11/10/18

Breaching a Lease Covenant

Breaching a Lease Covenant

Reiner & Anor v Triplark Ltd [2018] EWCA Civ 2151; a tenant of a flat, had breached a lease covenant for failing to obtain consent to assign her lease, despite the right to manage company failing to comply with statutory requirements.

In the above recent case of Reiner (4 October 2018), the tenant had requested consent to assign her lease, from the right to manage company (“RTM”) for the flats. The sole director of the RTM was the buyer. The RTM deliberately failed to notify the landlord of the proposed assignment in accordance with section 98(4) of the Commonhold and Leasehold Reform Act 2002 (“the Act”), which requires the landlord to be provided with 30 days’ notice.

The assignment was then completed and the RTM had neither granted or refused consent. The landlord subsequently objected and made an application to the Land Registry to register a restriction, to prevent registration of the assignment.

The Court of Appeal held that the RTM had not unreasonably withheld consent, despite deliberately failing to comply with the requirements set out in the Act. It was held that the tenant, who had assigned her lease without consent, had breached the lease covenant against parting with possession.

Section 98(4) of the Act is an important protection for landlords; it gives the landlord an opportunity to object, as the RTM is prohibited from giving consent to an assignment until it has given the landlord 30 days’ notice.

Until notice under the Act had been given, there was no positive duty on the RTM to give consent and as such, failure could not be deemed unreasonable. Even though the RTM had deliberately failed to give notice to the landlord, that did not alter the position.

In circumstances such as this, to remedy the situation the tenant would be able to apply for an order under section 107 of the Act, requiring the RTM to comply with its obligation to notify the landlord.

This decision is a useful reminder to ensure that the correct statutory process is followed, where parties seek consent to assign from an RTM.

11/10/18

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Kitsons Solicitors - Rhoda Honey

Rhoda HoneySolicitor

Rhoda is a Solicitor in our Property Litigation team

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