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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 Alienation. What is alienation? (p.1) Why would a landlord wish to restrict it? Part vs whole

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commercial leases lecture 6 today s topics
Commercial Leases: Lecture 6Today’s topics
  • Alienation provisions
    • T’s disposal of the lease
commercial leases lecture 6 alienation
Commercial Leases: Lecture 6Alienation
  • 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 alienation1
Commercial Leases: Lecture 6Alienation
  • 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 alienation2
Commercial Leases: Lecture 6Alienation
  • 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 alienation3
Commercial Leases: Lecture 6Alienation
  • 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
slide7

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 alienation4
Commercial Leases: Lecture 6Alienation
  • Effect of s19(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 s144 LPA – no premium can be charged for consent, but L’s reasonable costs can be required
commercial leases lecture 6 alienation5
Commercial Leases: Lecture 6Alienation
  • 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 } c.f. Newgate Centre
      • Ashworth Frazer} exercise
commercial leases lecture 6 alienation6
Commercial Leases: Lecture 6Alienation
  • New tenancies: LT(C)A 1995
    • s19(1A) LTA 1927 (pp.5-6)
    • Applies to assignments only
    • Commercial leases only (s19(1E))
  • s19(1A)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 alienation7
Commercial Leases: Lecture 6Alienation
  • If a condition or circumstance involves L’s discretion, then L to act reasonably or T to be able to refer to3rd 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”
slide12

Billies Cookies question:

Do the alienation provisions set out circumstances and conditions?

slide13

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 alienation8
Commercial Leases: Lecture 6Alienation
  • Further Tenant protection (p.7)
    • s1 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 alienation9
Commercial Leases: Lecture 6Alienation
  • LPA 1925 s144
  • [LTA 1927 s19(1)(b)]
  • Offers to surrender
    • Allnatt