Land Law: Frank and Kramerica - Case Study Example

LAND LAW ASSIGNMENT 1 – FRANK AND KRAMERICA The main issue in the present controversy tackles about the assignment of a lease. Stated otherwise, it raises the question of whether or not a real property owner can stop the current lessee from assigning the lease to another and, if so, under what circumstances or conditions. Before anything else, the general legal backgrounds have to be put in place. The lease over the realty subject in this case is registered. This presupposes that the contract falls under the coverage of the Real Property Act 1900 of New South Wales, Australia, where the leased premises are located. The law prescribes an approved form for leases. (REAL PROPERTY ACT 1900. New South Wales Consolidated Acts. [internet]) Likewise, the provisions of another law in the same territorial jurisdiction, the Conveyancing Act 1919 (NSW), may be applied as there is no showing of any inconsistency between it and the above-mentioned Real Property Act 1900 as far as concerning the instant case. (CONVEYANCING ACT 1919. New South Wales Consolidated Acts [internet]). Generally, a leasehold right cannot be assigned particularly if the prohibition is unequivocally stipulated in the lease agreement which is so in the case here. Frank, the owner of the property, has the right on whether or not to allow the occupant-lessee, Kramerica Industries Pty Ltd., to sub-lease, assign or sub-let the apartment to an outside or third party. Clause No. 16 of the contract is very specific in providing that the tenant may not assign or sub-let unless upon the consent of the landlord. Saying it differently, therefore, before Kramerica can assign the lease or sub-let the property to another person or entity, it has to obtain the approval of Frank, the landlord. Absent that, there can be no valid sub-lease of the apartment or assignment of the contract. The next question to be resolved is whether or not the right of Frank to prevent Kramerica from assigning or subletting is absolute. Definitely, the answer is in the negative. Why is this so? If there is a valid reason for Kramerica to assign the lease or sub-let the property, the prohibition of Frank may be disregarded and set aside. This is supported and well expressed in sub-section (1) (a) of Section 133B of the cited Conveyancing Act 1919 (NSW). In the narration of facts, Mr. Cosmo, the managing director of Kramerica, does not appear to be happy. The other occupants of the building who belong to a certain Australia Interactive Pty Ltd. are noisy and because the walls are particularly thin, the people of Kramerica feel disturbed and annoyed by the sounds that seem to go all through the night. They suspect some kind of a night party of dancing going on. Mr. Cosmo has decided that they can no longer bear these irritants. It seems that Kramerica does not have an iota of a justification to prevent Frank from imposing the limitation to lease or assign. In connection with the thin walls, Kramerica had all the opportunity to check and inspect the building before it entered into the lease agreement with Frank. Under the general and universal principle of caveat emptor, it was the duty and privilege of Kramerica not to push through with the leasing of the place if it believed it was not fit for the purpose intended. It could have easily examined the structure, construction and other circumstances of the edifice preparatory to finalizing the covenant of occupation. Having failed so, Kramerica and its decision makers have themselves to blame. As to the scandalous and annoying co-occupants, it is opined that Kramerica cannot put the same up as a reason for sub-letting or assigning. It is believed that in this action, the legal recourse of Kramerica will be against the noisy tenants at the other side and not against Frank. Kramerica can entertain the idea of filing a suit for injunction to stop the intolerable disturbance. Incidentally, the drawbacks presented by the thin walls and the blares of the people within the vicinity may not be considered here because Frank is willing to allow Kramerica to sub-let the property or assign the leasehold right to another company, Vandelay Investments Pty Ltd. For this, however, Frank is demanding from Kramerica the payment of five thousand dollars and the legal costs that will be incidental to the process of assigning the lease. Mr. Cosmo does not agree with Frank. Is the pre-requisite being asked by Frank tenable? The answer is in the affirmative as allowed by Section 133B of the Conveyancing Act mentioned earlier. Frank did not withhold his consent for Kramerica to sub-let or assign. This disposition of Frank does not preclude him though from requiring a reasonable sum for legal or other costs and expenses as may be incurred or suffered resultant of the giving of such consent. It has to be importantly noted that Vandelay is also a tenant of Frank in a separate lease that is about to expire or end. Hence, if Frank allows Kramerica to let Vandelay occupy the space which Kramerica desires to do away with, Vandelay will vacate the place which it currently leases from Frank. In that event, he (Frank) will naturally lose his earnings from that latter property. In short, Frank is imposing a reasonable amount for costs, expenses or damages he has to absorb in view of Kramerica’s sub-letting of the premises or assigning of the lease. Kramerica has the right to do the assigning or sub-letting. This is on the basis that the right of Frank to prevent the sub-letting of the property is not absolute in that if there is a justifiable ground to allow the lessee to assign the lease, the proprietor or landlord is duty bound to so allow. However, Kramerica, the lessee, has to prove that it has sound and valid reasons as already discussed above. On the matter of the payment being required by Frank, Kramerica has the right to a determination of whether or not the amount being required by Frank for the costs incurred and the damages sustained by him in connection with the sub-letting is reasonable as mandated by law. LAND