#3494 - Covenants Notes - Property Law and Practice

Type of clause?	What does it do?	Landlord’s Concerns	Tenant’s Concerns	SC/SCPC/Statute?	Remedy for Breach
User Covenant	Restricts the tenant’s use of the premises Planning Legislation – tenant may not be able to carry out any building or other operations. Cannot make a material change in use of premises without obtaining planning permission Covenants affecting a superior title – restrictive covenants affecting the landlord’s reversionary title which bind tenant Common law restraints – law of nuisance may prevent tenant from using premises in such a way as to cause disturbance to a neighbour	Maintain value of interest in premises Maintain rental value of premises Avoid damaging reputation of premises by immoral or undesirable uses Maintain value of adjoining premises owned by landlord Avoid tenant competing with other premises of landlord in vicinity Maintain a good mix of different retail uses in a shopping precinct owned by landlord Perform balancing act between control of the tenant and good estate management, and maximisation of rental values Ensure lease clearly states that any reference to the UCO is intended to refer to the Order as enacted at the time the lease was granted	Rental values and rent review reflecting restrictive use Narrower covenant avoided as limits ability to dispose of premises at some stage in future Have regard to own future use of premises Not too wide that will allow landlord to increase rental value of tenant’s interest at review Ought to resist a positive covenant	Code cl.8 – landlords’ control over alterations and changes of use should not be more restrictive than necessary… Can define use by reference to the Town and Country Planning (Use Classes) Order 1987 (UCO)	Landlord can claim damages for tenant breach of positive covenant Claim injunction for breach of negative covenant
Absolute Covenant	Gives landlord absolute control over any change in the use of the premises in that it permits the tenant to use the premises for the purpose of the permitted use and no other Can only use premises in way not permitted by getting landlord to agree to a variation of the lease		If narrowly defined then resist, unless sure that will not want to assign or sub-let the premises, or diversify business If widely defined, then tenant need not be unduly concerned
Qualified Covenant	Allows tenant to alter the use of the premises from a permitted use to some other use with the landlord’s prior consent, usually required to be given in writing		Tenant is at mercy of landlord who may decline request for change of use for whatever reason he chooses	No statutorily implied provision that the landlord’s consent is not to be unreasonably withheld S19(3) LTA 1927 Provided change of use will not entail any structural alterations to the premises, the landlord is not allowed to demand as a condition of his giving consent the payment of a lump sum or an increased rent BUT can insist upon payment of reasonable compensation in respect of damage to or diminution in value of premises or any neighbouring premises belonging to landlord Does not apply to agricultural or mining leases
Fully Qualified Covenant	Allows tenant to change the use of the premises with the prior consent (in writing) of the landlord, whose consent is not be unreasonably withheld – landlord can also not unreasonably delay giving consent		Without express provision in lease, there is no obligation on landlord to provide tenant with reasons for refusing consent	S19(3) LTA 1927	Tenant to apply to court for a declaration that landlord acting unreasonably and then proceed without consent
Alterations Clause	Restrict tenant’s ability to alter or make structural/interior changes to the premises	Maintain rental and capital value of premises by preserving character, reputation, appearance and physical integrity of premises Ensure that at end of lease tenant gives back premises which are substantially the same as those demised to tenant at start Ensure landlord does not inadvertently become responsible for any breach by the tenant of the external restrictions which impact on alterations			Injunction or damages
Absolute Covenant	Tenant can always ask the landlord for permission to make the prohibited alteration, but the landlord can simply refuse		Argue against except, perhaps, where the covenant relates only to structural or external alterations or where the letting is for a short term and the tenant is confident that it will not need to alter the premises in the future	Tenant can obtain a court order to enable it to carry out works required by some statutory bodies Tenant can use the provisions of the LTA 1927 to enable it to carry out works
Qualified Covenant	Prohibits alterations to the premises by the tenant without the landlord’s prior consent (usually in writing)		To avoid any...

#3494 - Covenants Notes - Property Law and Practice

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