Post-1995 lease: original tenant released on assignment (LT(C)A 1995 s.5)
In 2015 Hollis Estates Ltd granted Bea a 15-year lease of a shop in Derby, England. In 2022, with Hollis's written consent as the lease required, Bea assigned the whole lease to Darius. Hollis did not ask Bea to enter into an authorised guarantee agreement, and she did not give one. Darius has now failed to pay two quarters' rent and has disappeared. Hollis asks whether it can recover the arrears from Bea.
Which of the following best describes Bea's liability?
Choose one answer to see the reasoning.
Worked answer
Correct answer A: Bea is not liable, because on the assignment of the whole lease she was released from the tenant covenants.
THE RULE TO REMEMBER
Under the 1995 Act, a tenant of a lease granted on or after 1 January 1996 who lawfully assigns the whole premises is released from the tenant covenants, unless she gives an authorised guarantee agreement.
Post-1995 lease: original tenant released on assignment (LT(C)A 1995 s.5)
A lease granted in 2015 is a 'new tenancy' governed by the Landlord and Tenant (Covenants) Act 1995, which applies to leases granted on or after 1 January 1996. Under s.5(2), where a tenant assigns the whole of the premises demised to her, she is released from the tenant covenants of the tenancy as from the assignment. Bea assigned the whole lease to Darius with Hollis's consent, so this was not an assignment in breach of covenant, and nothing suggests it was otherwise excluded from release. Bea could have remained liable only if she had entered into an authorised guarantee agreement guaranteeing Darius's performance, which she did not. Hollis must therefore pursue Darius, or any guarantor or rent deposit he provided, for the arrears; it has no claim against Bea.
Why B is wrong: Continuing original tenant liability by privity of contract is the rule for leases granted before 1996, not for a 2015 lease.
Why C is wrong: An outgoing tenant guarantees her assignee only if she enters into an authorised guarantee agreement, which Bea did not.
Why D is wrong: A notice requirement for recovering fixed charges from a former tenant presupposes a continuing liability, which Bea does not have.
Why E is wrong: Release under s.5 operates in full from the assignment; there is no rule splitting liability by reference to the term.
A little more practice done.
Related questions
Forfeiture for breach of a covenant other than rent: section 146 notice first (LPA 1925 s.146)
What must Fairway do before it can enforce the right of re-entry?
Legal leases of seven years or less as overriding interests (LRA 2002 Sch 3 para 1)
Which of the following best describes whether Callum is bound by Amara's lease?
Overreaching on payment to two trustees and a beneficiary in actual occupation (LPA 1925 ss.2 and 27; City of London BS v Flegg)
Which of the following best describes Margaret's position against the bank?
A GOOD HABIT, DELIVERED
Tomorrow's question.
In your inbox.
One free question a day, with the answer and reasoning.
No course pitches. Just your daily practice.