Land Law - Kamerica, Franks Lease Agreement with the Vandelay - Case Study Example

First Apartment: Kamerica is understandably having a dispute over this matter because of the demands of the lessor. The lease clause 16 says that lessor’s consent is required if the lessee wants to assign the apartment to someone else. The lessor now demands the payment of $5000 including the legal fees that is to be paid by Kamerica. This demand is just because Kamerica has agreed to the lease agreement and now it is his responsibility to gain the landlord’s consent before subletting the apartment to someone else. Also it must be kept in mind that Frank’s lease agreement with the Vandelay has expired and there is one month’s notice to be arrived. This is a matter of concern for Frank because he will loose one of his tenants. This is the compensation that Frank is demanding. According to the Section 1 of the Landlord and Tenant Act 1988 it is the duty of the land lord to consent the tenant’s application to sub-let and assign the leased premises unless he holds a good reason for not doing so. Section 1 (3) of the Act says that when the tenant presents a written proposal for reassign, the land lord must, in a given period of time: 1) Give consent (except when it is not reasonable to) 2) To inform the lessee in writing whether to give or not to give consent. The land lord also has to inform within a time frame that 1) He gave consent in a time limit 2) What the conditions for not giving the consent? 3) Are these conditions valid and reasonable? Therefore it is essential for the land lord under 1988 Act, to prove that the reasons for withholding the consent are valid and reasonable and provides the tenant with an action of damages for breach of statuary duty; it does not change law in any other respect. Therefore it is critical for the landlord to show reasonable grounds for the delay in communicating whether or not to give consent to the tenant. The land lord must keep in mind that the proposed user will only be allowed a specific type of the use according to the lease agreement; it is therefore unreasonable for the landlord to withhold the consent of the assignment of the user when the landlord is fully secured for the payment of the rent and the result would be that the property will remain vacant. Since the landlord does not plan to sell the property and there is no case of realising the reversion through mortgaging, the landlord will be at a disadvantage because he will suffer the diminution in value of the property. Plus it will also be hazardous to the tenant (Kamerica) who has vacated the place but still liable for tenant obligations under the lease. Since the landlord ought to have considered this detriment of the tenant, his refusal will also be regarded as unreasonable based on this alternative (Lee 1999). In the case of Hughes vs. Waite (1957), the large sum had been paid at the time of the commencement of lease and was regarded as fine for the purpose of deciding whether the lease was at rent or premium. The word ‘fine’ in Hughes’s case was used for describing the single capital payment rather than the concurrent incomes whereas in s144, the deposit through a way security is not a fine. The point remains debatable that although the rental deposit may not be the fine prohibited by s144, it does not mean that the landlord can demand this deposit. The demand should, nonetheless, especially in the case of qualified covenant, should satisfy the grounds of reasonableness (Kratzer and Kreuzma, 2002). Following is the list of considerations that the court has considered for whether or not the landlord has reasonably held the consent or not. Refusals on the basis of discrimination of race, gender and nationality-The landlords refusal on the basis of racial and sexual discrimination is regarded as unreasonable even in the cases where the landlord share a part of accommodation with the tenant. Request for unnecessary details- A request for the full details of the lease transaction without specifying the main concerns does not justify the landlord’s refusal. Unreasonable conditions-unreasonable conditions portray the unreasonable grounds for refusal of consent by the landlord. Conditions that are created and extorted for the advantage of the lessor and which are otherwise not applicable should be regarded as unreasonable. Like in Premier Rinks vs. Amalgamated Cinematographic Theatres Ltd. (1912) in which the landlord imposed the condition that the assigned property cannot be used for the construction of cinemas. This condition arises when the landlord wants to prevent the tenant from subletting. Profile of the assignee party- the landlord cannot object if the assignee party is a limited company and has no ground to refuse the consent. Outstanding Rent Review- it will unreasonable to associate the consent with the rent review or a proposed variation of the lease terms. Statutory Protection- the possibility that the prospect assignee will enjoy the statutory protection that was however not enjoyed by the tenant is a reasonable ground for the refusal of consent. Breach of user covenant- The refusal of consent becomes reasonable in the cases where the suggested assignment will result into the breach of user covenants. However in the majority of the cases, the breach of covenants is not the essential outcome of assigning or subletting. Second Apartment: Since Frank is not looking forward to re-lease the apartment to AI, therefore he may not be forced to sign a new lease