landlord and tenant_ a contractual relationship
DESCRIPTION
Landlord and Tenant_ a Contractual RelationshipTRANSCRIPT
-
Serving over 2 Million visitors each year
Search
Comprehensive Online Business Insurance Tailored PI, Office, Public & Employers' Liability Insurance Are you covered? Read our Essential PI Guide Get a Quote and buy online in minutes
Landlord and Tenant: A Contractual Relationship?
Susanna Heley, Solicitor in Sykes Anderson LLPs Litigation and Dispute Resolution Department discusses the implications of a recent Court of Appeal decision on the Landlord/Tenant relationship
The Proposition
In the recent Court of Appeal case of Reichman & Another v- Beveridge & Another, what started as a simple debt collection matter was taken to the Court of Appeal to decide the preliminary issue of whether a landlord, faced with a tenant who has vacated the premises, is obliged to take action to mitigate his loss or whether he can simply sue for payment of the rent as it falls due.
The argument was advanced on the basis that normal contractual principles are increasingly being applied to leases. Cases supporting this construction from the last thirty years were cited as evidence that a lease should be regarded as a contract, even though it also creates an estate in land. This attitude is increasingly prevalent; even the Office of Fair Trading has indicated that residential leases should comply with the Unfair Terms in Consumer Contract Regulations 1999.
The Facts
The defendants had ceased trading and vacated the premises three years into a five year lease. They did not pay rent from March 2003. In January 2004 the claimant brought proceedings for rent arrears. The defendants alleged that the claimants were under a duty to mitigate their loss and that they should have forfeited the lease and re-let the premises.
Home
Business News
Set Up a Company
Start-Up Guides
Business Plans
Tax & Accounting
Business Finance
Business Banking
Sales & Marketing
Office & Home
Business Insurance
Legal & People
Search
Landlord and Tenant: A Contractual Relationship?
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (1 of 7) [26/10/2010 19:30:19]
-
Landlord and Tenant: A Contractual Relationship?
The existence or otherwise of a landlords duty to mitigate loss in these circumstances fell to be tried as a preliminary issue. The county court held that there was no such duty and the High Court upheld this judgment. The matter went to the Court of Appeal as a second appeal. The Court of Appeal also upheld the judgment and put forward some useful guidance for landlords.
If a tenant repudiates the lease by moving out of the premises and ceasing to perform its obligations under the lease the landlord can choose to accept the repudiation or to continue to hold the tenant liable. The landlords actions must not be wholly unreasonable (although it would be difficult to envisage a situation where holding the tenant to its obligations would be wholly unreasonable).
The landlord does not have a general obligation to seek a new tenant, although it is usually open to the tenant to seek an assignee provided that the lease allows for an assignment or underletting with the consent of the landlord. There may be practical considerations to consider in this respect.
Where a landlord terminates the lease by taking possession of the premises or otherwise doing an act inconsistent with the continuance of the tenancy, he will lose his right to the rent under the original tenancy. He cannot therefore claim damages for any reduction in the rent from a new tenant or in respect of any void periods.
It may be possible for a landlord to seek a middle ground by serving notice upon the tenant that it intends to seek a new tenant on behalf of the existing tenant. If the notice gives rise to a valid agency relationship between the landlord and the tenant, the landlord may be able to replace the tenant and maintain a claim in damages for any reduction in rent and void periods as against the existing tenant. This is risky though landlords may wish to include an express right to serve such a notice when granting the lease to maximise their chances of upholding a successful claim for damages against the original tenant.
Conclusion
Landlords should take some comfort in the outcome of this case as it does not impose any additional burden on them. A word of caution may be necessary though; the tenant must be the party at fault in order for these principles to apply and the contractual term of the tenancy must still be current.
Landlords should not just sit back and relax though; they will need to take a commercial decision as to whether the tenant is worth suing for the rent or whether it is more cost effective to attempt to re-let the premises. It should also be noted that the landlord cannot take possession of the premises so that they will remain vacant which could lead to security and risk management problems.
Posted January 5, 2007
Starting Up? - Get 18mths free banking, and much more from Lloyds TSB!
