Landlord and Tenant Law - Essay Example

13 April Landlord and Tenant Law Introduction The landlord and tenant act of 1954 was enacted to address security of tenants with businesses in England. The act regulates the tenancy of businesses and provides conditions for compensation in the event a landlord refuses to renew a business lease. Refusal to renew a business lease may be due to a tenant breaching of the law or breaking the agreement that had been made with the landlord (McQueen 2013). This Act is divided into four different parts with Part II of it addressing the tenancy for business premises. It therefore means that business tenancies with the protection of this Act are assured of automatic extension in case the first period of lease elapses. In case the landlord opposes the request for renewal, then termination of such a tenancy must be done as is prescribed by the Act failure to which has negative consequences especially on the landlord (Freedman, Shapiro & Steele 2006). This paper discusses the remedies of addressing Spotted Dice Limited which has defaulted in the service charges and rent. It also outlines practicalities of exercising break clause in a lease as well as the procedure of ensuring a lease does not get a statutory protection. Remedies to Address Spotted Dice Limited This is the first part of question one, which involves explaining the remedies to be taken in addressing the issue of forfeiture by Spotted Dice Limited. The FRI basis on which Spotted Dice Limited was granted the lease in Lansbury Towers is an abbreviation for Full Repairing and Insuring. FRI basis protects and relieves a landlord from incurring the costs of repairs and insurance and it is effected from the onset of a business tenancy. It therefore means that Spotted Dice Limited being granted the tenancy of the first floor of the Lansbury Towers is liable for all the costs of repair and insurance. This should be effective for the entire period of ten years the tenancy is granted. After failing to fulfill these obligations in the sixth year of lease, Spotted Dice Limited has breached the agreement made at the time of leasing. There are therefore two remedies to address the situation, which are possession claim remedy and damages for the breach of covenant remedy (City Law School 2014). Possession claim remedy is usually taken to regain the possession of the leased premise. Because Spotted Dice Limited has failed to remit this quarter’s rent, repossession of the premise allows for leasing to a new tenant. Similarly, damage for breach of covenant remedy applies where agreements in a contract have not been honoured. From the initial agreement, Spotted Dice Limited was accountable for all maintenance and insurance costs, a consensus which has not been fulfilled. This attracts the damage for breach of covenant. Procedure on how to apply these remedies This answers the second part of this question which is to outline the procedures in applying the remedies mentioned above. Possession claim remedy first involves serving Spotted Dice Limited with a letter of terminating the tenancy. This is in accordance with the prescription in the Landlord and Tenant Act 1954. I will then seek for a court order as a proof for discontinuing the lease. Any resulting stalemate due to rejecting the notice of discontinuation can be resolved in the court. The success of this remedy means recovery of ownership of the premise hence making easy it to be leased out again to a new tenant. Moreover, damages for breach of covenant remedy calls for assessing the level of the breach i.e. failure to meet the service charges of repair and insurance costs. Secondly, I will present to court the signed agreement form as a proof of the breached contract. This is to seek for court order stopping the continuation of the lease. Because it is difficult to enforce this remedy without the ascent of court, evidence of the circumstances as set out in the contract must be presented. The lease was on a FRI basis which implied that Spotted Dice Limited will be responsible for every repair and insurance costs. This is part of the agreement from the onset of the tenancy hence failure to fulfillment provides a ground for termination. However, there are case laws and statute laws that can apply to such cases as in the case of Spotted Dice Limited. A case law is an act arrived at by applying the principles based on the outcome of a past similar case. This means ruling a case by referring to how similar cases had been dealt with in the past and applying the same technique in the present case. Verdicts arrived at by higher courts in England are accepted by the lower courts and applied to similar conditions. For example, Salmon, a director of a private company which faces liquidation and all shareholders want the company to be transferred to their names. There is also a plan by some passive investors to put money in the business without incurring risks. Seven members were necessary to form a company. The case was if one person could possibly dodge a share and transfer it to another person and if it was compulsory (Hicks and Goo 2008). The sitting judge and court of appeal accepted the incorporation was valid and invalidated wrongful deals by passive investors thereby ruling as per the verdict of the court of Appeal. A landlord can also refer to a past case to solve a present case. In the case Spotted Dice Limited a referral can be made to a past similar situation, if there is, while applying the remedies. A statute law is a written code enacted by an Act of Parliament to govern an organization, institution or a company. It is a primary legislation that should be abided with for example, land ownership, property laws, and laws governing health issues such as abortion. For example, in the English Law committing murder is breaking the statute law. This means it attracts death sentence according to the legal precedent that is applied in ruling