#10237 - Alienation Leases Model Answer - Property Law and Practice

• Clause 4 Tenant’s Covenants – Tenant covenants to observe Tenant’s Covenant

• Clause 4.10 Alienation

• Clause 4.10.1(i) – Absolute clause prohibiting MM from assigning, charging or parting with possession only part of the premises. Clauses 4.10.1(ii) and 4.10.1(iii) respectively, prohibit share possession or occupation as well as underletting a part of or the whole premises unless permitted under 4.10. The provision regarding assignment will be seen as not unreasonable on the Landlords part as this provision has been agreed between the landlord and MM and it is a new commercial lease (s19(1)(A) Landlord and Tenant Act 1927)

• Clause 4.10.7 – notwithstanding clause 4.10.1 (Mini Mee can’t part with possession of the whole premises or allow someone to share the premises or any part of it (apart from a permitted assignment of the whole) Mini Mee can share occupation with a Group Company (1.1 “Definitions” defines Group Company). If this does happen, no new landlord/tenant relationship should be created. Absolute prohibition, but don’t need Landlord’s consent for approved parting with possession.

• Clause 4.10.2 – Mini Mee can’t assign or charge the whole premises without getting written consent from the landlord (not to be unreasonably withheld – fully qualified covenant). Tenant must satisfy the circumstances in Clause 4.10.2(i) (Financial Standing of the assignee) as well as the conditions in Clause 4.10.2(ii) (SEE the LIST ON THE LEASE AND LIST THEM) to get permission to assign. These circumstances and conditions will be seen as not unreasonable on the Landlords part s19(1)(A) of the LT Act 1927. This does not mean that this will hold up in court, but it will help the Landlord’s case.

Clause 4.10.2(ii)

• Clause 4.10.2(ii)(a)

• Clause 4.10.2(ii)(b) Mini Mee as the assignor must enter into an Authorised Guarantee Agreement (AGA) to act as a guarantee for the assignee. This will mean if the assignee breaches any of its covenants, the Landlord will be able to recover from Mini Mee, who will then be able to recover from the assignee.

Under the Third Schedule (Guarantee) clause 1.2, the Guarantor is required to guarantee that the assignor (Mini Mee) performs its duty’s under the AGA. This will mean if the assignee breaches any of its covenants, the Landlord will be able to recover from the guarantors only if they failed to gurantee that the Assignor (Mini Mee) failed to honour his covenant under Clause 4.10.2(ii)(b) (Guarantor will then be able to recover from the assignee)

• Clause 4.10.2(ii)(c)

• Clause 4.10.2(ii)(d) B4 completion of assignment Mini Mee rent must be fully paid

• Clause 4.10.2(ii)(e)

• Clause 4.10.4 Mini Mee cannot underlet unless: (LIST)

NOTICE (Clause 8 (8.1 in writing; 8.2 served at registered office; 8.3.1 personally; 8.3.2 if by post deemed served on 3^rd working day)

If Mini Mee wants to assign

• S1 LTA 88 – Landlord must respond in written within a reasonable time to Mini Mee’s written request to assign. If the Landlord refuses, he must give his reasons why. If the Landlord gives conditional consent, the conditions imposed should be reasonable. If the Landlord fails to do this it could lead to a liability for a breach of the statutory duty in tort for the Landlord.

Timetable for Landlord giving consent

• SCPC 10.3.2(a) – Seller (Mini Mee) should have applied for consent to the landlord at its own expense and used reasonable efforts to obtain it

• SCPC 10.3.2(b) – Buyer must comply with all reasonable requirements for obtaining that consent including...