Free 30 Google Adwords voucher - click here to claim yours.
Up to 2 years Free Banking! (T&Cs apply) with Barclays Business Banking
Online Accounting FREE TRIAL & 10% Off
Current Issues
Legal Guides
Staff Guides
IT Contractors
Technology
About Us
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (2 of 7) [26/10/2010 19:30:19]
-
Landlord and Tenant: A Contractual Relationship?
Compare Business Insurance
Hiscox Business Insurance
Set up a Limited Company Online
Great DELL Offers For Startups
Latest articles in Legal Guides
Why should my website have a privacy policy? Its easy to forget about things as you focus on the look and feel of the website and a good privacy policy could quite easily be one of them. But a privacy policy is essential for your website, as data protection and other laws give people a right to know how youre going to use their personal information. [September 27, 2010]
The Bribery Act 2010 and small businesses One of the last Acts of Parliament to be passed in the dying days of the last Parliament was the Bribery Act 2010. And for once, it is quite a short statute but one with a long reach as it is broad-ranging in its language and it specifically covers corruption abroad. [June 1, 2010]
Family businesses - A guide to governance structures A family charter typically sets out how the family wishes the business to be run, the familys goals and the long-term strategy for the business, as well as the familys relationship with the business and an agreement as to how the family members should behave towards each other in the context of the business. [May 25, 2010]
How to manage and minimise the legal risks to small
Our Partners Free Business Advice
NatWest Webinars - Join Now!
Lloyds TSBSupporting UK Businesses
Free 30 VoucherFor Google Adwords
Hiscox Office InsuranceInstant Online Quotation
Take control with aBarclaycard Commercial card
Great Dell OffersFor Startup Businesses
Opal Business BroadbandFrom just 10 per month
Free Advice & SupportFor Growing Businesses
Key Services Barclays Business
Banking & Help for Start-Ups
Working From Home?Get Dedicated Insurance Cover
Form a Limited CompanyComplete Online Service
Virtual Office ServiceFor full details click here
Online AccountingFREE trial and 10% off
Contractor AccountantsMonthly fixed-fee service
1 Year Fixed Rate Bond
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (3 of 7) [26/10/2010 19:30:19]
-
Landlord and Tenant: A Contractual Relationship?
companies We look at some key legal risks that can affect small businesses and how to manage and minimise such risks - ownership issues, employment issues and dealing with customers and clients. [April 30, 2010]
Companies Act 2006 - how it has affected small businesses Following the final implementation of the Companies Act 2006, we look at the impact the changes have had on how small businesses operate in the UK [March 15, 2010]
Why are written contracts importance to businesses? In this article, Andew Taylor explains why written contracts are both necessary and important to small businesses. [January 11, 2010]
The importance of intellectual property What is involved in protecting your intellectual assets - including patents, copyright, brand names, trade marks, design rights, domain names and online content. [December 7, 2009]
Staying legal how to ensure your web business is compliant with UK regulations You often hear business people complaining about red tape, and unfortunately they are right. Like every area of business these days, ecommerce has its own rules, regulations and laws. In fact, selling online tends to be worse because of the international dimension. [November 4, 2009]
Small businesses should ask more questions when appointing solicitors
Call Santander - 0800 783 6911
Business Reward SaverUp to 2% gross/AER. Details
Key Services Cashflow Problems?Try
Invoice Financing
Public Liability InsuranceAre You Covered?
Compare QuotesBusiness Insurance Cover
Dedicated Insurance CoverFor Home-Based Businesses
Legal Guides Choose a Solicitor
Copyright Law Guide
Business Sale Tips
Partnership Agreements
Companies Act 2006
Data Protection Act
Terms & Conditions
E-Commerce Regulations
Company Identity Theft
Company Formation Pitfalls
IT Contracts
Redundancy - Top 10 Tips
Flexible Working
Employment Contracts
Age Discrimination
Staff Interview Tips
Corporate Manslaughter Act
Employer Responsibilities
Cost of Employees
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (4 of 7) [26/10/2010 19:30:19]
-
Landlord and Tenant: A Contractual Relationship?
