Alienation �Meaning of “reasonable” (p. 3) When is it reasonable for a landlord to withhold consent (assignment/underletting)? �Leading case - International Drilling To be reasonable, refusal must be referable to L-T relationship Case law/examples (p. 4) ▪ Straudley Investments ▪ Moss Bros ▪ Ashworth Frazer } c. f. Newgate Centre } exercise

Commercial Leases: Lecture 6 Alienation �New tenancies: LT(C)A 1995 s 19(1 A) LTA 1927

Commercial Leases: Lecture 6 Alienation �New tenancies: LT(C)A 1995 s 19(1 A) LTA 1927 (pp. 5 -6) Applies to assignments only Commercial leases only (s 19(1 E)) �s 19(1 A) provides some certainty for when L’s refusal of consent will be reasonable: Circumstances and conditions when L’s refusal will not be unreasonable can be agreed (in the lease) (p. 7)

Commercial Leases: Lecture 6 Alienation � If a condition or circumstance involves L’s discretion,

Commercial Leases: Lecture 6 Alienation � If a condition or circumstance involves L’s discretion, then L to act reasonably or T to be able to refer to 3 rd party � Circumstances e. g. unsatisfactory references/poor financial standing, compliance with covenants � Conditions e. g. provision of an AGA, surety � Where circumstances and conditions do not determine whether L reasonable, use International Drilling to fill “gaps”

Billies Cookies question: Do the alienation provisions set out circumstances and conditions?

Billies Cookies question: Do the alienation provisions set out circumstances and conditions?

Billies Cookies question: Do the alienation provisions set out circumstances and conditions? 4. 10.

Billies Cookies question: Do the alienation provisions set out circumstances and conditions? 4. 10. 3 – conditions 4. 10. 4 - circumstances (p. 14 -15)

Commercial Leases: Lecture 6 Alienation � Further Tenant protection (p. 7) s 1 LTA

Commercial Leases: Lecture 6 Alienation � Further Tenant protection (p. 7) s 1 LTA 1988 – stops L’s solicitor “sitting on” T’s applications for consent � L’s duty to give consent unless reasonable not to, and if refused provide written reasons Onus Breach – tortious damages � Reasonable time No statutory guidance Cases (1 Month? ) ▪ Dong Bang Minerva ▪ Go West ▪ Blockbuster

Commercial Leases: Lecture 6 Alienation �LPA 1925 s 144 �[LTA 1927 s 19(1)(b)] �Offers

Commercial Leases: Lecture 6 Alienation �LPA 1925 s 144 �[LTA 1927 s 19(1)(b)] �Offers to surrender Allnatt