the case by judges. Hence tenants should aim to fully abide by the rules and regulations set out to govern the operation of their premises. Exercising Break Clause This section answers the second question of this paper which is about advising Pears Limited on the practicality of exercising break clause in the Landlord and tenant act of 1954. According the landlord and tenant act 1954, exercising break clause requires tenants to be up to date with their rent. A tenant should also give up the occupancy and leave behind no continuing subleases for break clause to be effected. If there are any disputes regarding the state of the premises, they can be reserved for later discussions. Pears Limited should issue a notice in accordance to the terms and conditions of the lease. The lease should specify the conditions to be abided with to the letter for the break to be successful. This is because in case of any failure in full compliance with the conditions of the break clause the lease may extend past the break date. As a result additional liabilities may set in before completing the application for the break. The period of practising the break clause is usually a disadvantageous moment for a landlord for it comes with losses hence may also be a source of conflict between landlords and tenants. Moreover, a landlord will try every means to take advantage of any mistake by the tenant for his gain. Therefore, Pears Limited must ensure it follows the formalities required in exercising break clause. Therefore, Pears Limited must confirm the details of agreement either through a Land Registry, Company House checks or a court. Check whether the provisions in the lease are compulsory or permissive. The notice should be ready as it is a requirement and must be done in the right timing. Garner asserts that the parties interested in exercising break clause must ensure they fully conform to the requirements of the clause as set out in the tenancy lease (Garner 2010). Break clause also dictates the conditions for tenancy extension and renewal. Pears has financial hurdles and its lease is not contracted out of the Part II of the landlord and tenant act 1954. This means it does not have security tenure in its lease implying that request for a new tenancy cannot be guaranteed. A court order validates the process of exercising the break clause as a proof that the tenancy has ceased to be in existence. As Chance and Rubin put it, any exclusion from the protection of the Act requires an order authorized by a court (Chance and Rubin 2005). Many case laws border the interpretation and compliance of such break clauses. This is because tenants have become fully aware of the challenges associated with the strictness of complying. Recent case laws in England elucidate that the lessors are obligated to have good co-operation with the lessees. For example, the following scenario is presented: “Can a CIF seller of 3000 tonnes of a commodity tender to its buyer three bills of lading for 1000?” (Hooydonk and Boonk 2003). They report that the first option was to search for a case law in the area of tendering bills of lading in sale contracts. And with the case law, the judge made the ruling through the carriage of goods by the sea. Therefore, even in leasing out tenancies cases of exercising break clause do arise, a landlord can refer to such in case he faces a similar scenario. In Hooydonk’s and Boonk’s book, a further case of statute law is cited in this manner: “Can a CIF buyer refuse tender of a bill of lading stating that 3000 tonnes of a commodity have been shipped on board ‘weight and quantity unknown’?” The case could not be ruled as in the above scenario but by going to the set statute of article III. Hence from the article, a rule was made basing on domestic statute on carriage of goods by sea and statute on sale of goods. Hence even in exercising break clause the laid down rules ought to be followed accurately for it to be effected. Additionally, claim forms and other particulars of claims must be presented with the correct information regarding break clause. There are two phases of operation in exercising break clause (Abbey and Richards 2009). A break clause may be prompted by reaching the specified date in the tenancy lease agreement. This first phase of operation means that the break clause will set into action when the notice is given. Additionally, a break clause can also be triggered into operation in the event of an occurrence. For example, for the case of Pears Limited the need for break clause is facilitated as a result of negative financial implications. This is because from the beginning of the duration of the term, the lease as was contracted was ten years but economic downward financial trend made it to opt for exercising break clause. And effective means of exercising break clause eliminate the possibility of falling into problems and the mechanism is to ensure compliance with the landlord and tenant act of the 1954. Procedure of ensuring a lease does not get a statutory protection This is the third question of the paper and it states that Pears Limited was granted the lease of tenancy outside of Part II of the landlord and tenant Act. By the time it is seeking for a break clause, damages have been noticed on the floor coverings and inner walls. Furthermore, financial challenges cannot guarantee continuity with its operations since it has no security tenure in its provision of the Act. Part II of the landlord and tenant Act of 1954, addresses protection of the business tenancies particularly in the event of an impending danger of a loss when leaving a premise. It also provides for tenancy renewal as well as exclusion of security tenure but with the approval of a court. Hewitson asserts that Part II of the landlord and tenant Act 1954 allows a court to grant new tenancy to tenants. However, it has a provision for certificate that allows discontinuation of occupancy especially