Small companies could be shelling out millions in unnecessary legal fees simply because they don't ask the right questions when they appoint solicitors. [August 18, 2009]
Furnished Holiday Lettings Scheme - An opportunity for overseas property owners The repeal of the so-called furnished holiday lettings or FHL rules, and a very important change in the interim will allow owners of qualifying overseas property to benefit from tax advantages. But there's only a short window of opportunity to take advantage of the rule change. [July 24, 2009]
Seven leasehold property pitfalls for commercial tenants Companies can often be faced with a nasty shock and a big bill when moving out of leasehold premises. In this article, we explore some common and costly mistakes often made by ill-informed commercial tenants. [July 8, 2009]
Guide to business libel in the Internet age Over the years, what qualifies as libel has developed from the written word to include such things as radio broadcasts, and perhaps most importantly, the internet. How employee emails and personal blogs can be a cause for concern to employers. [May 27, 2009]
What is a confidentiality agreement or 'NDA'? Non-disclosure agreements, or NDAs, are used to outline how two or more parties will share confidential information, without knowledge of such information going any further. [April 17, 2009]
What records are employers required to keep by law?
Guide to Recruitment & Interviewing
New Smoking Laws
Discipline & Grievance Procedures
Guide to Taking on Employees
How to handle Disciplinary Issues
Developing & Training Staff
Key Recruitment Laws
Health & Safety Basics
Staff Motivation
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (5 of 7) [26/10/2010 19:30:19]
-
Landlord and Tenant: A Contractual Relationship?
The three main areas where small businesses over-comply are - taking on new staff, the National Minimum Wage and the Working Time Regulations. But what records are employers required to keep by law? [October 24, 2008]
Guide to Copyright Law - What is protected? Copyright law is one of the key areas of intellectual property protection. In the United Kingdom, protection applies automatically once the work is created. In this expert legal guide, we step through each different types of work that are protected, and explain the extent of the monopoly granted. [September 3, 2008]
Site Map SearchSearch
Home
Business Newsm Latest News m Newsletter m Events m Business Statistics
Set Up A Companym Limited Company m Sole Trader m Self Employed m Limited Liability Partnership (LLP) m Partnership
Start-Up Guidesm Start-Up Guide m Business Tips m eBay Business
Business Plansm Business Plan Tips m Business Plan Guides
Tax & Accountingm Business Tax m Personal Tax m Tax Rates 2009/10 m Value Added Tax m Corporation Tax Guide m Budget 2009
Business Financem Finance News m Cash Flow m Raising Money m Invoice Finance & Factoring
Business Bankingm Business Banking Guides m Businesss Bank Accounts
Sales & Marketingm Sales Guides m Marketing Guides m PR Guides m Online Marketing
Office & Homem Home Working m Office
Business Insurancem Professional Indemnity Cover m Public Liability Insurance m Employers Liability Insurance m Landlords Insurance m Compare Business Insurance
Legal & Peoplem Current Issues m Legal Guides m Staff Guides
IT Contractorsm IT Contractor Guides m Managed Service Companies m IR35 Rules m Umbrella Companies m Contractor Accountants
Technologym Broadband m Create a Website m Web Technology m Web Marketing m Business Technology
About Usm Advertise m Contact Us
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (6 of 7) [26/10/2010 19:30:19]
-
Landlord and Tenant: A Contractual Relationship?
Bytestart Limited 2005-2010 - All Rights Reserved | Terms of Use | Site List | Website Feeds | RSS Feed
Business Insurance, Business Bank Accounts, Public Liability Insurance, Professional Indemnity, Startups, Limited Company, Sole Trader
http://www.bytestart.co.uk/content/legal/35_2/landlord-tenant-legal.shtml (7 of 7) [26/10/2010 19:30:19]
www.bytestart.co.ukLandlord and Tenant: A Contractual Relationship?
EONHMMNGJAJDAMPPGCFMAHCHNLCGPILPAB: form1: x: f1: 004324142909662365311:0ngbasdkavmf2: FORID:11f3:
f4: Go>f5:
form2: x: f1: 004324142909662365311:0ngbasdkavmf2: FORID:11f3:
f4: Go>f5: