Commercial Leases

Whilst on the subject of land agreements we mention this recent Court of Appeal decision in brief to bring it to readers’ attention and raise awareness.

Inevitably in the current difficult climate there is a focus on the complex interaction of insolvency and the commercial landlord and tenant relationship. This case is a helpful reminder of the some of the key principals regarding the payment of rent when a tenant is in administration or liquidation.

Whilst on the question of construction of instruments we mention this case in brief. Although the case concerned a licence the underlying principle is of equal application to tenancies.

This case raised an interesting point on the interaction of the unpaid vendor’s lien and the underlying transaction, a key feature of which was the landlord buying in a lease of property and on completion the merger of the freehold and leasehold interests.

In this case the Court of Appeal considered a tenant’s claims for alleged breaches of covenants to insure, to keep certain recreational facilities in good order and repair and to keep stairs and hallways in good repair.

This case is a reminder of the effects that a licence might impliedly release a tenant from compliance with other lease covenants. Other tenants in a development may be adversely be affected if a landlord has waived or modified another tenant’s obligations. Thus a landlord may find itself in breach to some of its tenants, such as covenants not to waive or release the covenants of other tenants.

The case also sets out a very helpful and comprehensive summary of the modern authorities on the law of the construction of instruments.

This case also raised the issue as to whether the lease of a ground floor garden flat also included the subsoil beneath. The case raises an important point given the appetite for basement or sub-basement works and the installation of swimming pools, leisure space or car parks in the smarter parts of London. The context of the case was that the tenant made an application for licence to carry out works in the subsoil and the landlord had failed to grant consent. The tenant sought a declaration that the landlord had failed unreasonably to grant consent.