with regard to matters of security (Hewitson 2005). This means that the presence of a notice with this certificate denies a tenant a chance of renewal of tenancy. Therefore, because of the present situation of Pears Limited, the right procedure need to be followed by the landlord and tenant so as to ensure no statutory protection as is stipulated in the Act. Failure to do this may have damaging effects on both the landlord and tenant. Statutory protection refers to the provision of security conferred by the lease to a tenant. The statutory provision has a regular review process from time to time as it changes with time. Hence the procedure should involve an application in form of writing to the court specifying the termination of a tenancy and serving a notice with a statutory form. Therefore, for the landlord to practice the break clause to ensure the lease does not get statutory protection, he must ensure that he has the documents proving the lease was made without statutory provision. Secondly, there is the evidence of damaged floors and inner walls which provide the grounds to claim for repossession for renovation. Hence it includes serving a statutory notice with termination date which must be done at least six months to the break date. Sometimes there is willingness by the landlord to give the tenant statutory compensation but this does not apply to Pears Limited. This is because the lease was not contracted out of the part II of the landlord and tenant act of 1954 which addresses the statutory protection for a lease. Also, serving a notice within a specific period of time is advantageous. This is dependent on the ground for claiming repossession which in this case is due to damages to the premise and negative financial state of the tenant. The notice must be issued maturely in that it must be in the prescribed form with all the necessary and relevant details. This forms the ground on which the landlord can rely on as he seeks for the termination. The notice should be given with adequate timing to make it easy for the tenant to quit the occupancy. Moreover, the landlord has to be up to date as the courts deal with the issue. This is because the courts have all the mandate and power of dispensing service in relation to the notice. Ashfield et al write that tenancy may also be granted without statutory protection. Most business premises are entitled to statutory protection except in certain special cases. He asserts that a landlord may seek for repossession with the claims that a tenant is not entitled to statutory protection. The reason why this provision may lack may be due to occupancy for a business purpose held by a different party. This is a case of an individual with a business enterprise under the management of a company in which the individual is a shareholder. Also tenancy may be given without a statutory protection if it is for a short duration of time which does not warrant a protection (Ashfield et al 2014). As such, the tenancy is not continued automatically. However, a tenancy with protection continues spontaneously after the term of contract expires until a termination notice is served. Again statutory grounds must be set out to show the willingness for a new tenancy of which the landlord must approve. The bid by a landlord may be to lay down the procedures which may automatically oust the tenant. Hence the tenant must respond as this will be a proof for the readiness to give up the occupancy. However, it is shocking that there are a lot of case laws surrounding statutory provision but present a lot of complications for the landlord involved. For example, “In Factory holdings Group v Leboff International, the tenant sent a notice to the landlord to refer a dispute to arbitration in a span of 28 days claiming to make time of the essence. In terms of lease, it was open to both the landlord and tenant hence it was ruled the tenant was not entitled to make notice in such a manner for there was no remedy for it” (McAllister 2010). Similarly, on statute law, a case is cited whereby an Adams v Cape industries plc has been sued due to injuries caused as a result of inhaling asbestos. The ruling made favoured the industry because in its operation, it complied with legislation of England. Conclusion Just as business tenancy is contracted out of the landlord and tenant act 1954 by consent of court, a consensus to give up a protected tenancy can also be made without law before the stipulation of the landlord and tenant protection act. Therefore, as the subject of landlord and tenant gains momentum, it can also be helpful in expansion of investments. Contractual agreements must also be abided with so that occupancy is not terminated and the tenancy denied. This is for the benefit of both the landlord and tenant. Works Cited Abbey, Robert ‎and Mark Richards. A Practical Approach to Commercial Conveyancing and Property. Oxford: Oxford University Press, 2009. Print. Ashfield, Evan et al. Advocacy. Oxford: Oxford University Press, 2014. Print. Chance, Clifford and Vicky Rubin. The Business Occupier’s Handbook: A Practical Guide to Acquiring, Occupying and Disposing of Business Premises. 2005. . City Law School. Remedies. London: The City Law School, 2014. Print. Freedman, Philip, Shapiro, Eric and Steele Kevin. Business lease renewals: The new law and practice. 2006. Garner, Simon and ‎Alexandra Frith. A Practical Approach to Landlord and Tenant. 2010. Hewitson, Russell. Business Tenancies. London: Cavendish Publishing Limited, 2005. Print. Hicks, Andrew and ‎S.H. Goo. Cases and Materials on Company Law. 2008. Hooydonk, Eric Van and Boonk, Herman. English and continental maritime law: after 115 years of maritime law unification: a search for differences between common law and civil law; Antwerp Maritime law seminars. 2003. McAllister, Angus. Scottish law of leases. 2010. McQueen, John. Landlord and Tenant Law. Brighton: Emerald Publishing, 2013. Print. Read More