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A covenant can form an agreement for a tenant to refrain from certain activity, such as using the premises for anything other than residential purposes, or an agreement for the tenant to positively act, such as keeping the premises in reasonable repair and purchasing insurance.
Where these covenants are breached, a landlord will be able to enforce them against the tenant in court. There are differences with regards enforcement mechanisms available to landlords between commercial and residential properties. In their dealings with a tenant, a landlord must take care not to implicitly waive their right to enforce lease covenants.
Subject to caveats for residential properties, the primary remedies for a landlord are:
Forfeiture will terminate the lease and turn possession of the property over to the landlord. Before forfeiture proceedings commence, a distinction must be made between breaches that are remediable or not. Breaches of covenants to repair, use or against sharing possession of the premises are not usually regarded as irremediable. By contrast, breach of a covenant against subleasing or assignation of the lease, or illegal use of the premises, is commonly considered irremediable.
If the breach is remediable, for most breaches, asides from non-payment of rent, the landlord must serve a Section 146 Notice upon the tenant. The Notice is required to:
All tenants must be afforded a reasonable time to remedy the breach where it is possible to do so.
Upon expiry of a reasonable period of time, with commercial properties the landlord is entitled to either (1) peaceably re-enter the premises or (2) seek court proceedings for eviction.
Peaceable re-entry is a cost effective solution where the landlord enters the premises (forcibly is permissible), changes the locks and leaves physical notice that the lease has been terminated on that date. However, the landlord must be diligent in ensuring there are no persons or property remaining on the premises. It is illegal for a landlord to access and change the locks on a premises if there is someone present who objects to the forfeiture. If property has been left by the tenant, the landlord may be legally responsible for its safekeeping until the tenant can recover possession.
For residential property, a landlord cannot use peaceably re-entry as a means of recovering possession unless it is clear the tenant has vacated the premises and does not intend to return. In almost all cases it is not advisable to use this method for residential property. Instead, a landlord will recover possession of residential property through court proceedings.
A successful relief from forfeiture will result in the lease being reinstated and the parties returned to the position they were in prior to the alleged breach. Relief can only be awarded by a court, and can be applied for before the relevant County Court or the High Court. Depending on the nature of the breach and the time elapsed since any court order for possession (usually six months), the courts have varied discretion whether or not to award relief.
Specific performance is a court action that orders the tenant to act in conformity with agreed covenants. Under English law, specific performance is considered an equitable remedy, and may be available where there is contention over the existence of a covenant in the first place. Generally speaking, the landlord seeking to enforce must prove that the tenant had notice of the covenant’s existence when they purchased the property. As with all equitable remedies, a court will take into account considerations of fairness, and will not compel a tenant to carry out certain conduct of unconscionable.
In contrast to specific performance, an injunction is a court order preventing a tenant from starting or continuing certain conduct. As with specific performance, injunctive relief is grounded in equity and will ultimately be granted or refused on the basis of fairness. Injunctive relief is the most common remedy for beach of lease covenants.
In the event an agreed covenant is breached, a court may consider it appropriate to award damages to the landlord. This can be done in addition to or in lieu of an order for specific performance or an injunction. Damages can be calculated on what the tenant would have to have paid to have the covenant lifted, known as a “release fee”, or based on any profits the tenant has accrued from their breach of the covenant.
If a landlord waives their right to bring action for the breach, they cannot attempt to do so at a later date. A waiver can be implied from a landlord’s conduct or communication, and so it is important to explicitly reserve the right to enforce covenants. Implied conduct can include acceptance of rent or indication that self-help remedies are being sought, such as the landlord initiating repairs themselves, instead of terminating the lease.
In moving to protect property interests, it is vital that a landlord adheres to statutory requirements in order to avoid adverse court decisions or action by a tenant that leaves the landlord in a worse position than they left off.
At Lewis Nedas, our team of Property Litigation Solicitors have broad experience in both commercial and residential property litigation. We have successfully advised clients with highly complex and multi-faceted cases. To speak with one of our Property Lawyers, please contact us on 020 7387 2032 or complete our online enquiry form.
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