LAW ASSIGNMENT 2 – FRANK AND AUSTRALIA INTERACTIVE The registered lease entered into by and between Frank and Australia Interactive Pty Ltd. is under date of November 5, 2004 and pertains to the second apartment of the landlord which is housed under the same building as the first one. The legal backdrops being common, too, the covenant is likewise covered by both the Real Property Act 1900 and by the Conveyancing Act 1919, both under the consolidated statutes of New South Wales, Australia. There is a pending request and notice for the renewal of the lease. Frank is now confronted with a dilemma because he personally does not entertain the idea of any further extension. Accordingly, Frank must be advised to refuse affixing his signature on the renewal agreement and to terminate the contract upon the expiration of the five years which cover the period of the current lease. The agreement for Australia Interactive’s occupation of the subject premises is to run until and last up to November 4, 2009. The tenant is allowed to tender a notice about its intention to renew the contract of lease not earlier than six months nor later than three months before the end of the present term. Indeed, on July 9, 2009, Australia Interactive delivered a notification to Frank for the intended extension for another five years. This was done inside the mandated period within which to serve the notice. Several events or happenings occurred in the contractual relation between the parties which were reasons for Frank to be discouraged. On three occasions, the tenant failed to pay the rents and needed to be reminded by the proprietor. In the last three months, the lessee has not tendered any payment for the rentals. Aside from the issue of delinquency in the payment of the consideration for the lease, Frank is also confronted by the poor and deplorable manner in which the apartment is being maintained by Australia Interactive. Three windows are broken, the hinges on the front door are busted, the carpet is in a mess and the walls are riddled by holes. Owing to these negative factors which evidently appear to be attributable to the occupying tenant, Frank will rather wish to have the place rented out to a more trusted and dependable new inhabitant. Australia Interactive has sent the notice to Frank for its desire to renew and this act was done within the agreed timeframe. The ball now is in the hands of Frank how to make it without force and effect in view of his resolution not to renew the contract with the delinquent and undesirable tenant. Frank’s predicament is now anchored on whether or not he can legally refuse the renewal. The answer is definitely in the affirmative. Firstly, Section 53 of the Real Property Act 1900 mandatorily provides that if the lease is for a term longer than three years, the proprietor has to execute the contract in the form approved by law. This means that if Frank does not accomplish the required form and sign it, there can be no extension and there can therefore be no lease of the property to Australia Interactive beyond November 4, 2009. While the statutory dictum mentions land in the cited section, it must be emphasized that land covers improvements, the former being the principal while the latter is the accessory. Under general legal axioms and precepts, the accessory follows the principal. In short, whatever law that applies to the land applies to the building as well unless the realties are otherwise specifically distinguished. Secondly, as to the matter of delinquent payment, sub-section (1) (d) of Section 85 of the Conveyancing Act of 1919 (NSW) states that if the tenant is in arrears for one month, the lessor or his agent or representative may take possession of the leased premises. On the other hand, if there is a need for repairs to be done by the lessee in the property and he fails to do the same within the period of two months, the proprietor, his agent or representative also has the right to re-enter the property. In the instant case, it will be the height of being naive and unfair to allow the tenant to stay longer despite its derelictions in the performance of whatever is incumbent upon it to fulfil. The monthly rent is the essence and cause or consideration that a property owner will temporarily convey his estate to another person through a lease agreement. Any delinquency in the settlement of the rental destroys the spirit of the covenant. What aggravates the situation of Australia Interactive is that the pattern of delinquency appears to have become one of a cycle. A lease gives the tenant the right to use the property. However, such privilege is not absolute. While being the one in possession, the lessee has to maintain the premises as if he were the true owner of the estate. Along this line, the lessee is under obligation to undertake the necessary repairs which the lessor would have otherwise ordinarily done during the life of the contract. As a matter of course, any property is susceptible of wear and tear until it is fully depreciated or has become totally useless and obsolete. In the meanwhile, it has to be given proper maintenance by whoever has occupancy of it at a given time. In the case here, Australia Interactive is currently in possession. Unfortunately, it has failed in that aspect what with the dislocated hinges, the repair needed for the windows, the worn out carpet and the holes in the walls. On another note, Frank is obligated to see that there are major repairs on the asset as will preserve its status as a capital item or as one which the lessee has intended to occupy for his purpose. Major repairs are those which are expected to extend the life or the usefulness of the assets. As the owner, he (Frank) also has charge over the payment of the real estate or land taxes. References CONVEYANCING ACT 1919. New South Wales Consolidated Acts [internet] Accessed October 8, 2009. Available at: < http://www.austlii.edu.au/au/legis/nsw/consol_act/ca1919141/> REAL PROPERTY ACT 1900. New South Wales Consolidated Acts. [internet] Accessed October 8, 2009. Available at: Read More