with the same party. There are numerous ways through which commercial lease or the tenancy agreements can be brought to a valid end. One option is to notify the landlord under section 27 of the Landlord and Tenant Act 1954 at least 3 months prior the contractual tenure expires. This is the safest method to end the lease term on the expiry date because the notice terminates the tenancy and so the tenant will not be eligible to withhold the property. If the landlord wants to oppose the issuance of a new lease then he should give tenant a counter notice within two months of the making of the Section 26 application. The opposing notice must clarify the basis on which the landlord would object to the permit a new tenancy term. There are only certain particular grounds upon which the landlord can argue to a new lease. The precise phrasing of these grounds are set out in Section 30(1) of Landlord and Tenant Act 1954 and are re-written in full in the body of the Section 26 application. In summary they are:  (a) The tenant has failed to obey with his repairing responsibilities under the present lease. (b) The tenant has been constantly late in paying rent, which is now due. (c) There is some other considerable breach by the tenant of the terms of the current lease (d) That the landlord is keen to provide appropriate alterative premises Forfeiture: In the case of Frank, the forfeiture of the lease will be the primary solution since the tenant (AI) has defaulted in the payment terms of the lease. This option is also valid if the tenant is unable to fulfil the other obligations of the agreement. In the meantime, the lease will be always be regarded as a valuable asset which the tenant will always look forward to preserve and withhold. He will therefore always try to avoid and seek relief against the forfeiture. There is a vast legal body dealing with these matters as well as several important statutory provisions (Pawlowski, 2002) In 1985, the Law Commission, as an element of the programme for the landlord/tenant law codification published a report entitled’ Forfeiture of Tenancies’ (Law Com no. 142) which highlighted the various defects in the present law and proposed recommended suggestions for the replace of the current one. In 1994, this commission published another report (Landlord and Tenant law: Termination of Tenancies Bill, Law Com no. 221, 1994) which included a draft bill that implemented the Commission’s proposals. This commission in 1998 published a consultative document that recommended various amendments for the landlord right to forfeit by physical re-entry in the expired premises. However, it is hoped that this bill will soon become a law and hence will provide greater advantages to the landlord (Stoll, 1977). The landlord’s right to forfeit a tenancy is preserved in the s24 (2) of the Landlord and Tenant Act 1954. However this is a judgement required for forfeiture and a subsisting application for relief from forfeiture. The tenancy does not come to an end by forfeiture for the purposes of s24 (2) until the final consequences of the proceedings. Conditions for the right of Forfeiture: The landlord ultimately holds the right of forfeiture under the following circumstances: Under a proviso for re-entry: The lease agreement generally contains the forfeiture clause which gives landlord the right to re-enter the demised property and terminate the lease agreement upon the tenants failure to pay the rent, his insolvency or other breaches of covenant like repair, user, alteration and insurance, etc. Where the tenant denies the landlord’s title- This may arise under three circumstances. First is that the tenant in the pleadings denies the landlord’s title and therefore prevented from re-asserting his lease. Secondly, when the tenant deliberately attempts to set up an adverse title either in himself or the third party against the landlord’s title. Thirdly when there is a disclaimer of lease (through words or acts) by a yearly or other periodic tenant which will operate as a waiver of the tenant of the usual notice to quit. The effect of such a disclaimer will be that the landlord will terminate the tenancy without serving with an appropriate notice to quit (Voiculescu, 2000). On the happening of an incident specified in an express condition in the lease-where a particular stipulation in the lease agreement falls to be assumed a s a condition (opposite to a covenant), the landlord will be entitled to forfeit the lease upon the occurrence of the event specified in the condition without an option to a proviso re-entry mentioned in the lease. Now a day, the most common condition included among the lease agreements is the condition that entitles the landlord to forfeit the lease if the tenant becomes bankrupt or goes into liquidation or allows other associated events to occur during the currency of the tenancy. However, such a condition is always to be found in the proviso for re-entry in any event in order to allow forfeiture for breach of covenant. This is not a typical condition in classic sense because the conditions of the latter kind are imposed independently of any forfeiture clause in the lease giving automatic right of forfeiture (Voorthuysen, 1998. REFERENCES Kratzer, Jost; Kreuzma, Benno ,Leasing in Theories und Praxis‎ (2002) ‎Lee, Samuel James, Introduction to leasing‎ (1999) Pawlowski, Mark, Leasing Commercial Premises, (2002)Stoll, Gerold, Leasing (1977) Voiculescu, Dan; Coraş Mircea, Leasing (2000) Voorthuysen, W. D.,Leasing (1998) Read More