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COMMERCIAL LEASES LECTURE 6

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

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  1. Jennifer Slade COMMERCIAL LEASESLECTURE 6

  2. Commercial Leases: Lecture 6Today’s topics • Alienation provisions • T’s disposal of the lease

  3. 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

  4. 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

  5. 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

  6. 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

  7. L’s consent (not to be unreasonably withheld) needed for assigning/subletting whole A “Permitted Part” may be disposed of under certain stricter conditions

  8. 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

  9. 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

  10. 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)

  11. 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”

  12. Billies Cookies question: Do the alienation provisions set out circumstances and conditions?

  13. Billies Cookies question: Do the alienation provisions set out circumstances and conditions? 4.10.3 – conditions 4.10.4 - circumstances (p.14-15)

  14. 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

  15. Commercial Leases: Lecture 6Alienation • LPA 1925 s144 • [LTA 1927 s19(1)(b)] • Offers to surrender • Allnatt

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