Landlord and tenant law - Remedies for breach of leasehold covenants (including forfeiture)

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Overview

Remedies for breaches of leasehold covenants are vital for aspiring legal professionals, especially those preparing for the SQE1 FLK2 exam. This guide delves into the legal principles, procedures, and practical applications of remedies available in landlord and tenant law, equipping candidates to tackle complex scenarios and hone their analytical skills.

Leasehold Covenants: Basis of Tenant Obligations

Leasehold covenants define duties and responsibilities in a lease agreement, differing from freehold covenants by specifying property use and upkeep.

Types of Covenants:

  • Positive covenants: Require tenants to perform specific actions (e.g., paying rent, maintaining the property)
  • Negative covenants: Prohibit certain activities (e.g., unauthorized subletting or structural changes)

Understanding these covenants helps identify breaches and determine suitable remedies.

Damages: Financial Compensation for Loss

Damages provide financial relief for losses from covenant breaches.

Key Principles:

  1. Aim to restore the injured party to their expected position if the covenant was upheld
  2. Must be reasonably foreseeable
  3. The aggrieved party has a duty to mitigate losses

Types of Damages:

  • General Damages: For natural losses due to the breach
  • Special Damages: Quantifiable, specific losses
  • Nominal Damages: Awarded when a breach occurs without substantial loss

Example: In "Landlord v Tenant (2021)," the court awarded damages for breach of a repair covenant, covering repair costs and lost income.

Injunctions: Enforcing or Prohibiting Actions

Injunctions are court orders requiring a party to act or refrain from certain actions when damages are insufficient.

Types of Injunctions:

  • Prohibitory Injunctions: Prevent actions in breach of a covenant
  • Mandatory Injunctions: Require actions to comply with a covenant

Principles:

  • Adequacy of damages as an alternative
  • Balance of convenience
  • Parties' conduct (clean hands doctrine)

Example: In "Proprietor Ltd v Lessee (2020)," the court issued a mandatory injunction for restoring property to its original state after unauthorized alterations.

Forfeiture: A Severe Measure

Forfeiture lets a landlord end the lease for serious breaches but requires strict legal and procedural compliance.

Prerequisites:

  1. A valid forfeiture clause
  2. Tenant's breach of covenant
  3. Compliance with notice requirements

Procedural Steps:

  1. Notice: Landlord issues a Section 146 notice
  2. Peaceable Re-entry: Possible for commercial properties
  3. Court Proceedings: Required for residential properties

Relief from Forfeiture:

  • Discretionary remedy based on breach nature and tenant conduct

Example: In "Commercial Estates v Retailer (2019)," the court initially granted forfeiture for rent arrears, later allowing relief due to tenant remediation.

Alternative Dispute Resolution (ADR) and Statutory Solutions

ADR and statutory solutions offer effective means for resolving leasehold disputes.

ADR Options:

  • Mediation and Arbitration: Quicker, cost-effective alternatives to litigation
  • First-tier Tribunal (Property Chamber): Handles various leasehold disputes

Example: In "Leaseholders Association v Management Co (2022)," tenants successfully contested excessive service charges through the First-tier Tribunal.

Conclusion

Understanding remedies for leasehold covenant breaches is critical for success in the SQE1 FLK2 exam and legal practice. Candidates should focus on:

  1. Understanding covenant types and breaches
  2. Principles governing damages assessment and awards
  3. Strategic use of injunctions for ongoing breaches
  4. Procedural complexities and consequences of forfeiture
  5. Increasing role of ADR and statutory solutions

By mastering these concepts, candidates can effectively address complex scenarios and excel in landlord and tenant law.