Possession and Breach of Covenant Claims

Possession and breach of covenant claims are breaches by the tenant (usually) or the landlord of their obligations contained in the lease. Tenants' breaches commonly include; failure to pay the rent, sub-letting without permission, carrying out unauthorised alterations, failure to repair or becoming insolvent.

Examples of landlord's breaches are: wrongly withholding or delaying consent for either assignment, subletting or alterations, failure to ensure, breach of quiet enjoyment (the tenant's right to use his property without unlawful interference from the landlord), or failure to insure.

The landlord faced with a defaulting tenant has to decide whether he wants to bring the lease to an end (known as forfeiture) or for the lease to continue and to simply look to recover arrears of rent or damages or an injunction (a Court Order to compel the tenant to comply with the lease terms). Alternatively if the tenant owes rent then rather than forfeiting the lease the landlord can re-enter the premises and simply seize the tenant's stock. This is known as distress.

For the landlord to forfeit, the lease must first contain a forfeiture clause. This allows the landlord to terminate the tenancy upon the tenant failing to pay the rent (usually after a period of grace of between 14-28 days) or in the event of any other specified breach of covenant. The landlord can forfeit a lease either by (i) issuing proceedings in the Courts or (ii) re-entering onto the premises. With arrears of rent the landlord can forfeit immediately after the period of grace has expired. With any other breach e.g. subletting, the landlord also has to first serve a notice on the tenant specifying the breaches of covenant (known as a forfeiture notice or a Section 146 Notice) which allows the tenant the opportunity to remedy the breach.

If the landlord does forfeit the lease then all is not lost for the tenant. He can apply to the Court to have the lease restored to him, known as relief from forfeiture. The Court has a wide discretion in allowing whether to grant relief. The Court's usual approach is to allow this providing the tenant (i) remedies the breach of covenant quickly and (ii) pays any rent arrears, damages and the landlord's costs.

Tenant's remedies are more limited and broadly speaking are limited to bringing a claim in the Court seeking damages or an injunction (an Order requiring a landlord to comply with the lease). Only in very rare cases can a tenant look to end the lease because of the landlord's breaches of his obligations.

The landlord's options are more limited when dealing with tenants of residential property. Usually the landlord can only recover possession by first issuing Court proceedings and obtaining a Court Order for possession. It is extremely difficult for a landlord to recover possession of premises let on a long lease, or where there is a "sitting tenant" occupying the property under an old-style protected tenancy under the Rent Act 1977. Today the most common short-term tenancies are assured shorthold tenancies and the landlord can recover possession more quickly.

We have widespread experience in acting for both commercial landlords and tenants and dealing with all types of rent arrears and breach of covenant claims and advising as to the best options open to them. We also have extensive experience in advising landlords of residential premises and tenants of high-value residential premises. We are conveniently situated close to Chancery Lane, near the Courts and also Counsel chambers. We have excellent contacts with leading specialist property landlord & tenant barristers and also a number of leading firms of property surveyors.

For more information on this topic or any of the services we offer please contact Mark Davies on 020 7822 4113 or email mark.davies@healys.com

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Mark Davies
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