#4870 - Landlord's Remedies For Breach - Property Law and Practice

Landlord's remedies for a tenant's breach of its obligations 1) Which lease clause has been breached and what is it a breach of? e.g. - Clause 5.1 - Payment of rent clause 2) Does the lease allow for forfeiture for breach of this clause? e.g. - Yes, Clause 8.1.1 allows for forfeiture as a result of breach of clause 5.1 3) For the landlord to forfeit, does a s.146 notice need to be served by the landlord? - s.146(1)(a)(b)(c) Law of Property Act 1925 a) Is a s.146 notice required? b) What should the s.146 notice specify? Breach of the covenant to pay rent s.146 notice is not required and landlord can forfeit at this point, making it easy to forfeit for rent breach of rent covenant Breach of any other covenant (e.g. occupation or repair covenants) s.146 notice is required 1) The specifics of the breach 2) Require the breach to be remedied within a reasonable time 3) Ask for any compensation required 4) If a s.146 notice has to be served, does it have to refer to the tenant's right to serve a counter notice? - s.1(4) LP(R)A 1938 5) If the tenant serves a counter-notice, what must the landlord do first in order to forfeit? - s.1(3) LP(R)A 1938 Breach of occupation covenant (unlawful occupation) s.146 notice does not need to refer to tenant's right to serve counternotice. Therefore landlord can forfeit at this point for breach of occupation covenant Breach of repairing covenant The lease was originally granted for at least 7 years and there are at least 3 years left to run at the date of the s.146 notice - s.51 Landlord and Tenant Act 1954 The landlord must get the leave of court to forfeit. Once he has this the landlord can forfeit. s.146 notice must refer to the tenant's right to serve counter-notice on the landlord within 28 days. 6) If the tenant serves a counter-notice, what must the landlord do first in order to sue for damages? - s.1(3) LP(R)A 1938 The landlord must get the leave of court to get damages. Once he has this the landlord can get damages 7) If the landlord gets damages, does the statutory cap on damages apply? - s.18(1) What is the effect of the cap? It limits the amount of damages payable to the landlord by tenant to the amount of any reduction in the value of the landlord's reversion. This will likely limit damages greatly. e.g. For a 20 year lease, with 18 years left, the freehold (reversion) will not lose much value as a result of poorly maintained electronic doors as, in 18 years, the tenant will probably have rectified the problem. 8) What other remedies are available to the landlord? a) Breach of payment of rent covenant 1) Court action in debt * The landlord can take court proceedings to recover the arrears of rent * Limited to 6 years' of rent arrears 2) Distress * Landlord seizes goods to the value of the outstanding rent * Limited to 6 years' of rent arrears 3) Security (rent deposit or guarantor) * The landlord can recoup unpaid rent from the rent deposit or guarantor * Details normally set out in a separate Rent Deposit Deed b) Breach of occupation covenant (unlawful occupation) 1) Specific performance * Rare to be granted, but each case will turn on its own facts 2) Security (rent deposit or guarantor) * The landlord can, in addition to non-payment of rent, can draw against the deposit / guarantor for other breaches including unlawful occupation c) Breach of repair clause 1) Self help under a Jervis v Harris clause * To use this there must be a clause in the lease that lets the landlord: o Enter the premises; o To do repairs himself; o Charge the cost of the repairs to the tenant; and o Recover these costs as a debt * By using this clause there is not need for the landlord to serve a s.146 notice will be no cap on damages imposed by s.18(1) LTA 2) Specific performance * Rare to be granted, but it could require the tenant to perform the covenants 3) Security (rent deposit or guarantor) * The landlord can, in addition to non-payment of rent, can draw against the deposit / guarantor for other breaches including breach of repair clauses